Property prices in many advanced and developing economies have risen exponentially in recent decades. According to a recent (January 2019) report published by IMF’s Global Housing Watch, a programme which tracks development in housing markets worldwide on a quarterly basis, house prices globally have gone up by 60 index points since the year 2000. Additionally, the online publication – in an attempt to elaborate on its gauging metrics – highlights several fundamental determinants of house prices: supply and demand, interest rates, disposable income, economic conditions, demographic needs, and government regulations.
Many a real estate affiliate, however, argue that the psychological domain of the ‘buyers’ mind-set’, as a significant driver of demand for property, has yet to be fully explored. Also, the role of the Media (both electronic and print), as a definitive, modern-day commercial ‘trend-setter’, merits further investigation.
Exploring the Role of the Media as a Commercial Price ‘Fixer’
Humans take cues from their surroundings, especially other people, on how to act. This natural, conformist tendency affects the various type of decisions that we make; including what political candidate we elect, and what investment options we consider. And on this front, the media certainly plays a pivotal and (further) cajoling role in fixing the ‘landscape of choice’ for us. Also, the gadgets or tools we use to share information with each other influence our decisions on almost a daily basis – by restricting/elongating their scope, or opening up newer avenues of actionable pursuit.
Consider the everyday case of a number of friends who are part of a Facebook or WhatsApp group.
If the majority members of the group recommend a certain housing society, the others would – at the very least, and however cautiously – develop a positive image of the project in their minds. Furthermore, someone who actually resides in the scheme, or has made an investment in it, would speak highly of the place (as is expected of any stakeholder). Such positive feedback, largely disseminated through word of mouth & recommendation, helps an area become more monetarily (and eventually, culturally) desirable – causing house prices to rise.
The Media’s Inroads into Developing Markets: Spotlight on Pakistan
In Asia, which has the highest number of internet users in the world, the media is said to be one of the driving forces behind the contemporary and seemingly-existential housing prices surge. In Pakistan, twenty-one percent of the population were documented as being confirmed mobile internet users at the start of this year. A majority of the people looking for new homes in the country use web browsers and online property portals such as Zameen and Prop.pk to search and sift through suitable options. Not only do these online platforms provide listing services and user guides, they also act as advertising agencies that host both free and featured properties.
The Property ‘Game’ has Shifted to the Online Sphere…
Nowadays, many advertisers have transferred the bulk of their business operations (in the guise of intuitively planned websites) onto the internet; providing reviews for different properties and land areas, as well as analysing current real estate trends that reach the target audience in the form of market reports. As a result of the largely unprecedented access provided by these portals, people have grown more accustomed to trusting the word of their deliberating experts.
A planned locality or residential property which gets favourable reviews online, or benefits from advanced and independent product placements/viewings on real estate websites, earns the trust of the public months (and even years) before the project physically makes its debut in the market.
Digital marketing professionals, as the primary propagators of this trend, increasingly like to claim that video content offers the best returns on investment. A virtual home tour, as a further promising new-age innovation, hold the potential to attract hundreds and thousands of views (which boost brand reputation, as well as fetch substantial earnings).
Bahria Town: A Poignant Case Study of the Media’s Galvanizing Influence on the Property Market
In Pakistan, the notorious case of Bahria Town relates the anti-moralistic tale of how an aggressive media campaign facilitated the advances of a local private builder, and served to shift the real estate dynamics for genuine buyers and sellers in the entire country.
Founded in the late 1990s, the Rawalpindi-based Bahria Town project has been a subject of numerous controversies since its inception. Its owner, Malik Riaz Hussain, is alleged of colluding with the country’s military; which enabled his business venture to swallow large chunks of state and private land across the South Asian nation’s political territory.
Many people in Pakistan can still recall Bahria’s TVCs that used to run on private news channels on a non-stop basis in the mid-2000s. For a housing scheme, these advertisements were considered way ahead of their time. Through these several-minutes long and flashy productions, viewers were provided an enticing glimpse of the gated communities and colourful theme parks, malls and cinemas, which Bahria Town had to offer; planting the idea of (and an unquenchable desire for) an elitist and extravagant lifestyle in the minds of the people.
All the hype generated through the media did wonders for Riaz, as Bahria Town soon became one of the most expensive housing schemes in Pakistan. Investors began buying and selling plot files at an unprecedented rate.
‘Files’, in the Pakistani context, are not tangible assets registered in one’s name, but open ownership documents that can function (essentially) much like stocks. Possessing a file does not mean that you have acquired a tangible piece of land in the country. And in some worrying cases, the plot linked to a file may not even physically exist!
Last year in May – after a year-long judicial process – the Supreme Court ruled that Bahria Town had acquired land for its projects in Karachi, Islamabad and Lahore through illegal means, and declared all these transfers to be null and void. In March this year, the country’s apex court accepted the foundation’s offer of PKR 460 billion for the land under its occupation in the Malir district of Karachi, and restrained the accountability watchdog NAB (National Accountability Bureau) from submitting references against the developer.
State Intervention – and Watching Out for Planted Stories!
While the whole Bahria Town fiasco appears to be far from over, the present government says it is devising policies to make sure that private developers and builders are not allowed to ‘gulp’ the hard-earned earnings of the common man.
But as things currently stand, the executive still needs to work on ensuring that public regulatory bodies and development authorities do not become party to real estate business interests. In today’s technology-driven age, it has become quite difficult to verify the authenticity of residential projects.
One way to watch out for property scams or planted stories (a prescription advocated by many local property market gurus) is for potential real estate buyers to consult the civic agencies concerned regarding the legal status of a housing scheme – before going through with their investments. Provincial bodies, including, most notably, the Lahore Development Authority (LDA), have already uploaded a list of legal and illegal housing schemes on their websites.
By way of principle, the best investments (whether made in Pakistan, or elsewhere) are most often the ones that appeal more to the head, and not the heart.
