Building cities and commerce for people

THE NEWS
Tuesday, December 25, 2007
Nadeem Ul Haque

We are looking for ways to accelerate growth so that poverty can be reduced and living standards improved. We go borrowing and begging to do this! Yet not many of us question the myriads of opportunities for investment that careless regulation stifles. The most glaring example of this is urban regulation which through Pakistan's history has stifled huge investment opportunities.

Construction leads growth. That is why analysts in the US always watch it. But look what our city planning paradigm has produced.

No tall buildings or apartments anywhere! We are all supposed to live in kothis!

The last time serious construction took place was in the sixties. Even today the tallest and the best building in Lahore remains WAPDA house made in 1966! Contrary to what people think, tall buildings and less regulated development does not lead to social and environmental ills. Research shows, that despite propaganda, US cities continue to develop at a rapid pace while their environment is getting cleaner and social evils like crime are declining.

Hotel construction too has been seriously retarded since Ayub's time. Why are their only two hotels in Lahore and they were also built in the sixties and seventies? Despite Lahore being rich in history and culture, why is their no tourism in Lahore? No conventions? Indeed none anywhere in Pakistan. Dubai has large conventions and boasts hundreds of thousands of hotel rooms. Lahore barely makes a few hundred 5-star rooms. Is this to protect a certain hotel monopoly? One should ask the related question, why has there been no entry into the hotel industry in the last 40 years? Why are multinational hotels not visible in Lahore and everywhere in the country? They will say that there is no demand. Of course there is not when they have to build out of the city. Why not a city centre location?

Indeed why do we not exploit our history and our mountains, beaches for tourism? Why no hotels near Moenjo Daro and Harrapa? No hotels in the mountains? Why? Tourist industry is huge and growing in the world with countries like Turkey getting $20 billion a year from it yet we have virtually willed it away.

Nathia Gali and Murree still have a governor's house which is hardly used and which could be a lovely high priced hotel? The hills still have rest houses being preserved for the VIPs at government expense. Rest houses were made in areas where there were no hotels for the touring judges or civil servants. Why not replace them with hotels? How many of these rest houses are properly used for government business? Is there any study of this?

Where is the commercial centre in any of our cities? No downtowns. I was told by one regulator that the heart of Lahore should now move to Bedian. By fiat even though the connection to the rest of the country is over the Ravi, yet the city centre should be by the Indian Border. People have to be moved from the old city and their current locations in Gulberg further out to preserve government real estate in the centre of town?

We have no highway infrastructure, pollution is already a problem. But no matter, spread the city out more and destroy the green fields of Punjab. Why is the heart of the city government owned? Almost all the land from the Charing Cross to the airport along the Mall is owned by the government. Some of it is not even fully utilized. Some examples of this are the Staff College (which can easily be moved to join up with the civil service academy near DHA), Civil service academy (now State Guest House and there is an academy near the DHA) NIPA, Government house, Navy War College (where is the sea?), the never-used the chief justice house (preserved only for weddings of the well connected).

The US government owns only the White House (smaller than our governor's mansion and the Vice President's House. All of us know the famous town house 10 Downing Street? The UK government maintains no housing for its permanent secretaries or judges! Why do we, a poor country, maintain expensive housing for officials?

Why is the urban regulation paradigm still friendly to an urban sprawl based on kothis? Why do kothi wallahs determine the pace of development by having the right of refusal to commercial development? Apartment blocks because of height and other restrictions are made economically infeasible. Where can you get readymade serviced office space in Lahore? Where is good warehouse space? Retail space is on now 3-marla plots? What can you build on that?

Why do we maintain rent control? Every major city in the world has eliminated rent control. All rent control does is reduce the supply of rental real estate and destroys the incentive to maintain quality real estate. Our regulators, however, are of the view that they know the value of rental real estate better than the market. Not surprisingly, Mall Road has shabby property that tenants have been renting for years at a rent that has not kept pace with inflation or real estate values. People who have had leases for decades continue to hold them and sometime even sublet. Rent control must go as an urgent priority if the construction sector is to be revitalized.

Urban construction is one of the most growth and poor-friendly activity in a country. Financial markets, pension funds can be based on it. It is sad that we are holding it back. Developing urban centres rather than urban sprawls are also intellectually and culturally invigorating. After all, most of mankind's major achievements--philosophy, democracy, industry, drama, art--have taken place in congested city centres. Let us embrace commercial development not fear it.



The writer is a former vice-chancellor of the Pakistan Institute of Development Economics.

Email: nhaque_imf@yahoo.com