Another day, another fraudulent housing society

Our readers might feel at this point that every week, come hell or high water, no matter what else is going on in the world of Pakistani business, economics, and finance there is always at least one story about a massive real estate project that is a fraud. 

Trust us when we say that we are a bit tired of it as well at this point. Particularly because it feels like all of these projects use the same classic techniques to defraud people. This week, we are bringing to you the case of the Grand Avenue Project on Lahore’s main Ferozpur road. Many things will be familiar – the overselling of files, the paying off of real estate agents, the grabbing of land, and generally shady activities. All of these tricks of the trade we point out nearly every week ad nauseum. 

But what can we do as well? Every week there is a new project getting up to the same old things with some twist of their own – that is how prevalent real estate fraud is in Pakistan. It preys on people with dreams of investing or making a house of their own one day. And that, perhaps, the most sinister part of this constantly repeated vicious cycle.

Development extravaganza 

Between 2008 and 2010, when Mian Shehbaz Sharif returned to the Punjab Chief Minister’s office, even though his party had lost the election at the center, they were in a good position for the next five years. With democracy finally returned, the PML-N would silently allow the PPP to blunder their way through running the federal government, pointing out their foreign policy mishaps and all other little things they were getting wrong. And while the PPP faced the heat, Shehbaz Sharif would go on a flashy glow-up project on Punjab – mostly Lahore. 

Roads were remade, overhead bridges were constructed, and underpasses were being built every other day. It was an infrastructural lollapalooza in Lahore and voters loved it. Thus, it was a good place to be. But what this also did was heat up the real estate market in Punjab, and without any eye to regulating these privately led projects, it is something Punjab is still suffering from today. Take Lahore’s Ferozepur Road for example. 

It was developed and Shehbaz Sharif had made plans to build a number of overhead bridges here, and even before it had happened the real estate business began to flourish. With the development of roads, there started the development of business and construction. A number of housing schemes were introduced in the surrounding of Ferozepur road due to its significance and accessibility. You see, developers need to find new, attractive areas to develop their real estate on. Often, they have to build malls or repair road or make other central locations to get people to come towards their projects. However, as soon as the government starts developing an area, it becomes attractive to prospective real estate customers without the real estate developers having to do much about it. They find a good area to start their new projects on using the government’s dime – which is why when a road like Ferozpur is renovated, builders and developers swarm their like flies to fallen ice cream on a hot summer day. 

Many renowned developers got into the business with the housing scheme. But the unique thing that is common in all the schemes on this road is that they are found in corrupt charges, in particular deceiving general people and looting their money. There were some bigger developers and some small developers involved in this real estate business. But no matter their size and the amount of skin they had in the game, all of them were finding innovative and some not so innovative ways to fleece people out of their money –  all built on false hope and empty promises. 

Grand Avenue 

In 2012, when Ferozpur road was fresh and had gone through its makeover, a developer named Riaz Chauhan started the Grand Avenue Housing Scheme. The Ferozepur Road area was a good choice for Chuhan for two reasons. The first one we have explained in detail above (the development of the road by the Punjab government). The second reason was just the cherry on top of the cake – apparently it is very easy to grab government and agricultural land in this area. Patwaris of this area are incredibly powerful and they do as they wish with official records with little to no accountability. 

Now, these developers had also started another project called the Central Park Housing Scheme. However, it was claimed that this [Grand Avenue Scheme] would be a mega housing project where all the housing facilities would be available. This is the typical part of how these stories go. Marketing was started even before the project started and a good commission was also offered to all the property dealers in the area. Traditionally, while the developers were trying to sell the project, large property dealers in the area were also selling files of the scheme to people in droves. However, these files belonged to Block A and Block B of this project and those who got the files here had also got plots. But the kind of development claimed by the developer for the beauty of the society was left incomplete. For example, when you look at the Main Boulevard from the entrance of this society, the plots along with it are empty and there is still a lot of construction to be done. However, as the plot file was getting cheaper and people were getting possession of the plots, people did not complain much about the stalled works from the developers. 

This is where the techniques used by Chauhan and Grand Avenue get a little different and a little more interesting. The developers had also improved their position in the market by capturing the files of two blocks and then the plots and had also won the trust of the people. During this time the success of the project was publicized through large land portals and vloggers. The announcement was made because the developer now intended to defraud the public. Now, an interesting and noteworthy thing here was that this society was doing business without the approval of the Lahore Development Authority (LDA) i.e. the society was illegal. Meanwhile, the developer made a strong statement in the market and said that the society’s phase one, which included the A and B blocks, did not fall within the limits of the LDA. Therefore, the developer obtained approval from the Town Municipal Administration (TMA) Nishtar Town. The developer had obtained approval from TMA for Grand Avenue society on land near 62 kanals and 18 marlas. Now another thing to consider is that the approval for the Grand Avenue Housing Society was obtained from the TMA, but this approval was for a small piece of land. It is impossible to form a society on a land area of ​​62 kanals and 18 marlas.

Sources in the district administration even told Profit that in the past, approval of any housing society, plaza, or house map from the TMA was not a difficult task. “Fixed bribes are taken for every job in the TMA office and since then on a monthly basis the field staff of this office has been taking bribes and approving numerous societies. As the location of this society was Ferozepur Road to Kasur Road, the developer contacted TMA. If a little investigation is done, then within the limits of Kasur, many of the housing societies which have been given approval by TMA are either defrauding the people or grabbing the land of the common man and selling it illegally,” they said.

Following the traditional manner, the administration of the Grand Avenue Housing scheme also introduced residential and commercial plots of 5 marlas  10 marlas and of 1 kanal. The management of the society set the rates of the plot files cheaper than the actual market price. The plots of 5 Marlas residential plots of Block A&B were being sold from 2 million to 2.7 million in the beginning whereas now the same plot file is being sold from 1.5 million to 3.9 million. The file of 10 Marlas residential plots of the same blocks were being sold from 3.5 million to 4.7 million in the beginning whereas now the same file is being sold from 4.1 million to 5.8 million in open market. The price tag for 1 kanal plot was set by administration at 6 million approx. Whereas now the same plot is being offered at 7 million approx. As the matter of commercial plot is concerned, the 4 Marla commercial plot was set to sell at 8-9 million by the administration of Grand Avenue Housing Scheme.

A senior LDA official informed Profit that some land of the society were not really included in the LDA boundaries at that time, but much of the area that was included in the society was within the LDA boundaries.

“If you open a beauty parlor inside your home and start a business, LDA and PRA (Punjab Revenue Authority) staff will be at your door the very next day. Not only that, but the district administration, the police and the officials of unknown government departments are trying to shut down your business. Because you are doing this business without the approval of the relevant authorities. Now think for yourself whether the officials of all the institutions will not reach such a big housing project. Absolutely, but these people take bribes and remain silent and do not take any action,” said the official. 

“The same thing happened with Grand Avenue. The project, which began in 2012, was declared illegal by the LDA in 2015 and had sold land illegally in those three years. In those three years, even the top officials slept soundly because of a good amount of money from the developer as a bribe was coming to them every month. To this day, the society has not been able to get approval from the LDA because it has many technical flaws. Requests from the developer have been received by the LDA several times, but its approval is still a mystery that has not yet been resolved,” they lamented.

The official added that the government and the concerned agencies should first identify the corrupt elements in the LDA so as to prevent fraud in the name of housing societies. “Look at the case of Ferozepur City in which two LDA staff members were found guilty. I don’t know how many cases in which the LDA staff is the main culprit. People spend their whole lives trying to buy their house and LDA staff allow fraudsters to loot such people. No illegal housing society can fool the public if timely action is taken,” he suggested.

Method of fraud 

The real game started after the society had sold the files of Block A and B and had also given possession of the plots to the people. Although all these sales were illegal because the society was not approved by the LDA. During this time all kinds of marketing tools were used to win the trust of the people and it was now much easier for the developer to defraud the public.

The developer gradually began marketing the C block of Grand Avenue in the market. The only problem for the developer during this time was that the society was not approved by the LDA. Chauhan hired a large number of property dealers from the market who could satisfy the people to buy files despite there being no LDA approval. One thing is clear, the role of the property dealer has always been important in every real estate fraud and the dealer is as guilty as the developer.

An affectee of Grand Avenue official told Profit that a friend of his had not only acquired a plot in the B block of the society, but his house was also under construction there. “I got some money from my inherited property and I was trying to buy a house for my family. Meanwhile, my friend introduced me to a property dealer named Arshad, and he was also claiming deals to buy and sell plots and houses of most housing societies on Ferozepur Road. Arshad insisted that I should also buy a plot in Grand Avenue because the said society has announced its C block and the files of this block are also being sold in the market. The satisfying thing for me was that society was fine and after all, my friend is also building a house there, so what’s wrong with me buying a plot here?” he explained. 

“I consulted my brother about this and he advised me to see if the society is approved by LDA. When I checked a little, I found out that the society is not approved by the LDA. I asked the property dealer [Arshad] if the society is illegal then would it be right to invest here. The dealer reassured me that the society did not fall under the purview of the LDA and the officials of LDA are blackmailing developers only for their bribes. The dealer said that this society is within the limits of TMA Nishtar Town and is also approved from there. He (the dealer) even told me that he is ready to give any kind of guarantee. It was my stupidity that I bought the C-block file and later found out that there was nothing there,” he informed.

This is how it goes for so many people that end up spending their life savings or their inheritance on a completely fraudulent project. The developer had sold only plot files to naive people even though he had no land for them. When people started demanding plots, quarrels started. Every day, the victims began to surround Chauhan’s office and Chauhan kept on avoiding the people with his cunning but when nothing was done, he started threatening the people. People had nothing but files and they had sunk their money.

The developer had skillfully defrauded the people and the poor people were knowingly hoping that their sunken money might be recovered. This practice of real estate developers is nothing new, but it is astonishing why the public is so deceived.

Fraudsters get NABd 

Profit also contacted a National Accountability Bureau’s (NAB) spokesman since NAB had arrested the developers at one point. However, the spokesperson informed that during 2016, the management of Vesta Developers launched a mega housing project named Grand Avenue Housing Scheme and started booking plots.The spokesperson added that the developer lured the general public to buy plots on installments but possession of the plots had not been given to the affectees.

“Accused persons, the owner of the project along with the other involved market dealers had cheated a number of public at large by collecting huge amounts from them. In pursuant to the multiple complaints pertaining to the offence of cheating general public at large, an inquiry was authorized by NAB Lahore against owners and developers of Grand Avenue Housing Scheme, Lahore & others dated 6th of January 2020. Immediate after scrutinizing of data collected in bulk, the NAB team investigating this scam requested their high-ups for upgrading said inquiry into investigation level against owners and developers of Grand Avenue Housing Scheme as soon as knowing the magnitude of the matter the Director General (DG) NAB Lahore Shehzad Saleem, subsequently authorized to upgrade it in September 2020. That the owner of the Grand Avenue Housing Scheme got sanction of the land subdivision known as Grand Avenue measuring merely 62 kanals and 18 marlas located at Mouza Jhulkey of Ferozepur Road from Town Municipal Administration Nishtar Town, Lahore and extended their housing scheme illegally up to 4000 kanals without any approval and in sheer violation of laws intact,” the spokesperson informed.

They added that as per LDA, an application floated on 17th august 2016 by the society administration was received in LDA seeking preliminary planning permission of Grand Avenue Housing Scheme comprising an area measuring 5300 kanals land falling in Mouza Jhulkey and Shaahzada, Ferozpur Road, Lahore.

“Amazingly, the management of society forwarded another application dated March 26, 2018 to LDA about revision of the area for preliminary planning permission by reducing it from 5300 kanal to 2022 kanal. Afterwards another request was forwarded for incorporation of additional area of 1978 kanals. During the course of Investigation, it was unearthed that the accused persons had sold 2818 files of Blocks A&B and 2582 files / plots of Block C, which complete land required for sold out Block C of Grand Avenue Society was not available with them. Going deep into the case it was further established that the accused owner and developers were found deeply involved in the commission of offence with malafidely and ulterior motives of grabbing public money,” he informed adding that into the bargain, it was also revealed that the prime accused even did not spare his co accused persons in the sale of files/plots.

“As per record confiscated from society, it had offered possession in Block-A and Block-B, however possession was not given to the members of Block-C and Society admin had been lingering on the matter of handing over actual possession to the public. So far, NAB Lahore has received 1434 complaints of the affectees against the management of Grand Avenue Housing Scheme alleging therein that they had been shown smoke screens and vehemently cheated by the owners of the said scheme on the pretext of selling plots in society. Even after the lapse of considerable time, neither possession of the plots was given to them nor was society approved by LDA. Similarly, there was no development work in Block-C of the society, whereas, development work of Block A & B remained incomplete, till time,” he added.

The spokesperson informed that during the course of subject investigation proceedings the owner accused Riaz Ahmad Chuhan along with land dealers namely accused Majid Nazir, accused Ashfaq Ahmad, accused Muhammad Irshad and accused Muhammad Yousaf were arrested by NAB.

“They consequently offered to return the crime proceeds / applications along with affidavits. DG NAB Lahore after thorough deliberation, recommended the plea bargain offers of the accused Chohan worth RS 2,207.457 Million, accused Majid Nazir worth RS 12.1 Million, accused Ashfaq Ahmad woth RS 7.5 Million, accused Muhammad Irshad worth RS 22.7 Million and accused Muhammad Yousaf worth RS 11.7 million and the same were verified by Chairman NAB, Justice Javed qbal and subsequently approved by the Accountability Court, Lahore. Total determined Liability was RS 2,261,751,458. First installment of said liability has been disbursed on 12th August 2021 among 1431 affectees amounting to RS730 million. This was a case in which not only the developer but also the property dealers were arrested. However, a second installment for affectees is planned for late September or early October.”