“This government believes that New Zealanders should not be outbid by wealthier foreign buyers,” Associate Finance Minister David Parker, of the ruling Labor Party noted recently.
According to the rough estimates, most of the local property in New Zealand bought by the foreigners is going to the Chinese nationals. Though NZ is a territory situated far from China, however even they are concerned about their land being bought by the Chinese investors. I am a university teacher and wanted to buy property for my family. But being a first time buyer, by the time I had accumulated enough money to buy a property real estate value had soared so high that I could not buy property in my birth city. And this is the case of millions of buyers.
The CPEC is bringing an influx of foreign investors that would be very interested in investing their money in Pakistan’s real estate property market. Much like NZ, we too should be concerned about land sales to foreigners. New Zealand is not the first country to have imposed a ban on foreigners buying property in their country; Australia too has made similar measures in the past so as to bring down the property prices to a reasonable level.
Poland and Hungary continue to witness controversy over land, while Saudi Arabia, Slovakia and the Czech Republic have not allowed any degree of foreign ownership that could provoke contention.
The dislike for foreigners owning land could be due tosocio-economic hardship, rural poverty and agricultural underdevelopment faced by the locals. One has to see the details of CPEC to identify if our Chinese investors have demanded that we and other One Belt-One Road countries should open the land market to the Chinese nationals. However after the demand of replacing Dollar with Yuan, one may anticipate that the above mentioned demand has
possibly already been made. Already the land prices in almost all cities across Pakistan are on the rise, which may increase even more if the details of the CPEC agreement will reveal the above made assumption to be true. In January this year, the State Bank of Pakistan stated that with CPEC, several Chinese industrial units shall come to Pakistan. However the local industrialists know that the Chinese investors with lots of money shall acquire land very easily leaving locals behind in benefiting from the development of the road network. One must not forget that Pakistan has not been able to full advantage of the Free Trade Agreement with China, therefore assuming that this time it would not be the same case is like evading the reality.
The new government has opposed the sale of land to foreigners. Now that they are in power, concrete steps must be taken to ensure that the locals are not left undefended against foreign buyers that have enough money to buy every inch of land up for grabs in our emerging country
Our situation today after the CPEC agreement is much like that period in Europe when the pressure to liberalize increased dramatically with the commencement of the European Union’s (EU) accession negotiations in March 1998.Several countries were opposed to the selling of their land to foreigners despite wanting to be a part of the EU.
For example, Austria, Denmark, and Finland limited foreign ownership in resort areas, Greece restricted foreign ownership of land in border areas, while Ireland regulated foreign purchases of agricultural land, forests, and water reservoirs. Swedish authorities required permission for foreigners to lease farms, land lying beneath built structures, and recreational property. Hungary, Poland, Slovakia, and the Czech Republic, on the other hand, initially demanded 10 to18 year restrictions on EU-nationals’ acquisition of agricultural land not merely in resort or border areas, but in their entire respective territories.
Even when their respective governments were trying to safe guard the interests of the locals, the most vulnerable members of the societies of Europe knew that foreigners purchasing land could impede the local livelihood for generations to come. For example when the Polish Peasants opposed the sale of their land especially to German buyers, in the nineties, the Germans were buying huge amounts of Polish agricultural land, which at that time threatened the nation’s existence. Could such a situation happen here in Pakistan? Are we completely safe even if foreigners bought every inch of land available for sale here in Pakistan?
Moreover one must keep in mind that incomplete legal frameworks provide larger loopholes to these foreign investors. Even if the current legal framework prohibits foreigners from buying land directly, they may not be prohibited from purchasing shares in local companies which own substantial pieces of land. Such as is in the case of Etisalat which has recently been purchasing the majority shares in PTCL and along with it all its infrastructural and land holdings. Imagine if a foreign investor buys the majority shares in Bahria Town or Defense Housing Authority- How much land would they own?
Another loophole is that if the foreign investors are not allowed to invest in land or in companies that own land, a bypass to this can be a locally registered company buying land on behalf of a foreign investor. There can be countless other possibilities that may get the foreigners a piece of land in a targeted country as long as there is an incomplete legal framework and the foreigners have the money.
I believe in raising awareness about the unplanned sale of land to the foreigners and how it is affecting the local buyers among the educated class will have an impact on its results. The new government in place has taken a position in the past opposing the sale of land to foreigners.
Now that they are in power, concrete steps must be taken to ensure that the locals are not left undefended against foreign buyers that have enough money to buy every inch of land up for grabs in our emerging country.
The writer is an Assistant Professor
Published in Daily Times, August 27th 2018.