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Affordable housing in the time of COVID-19

As the federal government attempts to protect its ambitious scheme of constructing five million houses from the ravages of COVID-19, Tabadlab speaks to leading experts for their take on the matter. Our speakers shed light on the contours of the affordable housing landscape in Pakistan and all the complexities that must yet be understood to achieve this target.

Featured Panelists:

Jawad Aslam is the Chief Executive Officer of Ansar Management Company with over 20 years of experience in the public and private sector.

Ibrahim Khalil is a Non-Resident Fellow at Tabadlab who specialises in project financing and management of residential real estate construction.

Fizzah Sajjad is an Urban Planner and the Research & Policy Director for Mahbub-ul-Haq Research Centre at LUMS.

Huma Sattar is a Researcher and Consultant specialising in Economic & Public Policy at the Business Recorder.

Namoos Zaheer is a Senior Specialist at the World Bank and a banking professional with experience in financial development.
Discussion Summary:

Clarity
How coherent has the government’s approach towards its housing policy been – particularly balancing housing for low-income groups while increasing housing stock in general? Is the incentivised package for the construction industry in line with this policy, or is it merely meant to provide employment opportunities during COVID-19?
Quantification
How did we decide that the adequate number of affordable houses for Pakistan is 10 million? Our speakers shed light on whether these figures have been systematically calculated or if the government’s target of constructing 5 million houses is arbitrary.
Demand
What do the numbers reveal about how many low-income households would actually prefer to invest in home ownership over renting? Are there any mechanisms in place to support these tenants with their payments during the financial crisis brought on by the pandemic?
Affordability
Is it incorrect to assume that a supply of affordable housing will create its own demand? How much of their monthly income will applicants have to set aside in order to pay off their instalments? Will the increasing costs compromise on the scheme’s affordability for the lowest income groups?
Inclusiveness
Our speakers discuss the importance of bringing multiple stakeholders on board the decision-making process. While the government and property developers have dominated the conversation, to what extent have community leaders been consulted to determine their needs and preferences?
Profitability
How difficult will it be to interest the private sector in projects with insufficient profit margins and getting banks to lend to “high-risk” clients? Alternatively, is it unrealistic to expect the Pakistani government to subsidise such developments in this economic climate?
Regulations
Does the current regulatory framework simplify processes for those wanting to enter the construction market or create hindrances? Is it possible to create a one-stop solution which cuts through the red tape? How is the legal authority divided between the federal and provincial governments at present?

Recommendations:

• Taking communities on board to understand their needs better
• Prioritising affordability for lowest income groups
• Balancing public sector subsidies and private sector profitability
• Reducing reliance on commercial banks to offer financing products for the masses
• One-stop solution for developers to cut through red tape

Key Resources:

The World Bank’s Pakistan Housing Finance Project

Huma Sattar – Business Recorder: Roti, Kapra, Makaan? Maybe Not Today

Fizza Sajjad – Dawn: Who Will Benefit From the Relief Package?

Ibrahim Khalil & Umar Nadeem – Tabadlab: Optimising the Naya Pakistan Housing Policy Opportunity – Working Paper 01

Ibrahim Khalil – Tabadlab: Mortgage Market Design for Low-Cost Housing Units in Pakistan – Working Paper 02

Ibrahim Khalil & Umar Nadeem – Tabadlab: Designing Affordable Housing – Working Paper 03

Jawad Aslam – Building Sustainable Communities in Pakistan