Sindh Lifts Seven-Year Ban on Commercial Use of Residential Plots
KARACHI, PAKISTAN — WEB DESK: The Sindh government has ended a seven-year restriction on converting residential plots for commercial use, reopening the way for regulated land-use changes in Karachi, Hyderabad and other parts of the province while retaining strict protections for amenity plots.
The Sindh Master Plan Authority has withdrawn the notification that had blocked residential-to-commercial land conversions since 2019. The move follows a May 12, 2026 order of Pakistan’s Federal Constitutional Court recalling earlier Supreme Court orders that had led to the restriction.
The change takes effect immediately.
However, officials have stressed an important distinction: the withdrawal does not automatically turn residential plots into commercial properties.
Property owners seeking a change of land use will still have to comply with relevant laws, zoning regulations and the applicable master plan, and obtain an NOC and approval from the competent authority before commercial activity can legally begin.
Why Was Commercialisation Banned?
The dispute dates back to Supreme Court orders issued on December 21, 2018 and January 22, 2019 concerning widespread conversion of residential and amenity land for commercial purposes in Karachi.
The court ordered an immediate ban on changes in land use, including conversions of residential and amenity plots for commercial purposes. The Sindh Building Control Authority subsequently issued a notification on January 24, 2019 implementing the restriction.
That regime remained in place for roughly seven years.
The legal position changed when the Federal Constitutional Court issued an order on May 12, 2026, recalling the earlier Supreme Court orders and consequential directions. The Sindh Master Plan Authority has now formally withdrawn the SBCA’s 2019 notification in response.
Not Every Residential Plot Can Become Commercial
The regulatory change is significant for Karachi’s property market, but it is not blanket permission for unrestricted commercialisation.
The Master Plan Authority says each proposed conversion will continue to be assessed under applicable zoning and planning requirements.
A property owner cannot simply convert a house into shops, offices, restaurants or another commercial operation solely because the 2019 notification has been withdrawn. Formal approval remains necessary.
This distinction is particularly important for buyers, builders and investors assessing the value of residential properties following the announcement.
Commercialisation Allowed on Declared Roads
Senior Director of the Sindh Master Plan Authority Shakeel Siddiqui told Express that commercialisation could proceed on a number of designated roads, subject to the required regulatory process.
The roads identified in the Express report include Shahrah-e-Faisal, Tariq Road, Rashid Minhas Road, University Road, Shahrah-e-Pakistan, Khalid Bin Waleed Road, Shaheed-e-Millat Road, Tipu Sultan Road, Stadium Road, Alamgir Road, Nishtar Road and several major roads in DHA and North Nazimabad.
The report lists 26 declared roads where commercialisation may be possible.
Eligibility based on location should still not be confused with automatic approval: individual plots remain subject to the relevant planning, zoning and NOC requirements.
Parks, Schools and Other Amenity Plots Remain Protected
The regulatory change does not open amenity plots to commercial development.
The authorities have specifically maintained protections covering land allocated for public and community purposes.
Plots designated for parks, hospitals, schools, mosques, playgrounds and graveyards cannot be converted into commercial or residential properties.
This is one of the most important limitations on the new regime.
The withdrawal of the residential conversion ban should therefore not be interpreted as allowing developers to commercialise public amenity land.
New Infrastructure Fee Formula Introduced
Alongside the policy change, Sindh authorities have introduced a new formula for distributing infrastructure fees collected when land use is changed.
For Karachi Division and Hyderabad district, the largest share — 45% — will go to the relevant Town Municipal Corporation.
The Sindh Master Plan Authority will receive 25%, the relevant Water and Sewerage Corporation 20%, and the Metropolitan or Municipal Corporation 10%.
The same 45%-25%-20%-10% formula will apply within municipal corporation limits in other divisional headquarters, including Mirpurkhas, Shaheed Benazirabad, Sukkur and Larkana.
In areas outside corporation jurisdictions, 75% of the fee will go to the relevant municipal committee, town committee or district council, while the Master Plan Authority will receive the remaining 25%.
The formula determines how collected infrastructure fees are distributed among public bodies; it should not be confused with the actual commercialisation fee rate payable by an individual property owner.
Builders Welcome Decision but Infrastructure Concerns Remain
The lifting of the restriction is expected to be welcomed by developers and businesses whose projects had remained stalled under the previous regime.
Association of Builders and Developers chairman Hassan Bakhshi welcomed the decision, saying the property sector had received relief after years of restrictions.
But he also warned against commercialisation without adequate planning and infrastructure improvements.
According to Bakhshi, uncontrolled development could add pressure to Karachi’s already strained traffic, water, sewerage and other municipal infrastructure. He argued that commercialisation on designated roads could generate employment and increase options for buyers, provided it was properly managed.
Potential Impact on Karachi Property Market
The decision could have a substantial impact on property values along designated commercial corridors because the potential for approved commercial use can increase the economic value of certain plots.
It could also revive development proposals that were unable to proceed under the seven-year restriction.
However, the scale of that impact will depend on how authorities apply zoning rules, infrastructure requirements, fees and NOC procedures.
The policy therefore represents a reopening of the regulatory route to commercialisation, rather than unrestricted permission to convert residential property.
That distinction will be critical for property owners and investors: a residential plot does not acquire commercial status merely because the province-wide restriction has ended.
What Property Owners Need to Know
The immediate practical position is that applications for change of land use can again be processed under the applicable regulatory framework.
Owners will still need to establish that their property is eligible under the relevant master plan and zoning rules, obtain required clearances and pay applicable fees.
Amenity land remains excluded.
The Sindh Master Plan Authority’s withdrawal of the 2019 notification therefore ends the blanket restriction while returning individual conversion decisions to the formal planning and approval system.
