When you think of the real estate industry in Pakistan, you think mostly about cities like Lahore, Karachi, Islamabad, Multan, and Faisalabad. Or maybe even developing cities like Gujranwala or Gawadar. There are large projects being undertaken in these cities – all massive, all gaudy, all ridiculously priced, and almost all full of fraud, scheming, and corruption. But as much as Pakistan seems to love grossly made housing societies with little planning and a lot of nauseating design choices, there is perhaps one place where housing societies could be done right – up north.
Pakistan has a breathtaking northern province, a lot of which is accessible and a lot more of which is very quickly becoming so. Perhaps the most famous of these locations is Murree, once in contention with Simla to be the summer capital of the British empire in India. Serene, beautiful, and a bit of a tourist city that has slowly been poisoned by high visitation, Murree still has vast tracts of land that can be developed and turned into both commercial and residential real estate. While the bulk of the stimulus received as part of the construction package has not been focused up north, a place like Murree would be an ideal location for investment. Most projects in the Punjab need hooks – recreating Paris, or Egypt or some other ostensible and silly whim that some real estate developer thinks is a good idea. With a place like Murree, you don’t need a gimmick since you are selling natural beauty. It is a clean, simple kind of development that a place like Murree needs.
Tourism is booming and the prices of land, houses, shops, hotels and plazas in these areas are skyrocketing. International hotel chains, restaurant chains, and coffee shops are also making good profits by setting up their businesses here and it seems that the hotel and restaurant industry is also eager to make further investments in these areas. Since the northern areas are mostly tourist destinations, everyone wants to invest here for residential and commercial purposes.
The situation is similar in Murree, a popular tourist destination in Pakistan. By the way, it is a hill station and falls within the limits of Punjab, but since it is full of tourists all year round and the expressways and GT road leading to this city are very beautiful and dynamic due to the government’s attention, therefore, most of the real estate projects have started to grow here as well. Apparently, the management of such projects claims that the projects are extremely beneficial from the point of view of investment and the investor today will also get huge benefits in the future but it is too early to say whether this will actually happen or not.
How things stand in Murree’s real estate market
People from Punjab and other areas being interested in buying property in Murree is not new news. Amjad Ali, from Masyari (a village near Murree) runs a real estate agency. He believes that in the next few years, there will be more housing projects around the expressway because most landowners in the vicinity of this road are now interested in forming housing societies. “This is not a recent development over the past couple of years. It has been over the past decade and more that we have gotten here. The signs were there to see for anyone that wanted to look,” he explains.
“Most investors here are interested in investing in tourism, naturally. Murree is still a hot spot that attracts people from all over the country, which is why accommodation is always going to be a problem and hotels are always going to be in demand. And it isn’t just that accommodation is not available, it is more about how unregulated it is,” he says. There is a point to this. There are no set prices for hotel rooms in Murree, and while all hotels do nudge prices depending on availability, it is crazy how much they fluctuate in Murree. For example, on normal days when there is not a lot of rush, a simple hotel room becomes available for as low as Rs 2000 per night. But if the rush increases, then prices automatically jump up astronomically and the prices can go as high as Rs 10,000 to Rs 12,000 per night.
“Imagine this from a tourist’s point of view. When a tourist comes here to spend a week or more on vacation, he spends around one Rs 100,000 on renting a simple room and in order to eat and drink, he either has to buy from the hotel where he is staying or he has to eat from a hotel or restaurant outside which is very expensive. If a family of six comes to spend a week here, it spends Rs 200,000 to 300,000 on food and accommodation.”
And even when they are paying such insane amounts of money, the accommodation is rarely good. It is uncomfortable, the staff is unhelpful and rude because they know they have clients queuing outside. So for a family that visits a couple of times a year or likes to set up base camp in Murree to go further up north, staying in a hotel becomes quite a tasking activity. Because of this, a lot of people prefer to buy small apartments, flats, cabins, or houses in Murree. Even if they are a little off center from where the hotels are, the convenience and cost saving is enough for them to consider it.
This was the case as early as back in the late 1990s and the early 2000s. People from Punjab started buying properties in Murree and made summer houses here. When they were not around, these properties would be rented out and become part of the hospitality industry in the area and start engaging in the same practices. Other small properties were bought by locals who also turned their homes into small guest houses or apartments for tourists to stay in. Very quickly, even as demand rose for property in Murree, people were not willing to sell them because of how profitable they were, meaning the prices rose significantly and they have continued to rise since.
Properties within the city of Murree have become expensive in recent times, and the land rates in the main areas have gone up to Rs 1.5 million to 2 million per marla. Secondly, there are investors who want to do business in or around Murree and such investors pay more attention to an area that has beautiful scenery rather than how central the location is. Even for such investors, it is very difficult to find properties within the city of Murree because the people who have bought properties here in the past were either locals or came here for business and their properties are giving them so much profit that they hardly think of selling them.
Ali believed that when investors did not have access to properties within the city or would get very expensive prices, they would invest outside the city. “As Murree is a small town and properties outside it are selling at a faster rate within a range of ten to fifteen kilometers. For those who come here after a long journey from other cities, covering a distance of more or less ten to fifteen kilometers is not a big problem. Similarly, the Murree Expressway has easy access to the motorway, Murree and the northern areas, so people here are selling their lands at a faster pace,” he explains.
“Similarly, the Murree Expressway has easy access to the motorway, Murree and the northern areas, so people here are selling their lands at a faster pace. Now when it comes to buying and selling land, the procedure is very simple as file culture has not yet developed here, so people are more focused on buying plots instead of files. Many private developers who own or have purchased land now sell the land to the customer. For this they simply go to the Patwari and follow the whole procedure and transfer the land to the buyer. This is the practice in and around Murree. Yes, but it is also the responsibility of the buyer to check the land before purchasing and before buying the land, get the demarcation from the Patwari so that he knows whether the land the seller is showing him is the same as the seller is telling him.”
The buying and selling process
However, most of the property agents and developers in and around Murree used to follow the same procedure of buying and selling land but for further investigation Profit approached the management of a housing project ‘Snow Pines’ near Murree to investigate further. The management claimed that their project covered 80 Kanals and that they were building and selling land and houses here.
The issue now is not the sale and purchase of plots or land, but the need to see whether the land in these areas at Rs 300,000 to Rs 400,000 per marla or land in the main areas of the city which was selling at Rs 1.5 million to 2 million per marla was not a loss-making deal.
In this regard, Sheikh Ilyas of Lahore, who runs a restaurant, believed that even if land was available cheaply in these areas, the investment would be a little risky. “I also thought about investing when the government relaxed the lockdown and opened up tourist spots. Because the restaurant industry in Lahore was in crisis and people were camping in tourist places. I also tried my luck to buy a restaurant-hotel in Murree, and I was shocked when I met many property dealers and agents and they all started advising me to buy land outside Murree or showed me such places in Murree where it was impossible to do business.”
The sentiment seems to be clear in this regard. For people wanting to invest in small guest houses or buy summer homes for their families, investing in the areas right outside Murree was not a bad idea at all. In fact, for not a lot of travel time lost, you could get these places much cheaper with the certainty that they will develop over the years and that Murree will expand. However, commercial real estate is a more difficult sell as people looking to set up businesses want to wait until people have bought places and settled in enough numbers. Then again, the opening up of restaurants and other commercial ventures would attract more people so it really is a vicious cycle, but one that is bound to end up in Murree expanded and both commercial and residential land being sold in these outskirt areas.
Explaining his reasoning for not ending up investing in the areas right outside Murre, Sheikh Ilyas said that he was shown GT Road coming from Islamabad to Murree and also the Murree Expressway, as well as lands in Galyat and also on Khaqan Abbasi Road. “In fact, it is worth noting that there was a hotel called Premier Inn on Murree’s View Fourth Road and next to this hotel was another hotel which was very old and dilapidated and had been closed for a long time. I thought that now that this hotel is not running and has been closed for a long time, why not try to buy it? I intended to revamp it after purchase and since it was on the View Fourth Road and very close to the Mall Road, the business here will also flourish but when I tried to contact its owner, he was not ready to sell it and the demand he was making for this four kanal area was very unrealistic,” he says.
“He was demanding Rs 200 million for this four-kanal piece of land, while if we look at the Murree market, the value of this hotel was not more than RS 80 million. After that I saw a lot of land in Galyat which was located on the main road. These lands were cheap, i.e. land was available on the main road for RS 600,000 to 700,000 and on GT Road, land was even available at RS 100,000 per marla. What happens now is that ordinary investors are quick to buy cheap land, but I don’t think they should.”
What investing would mean
“Although there is no problem with land, there are many other factors that, when taken into account, indicate that it has made a loss-making investment. Let me give you an example. Suppose you find a beautiful piece of land of four or five kanals on the Galyat or Expressway where business can run very easily and you plan to open a hotel cum restaurant. First of all, keep in mind that construction is a very difficult task here because the whole area is hilly. Here leveling the land and then constructing it means that the plot you have got at RS 400,000 lakh per marla will cost RS 600,000 per marla just to straighten the plot or maybe even more. After that, construction costs are very expensive here and labor is also very expensive because the construction techniques are a bit different here,” he explains.
“Once you have done all of this, you have to get the map approved to build the place of your choice and interestingly, new construction is not allowed in Murree. Of course, new constructions are allowed outside Murree, but taking construction materials and labor there means that it will take a year to complete the construction. Now that the building is built, there is a need for labor to work in your new hotel and restaurant. Such labor is easily found here but since the building is outside Murree and even if it is on the main road it means that it is in the jungle. There are no street lights and there are security problems at night. During the day, only travelers can come here to eat and drink, but the risk of spending the night, especially for families, is very high.”
This then means that hotels in these areas need to make compromises, and start renting out rooms for Rs 500 – Rs 1000 a night. These rates and the lack of security generally only attract bachelors and other such parties. It is a shame to have to say this, but it is true that then these establishments are looked down upon and they never really get off the ground as tourist spots for families – which is what hotel owners want since families spend more money as well. In fact, in some areas outside of Murree room rents can be as low as Rs 200 per night because these hotels are trying desperately to stay afloat. Issues like road closures, lack of gas in the winters, and electricity all makes operating a hotel outside the main Murree area quite tricky. “Investment here will only be beneficial when the government provides light and security on the roads, as has been done by the government in Murree. There is a round-the-clock movement of tourists and they travel without fear, but this is not possible outside the city. Even if I had invested Rs 80 million here, I would have had only one building to own and I would have had to wait for a good time to make a profit,” says Sheikh Ilyas.
The residential equation
On the other hand, lands sold for residential purposes are fine, but the housing societies or housing projects started by private developers are almost all illegal. The director of the housing project, Murree Snow Pines, speaking to Profit informed that he was selling a four-marla double-storey villa for RS 16 million, which was also available in installments. “Our land is clear, there is no fraud. We are not only building and selling houses, but also providing tenant services to buyers in their absence, including house security. We have investors who can use their villa whenever they want and if they want to rent it through us, they can also get a very reasonable rent every month. We are currently offering a 15 per cent discount on our project. We also have a villa available in eight marlas which is priced at RS 20 million and is also available in installments,” he said.
When asked if the housing project has been approved by the Rawalpindi Development Authority (RDA), he said the area would need the approval of the TMA (Town Municipal Administrator) and not the RDA and the said society was approved by TMA. On the other hand, Aftab, a demolition staff of Murree TMA, said that the society called Snow Pines was not approved as it did not meet many legal formalities.
“If a developer has an area of one 100 kanals of land, then his society can be approved. Otherwise, a place with less area is not called a society but a subdivision. They do not have 100 kanals of land yet. The sub-division also requires land to be packed on all four sides with forest on one side and population on the other so that the developer cannot buy more land than the 80 Kanals. The second step is to keep the space thirty feet wide and the streets thirty feet wide to give way, then the sewerage and gas etc. will be in the name of TMA and then they can apply for approval and it is not an easy task to get approval from TMA as approval from TMA comes after a lot of scrutiny. As for Murree, almost all the subdivisions here are unapproved,” Aftab revealed.
When asked how the housing societies or sub-divisions are selling land, he replied that the housing societies or sub-divisions are only selling plots here. “When the plot is in the name of a buyer, he will have to come to TMA for its succession and for any kind of construction there and will have to go through all the stages and get permission to build there,” he said.
When asked if any action has ever been taken against such an illegal housing society, he had no answer. However, he informed that a ban had been imposed by the Supreme Court in 2018 that the Shamlat land in the area could not be sold nor could construction work be done on them.
“Many housing societies such as Judicial Town, Sky Garden, Green Valley, Bahria Town, OGDC, Utility Stores Corporation Housing Society, which started on Murree GT Road and Expressway following the orders of the Supreme Court, stopped their work. As many societies were established on Shamlat lands and in Murree also many societies were formed on such lands. If we talk about Pines City, the area of this society also includes Shamlat Land. However, earlier they were saying that they have bought 40 kanals of land and after buying the remaining 40 kanals, they will start work with the approval of TMA. But that hasn’t happened yet,” he added. However, sources in the TMA office of Murree believe that buying land in private societies for residential purposes is a big risk.
For example, if a person buys a plot in an unapproved housing society or sub-division, he will later face problems such as lack of access or development by the society because no society here has started development work yet. Second, the sale and transfer of Shamlat land is a very complex issue. Because there is no one owner of this land but there are many owners and it is a difficult task to take this place from all of them and then transfer it to the name of the society and from there to the name of the buyer. In Murree, however, there is no check on this illegal purchase and sale. In fact, there was no check here even when construction was banned. Every influential person violated the orders here despite the ban. What do you think about the fact that the houses of big politicians in Murree were not constructed or renovated during the ban? The staff here is very corrupt and the government deliberately ignores the irregularities here,” they lamented.