Urbanization is not a new concept in Pakistan. The entire country has seen varying yet increasing trends of urban growth. Flocks amidst flocks leap towards cities, fleeing their rural homes and lifestyle. These wishful thinkers hope to settle, find jobs, and grow in the hustle of an urban center. The question arises on how urbanization affects the economy and market of our country.
Four Aspects of Urbanization in Pakistan
- The trend of urbanization in major cities
- Three main drivers of urbanization
- Education
- Healthcare
- Real estate
- Fluidity of urbanization
- How does urbanization affect demand in real estate
- Bahria Town
- Capital Smart City
Trends of Urbanization
Urbanization is a potent phenomenon.
The major cities of Pakistan have emerged as economic centers thus a hub of skilled jobs with better money and incentives. The cities tend to offer various luxuries which rural areas are deprived of. We have seen a gigantic trend of urbanization over the past decade and Pakistan is projected to become an urban-majority country by 2030 with more than half of its forecast 250 million living in cities [1]. Below [2] mentioned progress shows the percentage increase in the urban population.
These numbers plus the projected forecast have one underlying assumption which will become pivotal to our discussion later. Urbanization only manifests in the major cities like Karachi, Lahore, Islamabad, Faisalabad, and Rawalpindi. The graph below clearly highlights Karachi and Lahore as the forerunner of this entire urbanization movement.
The trend is not without obvious reasons, these cities tend to offer glamour, opportunity, and luxury thus pulling many into its folds. More specifically, there are various drivers to urbanization like literacy rate or education, healthcare system, and most of all investment opportunities in the form of real estate.
Three Main Drivers of Urbanization
Education
The availability of education and a better healthcare system forms the foundation for economic stability. They attract a majority of the rural population as they are the basic needs of any human who wants to prosper in life. The clear indicator of the education system is the literacy rate, broadly speaking. Table [3] below shows the statistics for major cities; it showed an overall increase in the literary rate. Lahore and Karachi take the top positions in these rates. These figures directly translate and contribute to urbanization. It also shows why only major cities are affected.
Literacy Rates in Cities Versus Provincial Averages (percent)
| 2004-2005 | 2008-2009 | 2012-2013 | ||||
| City (Province) | City | Province | City | Province | City | Province |
| Lahore (Punjab) | 71 | 51 | 79 | 56 | 77 | 59 |
| Faisalabad (Punjab) | 56 | 51 | 58 | 56 | 67 | 59 |
| Karachi (Sindh) | 77 | 54 | 78 | 57 | 81 | 59 |
| Peshawar (KPK) | 46 | 40 | 50 | 45 | 56 | 48 |
| Quetta (Balochistan) | 62 | 33 | 63 | 39 | 66 | 39 |
SOURCE: Pakistan Bureau of Statistics, Government of Pakistan, undated.
Healthcare
Speaking of healthcare, it is also an important driver. Rural areas seriously lack hygiene and sometimes even access to clean drinking water therefore numerous diseases immobilize the population in many ways. Further than that, the presence of little or no hospitals and doctors pose a challenge unreal to many. On the contrary, cities have a wide-spread network of hospitals and specialist doctors which leads many to knock the doors of these cities.
Real Estate
Aside from basic needs, one of the most important reasons that drive people to cities is the opportunity to invest and essentially double assets. Real estate and value of land stem from the opportunities the land offers. In big cities, the presence of streamlined businesses ensures that the economy stays in a loop. With even the little money, a far-sighted investor can make millions. Such precedence garners the attention of every and any struggling person whose goal is to make enough money. The machinery of real estate falls hand in hand with urbanization and as more people step in the big cities, developers are propelled into creating societies and communities with a diverse price range.
Fluidity of Urbanization
Urbanization takes a different shape when a planned effort is put forth. Mostly, urbanization is considered an extremely fluid process.
In border cities, such as Peshawar and Quetta, many of the residents are migrants (legal or illegal, refugee or longer-term) fleeing war or disorder in Afghanistan; 3.3 to 3.6 million Afghans fled into Pakistan before 1990[4].
People migrating to cities or refugees taking shelter in our country happen with a firm reason but in a haphazard manner. Such a nature demands an up and running economy to face the challenges of the process and as the number of leaving and entering a city blur; cities fall in chaos. Major cities that sit at the helm of modernity and politics become deranged and chaotic.
The waste disposal system in Karachi is a prime example of governance and the economy failing to meet the challenges of urbanization head-on.
However, urbanization can be utilized in a planned manner. As cities fill their brim, developers are moving outward and making a concentrated effort to create small gated cities outside the major ones.
How Does Urbanization Affect Demand in Real Estate?
People moving the cities can hardly be arranged but what can be consolidated is the effort to develop more though smaller gated cities.
This type of urbanization is relatively new and can be observed in projects like Bahria Town, DHA, and Capital Smart City.
Bringing urban growth outside a city serves many advantages:-
- Firstly, the sprawling nature of people’s migration is contained and moderated in a non-fluidic fashion. It helps curb the unusual challenges of urban growth and the economy no longer has to fight urbanization blind.
- Secondly, projecting development outside a city becomes a great virtue for our economy. Investors and buyers are attracted to far-away lands with equal amenities like that of a city thus raising the value of land which would have left barren otherwise.
- Lastly, as the interests of the investor spike, developers move even outward. This phenomenon occurs publicly while keeping it off the state’s shoulder. More and more areas/regions are subjected to development adding inevitable value to the economy and creating limitless business opportunities.
These factors accumulate into a major interest in the real estate market.
Bahria Town – Offering What Cities Failed to Offer
Bahria Town presumably has taken the forefront of planned urbanization and undoubtedly gained massive popularity. In times when Pakistan faced a serious power shortage and hours of load shedding made people’s life miserable, Bahria Town offered a paradise. They marketed their housing scheme as a chunk of land with no power cuts. Here the fact that Bahria Town almost bordered outside of a city did not cause any dip in the interest as the idea of urbanization was taken to a whole new level.
Capital Smart City – Modernity Beyond Imagination
On the edge of motorway M2, a futuristic gated city is in progress. Capital Smart City is another prime example of how planned urbanization can project a significant interest in real estate. The essence lies in the far-sighted nature of these developers who are using the idea of urbanization to their advantage. Bringing the concept of smart cities was revolutionary and as they brick their city together, it will become a huge real estate where profits will become unimaginable.
Conclusion
Urbanization will continue to happen and our economy must find ways to cope with the challenges that it brings. While urbanization may sound like a problem, it can do miracles once organized in a planned manner. Refugees or migrants mindlessly settling in big cities will always become tough to manage as jobs are limited in the market. However, if outlying lands are turned into urban centers with equal or greater facilities investors will undoubtedly leap to these opportunities.
Eventually, the entire country could be modernized using these independent projects without burdening the economy.