As the demand for housing grows due to increased rural to urban migration in search of a better lifestyle, the real estate sector is becoming more and more lucrative for developers and contractors. In light of this huge demand, it has been seen that multiple housing projects and commercial projects are being set up in the country, especially after the announcement of the incumbent government declaring the construction sector as an industry.
The real estate sector of Pakistan is growing due to increased growth in population, rural to urban migration, and measures taken by the incumbent government to stimulate overseas investment. The rising demand for housing in urban areas is generating much activity in the real estate development sector, which has now started pumping out massive housing projects and commercial development sites all over Pakistan in major cities. Since many of these real estate projects are started near the outskirts of main cities and focus on developing previously undeveloped areas, the initial cost of purchasing land in these schemes is relatively low. This makes it possible for people with middle to low income to purchase land offered at lucrative rates and instalment plans. But the practice has also led to widespread fraud and misleading advertisement campaigns. The most important issue among such campaigns is the over-advertisement of capacity. People are sold far more titles than what the development project can compensate for in terms of land, causing much trouble for both the developer and the client. Real estate frauds in the marketing of new projects are famous around the world and in Pakistan. Therefore, it is II
Understanding Real Estate Fraud
Buying or renting property can be one of the most important decisions a person makes throughout his life, and being worried about getting scammed should not be at the top of the decision-making agenda. Criminals are getting more and more creative in how they are targeting consumers, leading to major financial headaches for unsuspecting victims. A large portion of those who get scammed in Pakistan consist of overseas investors. By one estimate, more than a million land cases are pending countrywide (Home Office, 2017). Many people are too embarrassed to file complaints, making it harder to catch the scammers who repeatedly victimize unwitting homeowners and home buyers. Real estate scams in Pakistan consist of unreliable agents, false or misleading listings, fraudulent property buyers, fake documentation, buying or renting unseen property, and falsely communicated market value. All these are popular ways in which people get scammed in the real estate of Pakistan. People hardly check for the registration of real estate agents with reliable and credible agencies. Many websites have popped up with listings claiming to be verified, but few can achieve this massive task. Another problem is that people often hand over legal documents to buyers before the deal is officially finalized. Since most people in Pakistan are illiterate or do not understand the documents involved in the sale or purchase of land, they often put their signatures on the wrong documents and get scammed later. Lastly, agents have developed a practice of quoting a misleading market price for properties in hopes of getting large profits by selling at a higher price later. Therefore, real estate fraud is a reality in Pakistan, and if the government does not take concrete steps to regulate the marketing of real estate, the sector will not become the beacon of growth they desire.
Need for Real Estate Marketing Regulation
Real estate marketing is the marketing of property listings that are being purchased and sold to buyers through real estate agents or directly. The real estate market sets the standards for property in a particular area such as the pricing and mortgages. Successful marketing for real estate investing implies implementing strategic and innovative real estate marketing ideas to gain an advantage over the competition, generate leads, and make it much easier to convert those leads into prospects (buyers or sellers). The practice involves using different social media handles along with traditional media outlets as well. This means that more and more people are now susceptible to receiving information related to new development projects. To protect such people from fraud, advertisements related to real estate development must be regulated. There should be oversight over what is being marketed and are those project developers worthy of delivering on the claims. People often get a timeline mentioned for completion of projects but seldom receive their final product on the said date. This area can also be regulated to make it mandatory for those who market new projects to complete in their stipulated time. Lastly, it is very challenging to verify the details of each project which is marketed, and having to scrutinize every detail related to title, ownership, and NOCs can be an arduous task. Therefore, Pakistan has taken some steps towards achieving ease for consumers by regulating real estate marketing practices.
Regulating Real Estate Marketing
Islamabad real estate regulation bill was adopted in 2018 for the regulation and promotion of the real estate sector and to ensure that the sale and purchase of plots, apartments, buildings, and real estate projects can become as transparent and efficient as possible. The act refers to the unfair practice in real estate advertisement, and it is important to understand what the term means. The term “unfair practice” means a practice that promotes the sale or development of any real estate project while adopting any unfair method or deceptive practice. This can include false representations of approvals, grade, or sales and services. Therefore, in case of violation of these rules, the authority can revoke licenses and registration of any party found guilty of misleading ad campaigns. The authority will not revoke the registration unless it has given a 30-day notice to the developer and also produced a show-cause notice. In case of revocation, the promoter will be barred from accessing the website in relation to that project and the authority will also specify the promoter’s name in the list of defaulters, display his picture on the website, and inform other institutions about the revocation. Lastly, the authority will also seize the bank accounts of fraudulent promoters. This will make the real estate market much more secure and transparent, allowing for greater investments and growth. Therefore, the regulation of real estate marketing will go a long way in promoting real estate growth in Pakistan. (Corpbiz, 2020)