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SAZH-TAF Report on FDI

Industry - Real Estate

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An Expert shared that the first investment that an investor makes, usually, pertains to real estate. However, due to our complicated and opaque land registration and transfer procedure, there are countless delays, unexpected expenditure, and nearly infinite litigation on ownership of real estate. He shared that in various other jurisdictions, such as Singapore, the state takes responsibility for ensuring that land purchase and title is secured. However, in Pakistan, unfortunately, according to our Expert, the relevant authority, such as Board of Revenue, Lahore Development Authority (LDA) or Capital Development Authority (CDA), while charging and owning the process of recording and transferring title, does not get involved if an objection arises as to the transaction. For example, he shared, that an investor may buy land from a person who on the record of LDA owns that land. The investor will make payment and assume that the transaction is concluded. However, another person may arise, who challenges the purchase stating that the land is in fact owned by him and may approach the court to block the transaction or ownership of the investor, and return title to himself. Now in this process, the investor is innocent, and may have done everything by the book, yet the authority who aided in the transaction and assured title of the first owner, who has been paid, would not intervene and stand by their assurance of title, leaving the investor to engage in a dispute with this new purported owner. This he shared, greatly reduces investor confidence.

 

This is further compounded by the fact that our system has multiple stakeholders that include patwaris, Board of Revenue, Land Development Authorities, settlement departments and other organizations, which may be needed to verify ownership and be involved in the transaction. Pakistan has not simplified and digitized this, even though reforms had been planned decades ago, yet implementation is still not complete. Hence, now an investor is to be advised that, title ownership as declared by a patwari or LDA or any other organization, is not an actual guarantee that it is correct or secure. He will have to account that there most likely will be litigation, frivolous mostly, to harass the investor. This will necessitate the investor to add this litigation to the cost of doing business in Pakistan. This could be easily resolved if the bureaucracy and land record could be simplified and the state stand by its record on title, and then stand by the investor. In Singapore, as previously mentioned, our Expert shares that if such a dispute arises, it is between the state and the purported original owner of the land, and the investor is not involved, as the state acts as guarantor of the title. Thus, he recommended that Pakistan needs a simplified and digitized system for land record, and a similar guarantor system, or protection system for investors who are investing in Pakistan.


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