The Future of Formal Education in the Real Estate Sector of Pakistan
Real Estate has been the foundation of the ‘economy’ from time immemorial. From the inception of the concept of the right to private property to the state’s social contract, civilisations have grown and flourished on the basis of their real estate economy. The origins of real estate economy can be traced back to tenancy’ when lands were first owned by tribal leaders (tribalism), then by the kings (feudalism), and finally the landlords. Essentially, a barter system was established between the owner and the tenant, where the tenants cultivated lands for ‘owners’ in return for housing, safety, and security. Fast forward to the 18th Century, the industrial revolution disrupted the feudal economy; the free market capitalism then led to the initiation of neo-liberalism in the late 20th Century. This new economic system gave individuals (common man) the power and resources to own property and homes.
The booming digitisation trends have truly revolutionised the real estate sector and made it one of the fastest-growing economies in the world. The concept of ‘ownership of property has evolved from being a symbol of power to a tangible good that can be bought, sold, traded or leased out through mobile applications – and now Metaverse. Even though real estate has always been considered an interdisciplinary subject, taught with various interlinked aspects borrowed from the fields of sociology, data analytics, marketing, and urban law. However, due to the digitisation wave in the real estate sector, academic circles are beginning to remodel real estate as a specialised field of study for formal education (McGrath, 2020).
This article by the Iqbal Institute of Policy Studies will discuss the future of formal education in the real estate sector in terms of Real Estate Agents, formal education trends across the globe, and licensing of real estate professionals in Pakistan.
How will Formal Education Impact Real Estate Agents?
The evolution of the real estate industry has prompted academic circles to devise formal methods of study, from diplomas to specialized degrees at Undergraduate and Graduate levels. Even though real estate is the fastest growing industry in Pakistan, however, the absence of a proper regulatory framework turned it into the budding zone for money launderers. Resultantly, the government of Pakistan has taken active steps to regulate the real estate industry. To that end, the government recently made the registration of real estate agents with the Federal Board of Revenue (FBR) mandatory (Rana, 2021). This is the closest comparison we can make to the ‘Licensing System’ of real estate agents in the USA. If we study the USA as a model, the real estate agents are required to complete a compulsory real estate education course for being eligible to sit in the licensing examination (Kaplan, 2021). This is an effective model for Pakistan because a large number of young people are diverting towards the real estate sector as a primary career choice. However, a lack of formal education requirements has made it convenient for people to skip the rigours of formal education and earn a commission-based steady income.
The importance of specialized education can be assessed from the dynamics of the industry. To become a successful real estate agent; continuous knowledge of emerging trends is as significant as customer relationships. This rapidly evolving industry is designed to filter out those who don’t keep up with the recent developments in the real estate sector, which leads to despair and frustration amongst the youth. Formal education in real estate science will provide real estate agents with social acceptability and foundations of licensed professionals like lawyers, doctors, engineers or architects.
Formal Education Trends in Real Estate Sector
Digitisation has revolutionized the core values of the real estate industry through fast-paced technologies like proptech, contech and fintech. These technologies have become a part of the specialized disciplines for students aspiring to acquire formal education in real estate science. Currently, real estate based courses are taught as a part of the curriculum of specialized degrees in business schools. For instance, Columbia University currently offers a course in its MBA program, titled ‘Proptech and Real Estate Disruption’. The course is designed to familiarize students with the economic rationale behind the disruptions in the real estate industry in relation to proptech; which essentially refers to startups using disruptive technology to change the way we buy, rent, sell or manage property (Columbia Business School). Similarly, many other universities across the globe offer graduate and undergraduate degrees in real estate management. For example, Georgetown University offers a specialised Master’s Degree in real estate.
Global education trends in the real estate sector have also reached Pakistan as a result of the continuous efforts of private sector companies like Graana.com, Pakistan’s first online real estate marketplace, which has collaborated with the University of Central Punjab (UCP) to introduce Pakistan’s first Bachelor’s program in real estate management. Even though academic circles are deliberating to develop an efficient and sustainable model for real estate based degrees; however, the trends of formal education have indeed transformed from online virtual courses in real estate science to specialized bachelor’s and master’s programs for aspiring professionals (McGrath, 2020).
The Property Dealer Misnomer
A ‘Property Dealer’ is someone who acts as an agent or broker in real estate transactions. The term was popularized in the 90s when Pakistan was beginning to realize the potential of its evolving real estate industry. Soon the real estate sector became an ideal investment opportunity for people willing to inject surplus capital into urban economies. However, the absence of a regulatory framework resulted in property dealers taking advantage of the lacunas in the law. As a result, capital traps, encroachments, illegal possession of properties, integration of black money in real estate, and illegal construction became common. By the end of the 90s, property dealers had gained the unwanted notoriety that plagues the real estate professionals to date. However, a revolution in the real estate industry has attracted a large number of young professionals, aspiring to work as real estate agents or investment advisors.
In that regard, formal education and licensing/registration of real estate professionals with the FBR will legitimize becoming a ‘Real Estate Agent’ as a reputable professional. Moreover, real estate professionals will gain the trust of the customers for matters related to investments and evolving market trends; their advice will carry weight backed by the training from formal education. Another emerging trend of the future is the Real Estate Consultancy Firms, which will hire and train licensed/registered real estate professionals.
With the strong regulatory framework in place, formal education is the rising trend in the real estate industry across the globe. The education structure has evolved from virtual courses to professional degrees on undergraduate and graduate levels in real estate science. Furthermore, the government of Pakistan has made it mandatory for real estate agents to be registered with FBR by January 2022. The registered agents will be regulated through a set of rules and guidelines. The criteria to become a professional real estate agent will become stringent in the future due to regulatory requirements. Being the fastest growing industry, real estate is also evolving as a new field of study for higher education. Educational institutions around the world are developing different models to integrate real estate education in professional fields of study. Pakistan has also jumped on the bandwagon and formally launched a professional degree program in real estate management through the collaboration of Graana.com and UCP. It can be said that formal education will reinstate the faith of potential investors and customers in real estate professionals. Education has the potential to remove the stain of ‘property dealer’ from the real estate professionals, officiating them as advisors or consultants.