Research Proposal:

Title: Ponzi Schemes of Real Estate Market in Pakistan

Introduction:

A new form of Real Estate Market has evolved in Pakistan. The process starts with Booking Forms then
there is Balloting of Files followed by an Installment plan ensured by Balloting of Land and after that
possession is given. This tenure can range from months to decades.
At the start of 21st century with booming metropolitan cities of Pakistan and continually increasing
demand of land for housing increased. The concept of private housing societies took birth in Pakistan
which is pretty old in other countries of the world. In an unregulated economy and a weak justice
system the private realtors took advantage of the non-stringent laws and used illicit means of making
huge profits at the expense of the general public’s hard earned money. Very less work has been done in
this domain regarding the situation of Pakistan, and this paper is the first of its kind which explains in
detail the strategies, ways and means involved to make colossal amounts of money by market
manipulation and exploiting the general public which led to creation of real estate tycoons and an ever
stronger real estate lobby in Pakistan.

Subjects of Study involves:

1. How Private Societies and groups of real estate agents manipulate real estate prices.
2. Phases of profit making involved.
3. Cycles of price fluctuation of property and booking files by manipulating market, such as
creating an artificial supply and demand gap and showing huge gains by mutual collaboration of
realtors and real estate agents to attract general public to invest huge amounts of money in
short term making it a Ponzi scheme.
The process includes:
a. Phase 1: Marketing Booking Forms to submission of Booking forms
b. Phase 2:Submission of Booking Forms to Balloting of Files
c. Phase 3:Balloting of files till Completion of Installment plans
d. Phase4: Completion of Installment plan till Possession of Land
e. How general public responds and is affected by these phase of profit and loss cycle.

4. Commercial plots and their selling at the time of their choice

5. Booking Land before buying it
6. Fraudulent selling of land never bought
7. Some example case studies BAHRIA TOWN, Lake City Lahore, DHA Multan, EDEN Housing
society, Formanites Housing Society, Elite Town Housing Society Lahore.
8. Role of Real Estate Brokers and Agents
9. Explore the profit making models of Realtors
Summary:

There has been a recent trend in Pakistan in the real estate sector of launching new housing societies
and pre booking of land of different areas for gated/non-gated communities. This segment of the
market has generated a lot of money for the real estate sector which was never hailed as a core real
estate business. But it has been successful in making huge returns in limited amount of time for the
housing societies, real estate brokers and some customers too. It can be compared with Ponzi schemes
in which the people investing first have the highest possibility of making greatest returns.

There are different vantage points for making these profits. Starting from opening of booking(of plots)
where the first phase of making money starts. This is accompanied by a controlled supply of booking
forms and files, to the general market ,by the Real Estate company and the marketing company or real
estate brokers involved having combined stake in that housing society. Initially a small supply of booking
forms, released by the most esteemed names in real estate market, creates a hype in the market and
thus creates a huge demand in the market. Once the price, of the booking form, appreciates and the
general public starts to buy these at much appreciated prices, the stakeholders involved start to sell
their holdings at very high prices and make a profit. More and more people start to get attracted to
these real estate projects expecting huge gains. Once the stake holders think that the market is about to
reach the saturation point they start selling their holdings at much higher prices in a coordinated
manner so as to gain maximum profits. Once the saturation point is reached an artificial over supply of
these booking forms is created hence bringing the prices down with most of the holdings in the hand of
general public. This creates an uncertainty in the market and people start selling most their holdings at a
very nominal price. Consequently these real estate brokers start buying back these booking forms at
much lower prices and hence another cycle of profit making may ensue.

The second cycle of profit making follows at the time of balloting of these booking form/files when the
booking forms are allocated numbers and locations on map. At this point the general public is also
making money from the process as most of the real estate holdings are among the general public. At this
point market manipulation by the real estate mafia becomes difficult since a substantial amount of
holdings lie with the public. Therefore at this stage the gains are much less and more time taking for the
real estate mafia.

The third profit making stage is at the time of allotment of possession where a similar demand arises
and the prices appreciate thus providing an opportunity for making money. Similar to previous scenario
the profit gains are much less as most of the holdings are among the general public but still some
worthwhile profits are made.
This is a new form of real estate brokerage which has blossomed in Pakistan during the last decade and
has created huge real estate giants in the country involving one of the biggest names.
Research Objective:

1. Studying in detail the case studies of real estate booms and busts in Pakistan.
2. Studying the nature of scams in the real estate market.
3. Data Collection regarding fluctuation of Prices with each cycle.
4. Improving of systems to ensure transparency and manipulation of real estate market.
5. It will help to study in detail the ways and means to stop market manipulation of these real
estate giants in Pakistan and helping people protect their hard earned money.
The paper is aimed to be published in the real estate journal of USA.