Manahil Estate

Faisal Town Phase 2 warns to levy escalation charges – Major Blow to Investors

Faisal Town Phase 2 Escalation Charges

Faisal Town Phase 2 has recently started sending final warning notices to its members regarding payment of their dues and imposition of escalation charges. The notices are coming when the resale market of Faisal Town Phase 2 is in dire straits, with files/plots prices gradually sinking to the lowest ebb and investors suffering from heavy losses.

Escalation charges refer to additional charges applied to the actual price of the plot, so the base price of a plot will increase resulting in market rates further going down for such files. This is an unacceptable policy, and members should raise their voices over such exploitative tactics by housing schemes.

Following is a copy of the notice issued to members by Faisal Town Phase 2:

Faisal Town Phase 2 Notice

This is true that a housing society needs regular funds to continue with its development activities, but there are some inherent issues in the model of real estate investments that we follow here in Pakistan. Investors usually bite more than they can chew, and societies have no qualms about overselling their project due to lack of oversight of the Government departments.

Launched back in October 2022, Faisal Town phase 2 received overwhelming response from investors community across Pakistan as well as Overseas Pakistanis. Seeing the positive response, FT2 continued selling its files in bulk and swept billions of rupees from the market. Market estimates suggest more than 30,000 files sold within a month of its first launch in 2022. Investors booked multiple files hoping to earn short term ROI, but all hopes were dampened when the resale market performed poorly and prices went negative immediately after the buyers received their files.

Faisal Town knew fully well that they did’t have the NOC from RDA (which they are legally bound to obtain before selling any plot), and the resale market couldn’t improve until it got its NOC and develop a sizeable area of this large scale housing project. To make the matters worse, the society kept issuing more files, and even launched another block by the name of “Overseas Enclave” which also didn’t perform well. Later on, they launched commercial plots, and even conducted the ballot to collect advance installments from its members.

Hence, the society absorbed the meager demand in the market itself by new launches, and left the market swamped with oversupply of files. Faisal Town didn’t even make attempts to improve the market situation, and such harsh policies are going to further worsen the resale market situation (maybe they are happy buying back files at less than half of their sale price).

The reason to share this context is the audacity of the private housing schemes to exploit its members, but the societies must also realize that their investors have suffered badly over the past 2 years not only due to the economic situation but also the malpractices of these housing schemes.

In the case of Faisal Town phase 2, it is utterly unjustified to levy any penalties on its members until it fulfills the commitments made by its owner, Ch. Abdul Majeed, who had made tall claims himself in his meetings and interviews about huge returns to lure investors into buying more files.

The only acceptable action before sending any warnings or imposing any penalties would be a refund offer, so that any member who cannot continue with payments due to any reason can exit safely, and those who want to retain their plots can continue paying their installments. Without any exit offer, it is an outright exploitation of the members.

As there are thousands of members who can get affected by this policy, Faisal Town must reconsider its decision to levy any penalties at this stage and market situation. The society must realize that it can thrive only with investors’ confidence. Such large number of affectees may cause serious trouble for the society by resorting to legal forums, so better sense should prevail !

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