Pakistan's Housing Boom and Economic Growth
Housing construction is one of the largest sectors of most major economies in the world. In the United States, for example, housing is a significant contributor to the American economy, providing millions of Americans with jobs and generating hundreds of billions of dollars of economic output each year. It is also an important source of wealth building. Beyond economic measures, homeownership and adequate rental housing also contributes to society.
The construction and sale of new homes make direct contribution to GDP, based on the value of the housing built. However, the sales of existing homes do not enter into the calculation of the nation’s domestic output, just as a used car sales do not get entered because the transaction does not represent a new production. However, purchases related to the transaction of existing home sale do get included in the GDP. For example, all payments for services rendered, such as real estate agent commissions, home inspection, attorney, and loan origination fees, are included.
Currently, Pakistan has a serious housing crisis and needs about 7 million additional housing units now, according to the data presented at the World Bank Regional Conference on Housing last year.
According to BMI research, the country’s real estate sector continues to be dominated by the two major issues of a chronic shortage of housing against a backdrop of rapid urbanization and rising population and the impact of security factors on the risk appetite of investors and developers.
The first of these factors remains as intractable as ever, with the most recent estimates identifying shortfall of 7.9mn houses. By contrast, the current government is committed to building just 1 million houses. Other estimates paint a similar picture with the Punjab province, with a population of 82 million, said to be facing a shortage of 5 million houses. By some accounts, nationally there is an incremental demand for 700,000 units a year against the annual construction of just 150,000 units.
As to the second factor, the major projects currently moving forward are being executed by risk-tolerant developers from regions such as the Gulf Cooperation Council(GCC) and government or government-linked landowners in Pakistan. This has significantly reduced the scope to provide housing at the level required to supply the backlog. Recently, however, there are reports that Malaysian developers are coming to Pakistan, according to Malaysian news agency Bernama in August 2009. The Malaysian developers are negotiating to build some 500,000 low-cost houses annually in various parts of Pakistan.
The recent Dubai debt crisis will likely hurt some Pakistani workers in the Gulf region. However, the flip side of Dubai troubles is that many of these Gulf developers will look at Pakistan where real estate investments have always been winners, regardless of the political or economic environment. The supply has continued to lag demand for housing, retail and office properties.
The Gulf and Malaysian investments in housing can potentially help resuscitate Pakistan's currently moribund economy by creating millions of new jobs directly and indirectly. Construction is one of the most labor intensive economic activity requiring large numbers of workers, creating hundreds of thousands of jobs. And when the buyers move in, they will demand all kinds of products and services to furnish their homes, thereby creating further employment opportunities. All of this is offers a great recipe for reigniting economic growth and renewed prosperity in Pakistan.
A new wave of housing construction offers an opportunity to the PPP leadership to live up to at least one of their election promises included in their "roti, kapda and makaan" platform. Looking back at the history of the political platforms that have succeeded, what comes to mind is the name of President Franklin Roosevelt and his "New Deal" , as well as the successive US Presidents' policies on "The American Dream" of home ownership for all. These policies helped reduce poverty and enhanced education and housing for a large number of people in the US. New housing construction can also help reduce poverty in Pakistan.
Related Links:
Food, Clothing and Shelter in India, Pakistan
Pakistan Real Estate Report Q4 2009
Dubai Debt Crisis
Food, Clothing and Shelter For All
What Does Pakistani Democracy Deliver?
Urbanization in Pakistan Highest in South Asia
Housing: Global and Local Perspectives
Uncle Sam Saves Fannie and Freddie
Pakistan Attracts FDI Despite Security Concerns
Witness a Failed State: Try Pakistan's M2
Doing Business Rankings of Countries
The construction and sale of new homes make direct contribution to GDP, based on the value of the housing built. However, the sales of existing homes do not enter into the calculation of the nation’s domestic output, just as a used car sales do not get entered because the transaction does not represent a new production. However, purchases related to the transaction of existing home sale do get included in the GDP. For example, all payments for services rendered, such as real estate agent commissions, home inspection, attorney, and loan origination fees, are included.
Currently, Pakistan has a serious housing crisis and needs about 7 million additional housing units now, according to the data presented at the World Bank Regional Conference on Housing last year.
According to BMI research, the country’s real estate sector continues to be dominated by the two major issues of a chronic shortage of housing against a backdrop of rapid urbanization and rising population and the impact of security factors on the risk appetite of investors and developers.
The first of these factors remains as intractable as ever, with the most recent estimates identifying shortfall of 7.9mn houses. By contrast, the current government is committed to building just 1 million houses. Other estimates paint a similar picture with the Punjab province, with a population of 82 million, said to be facing a shortage of 5 million houses. By some accounts, nationally there is an incremental demand for 700,000 units a year against the annual construction of just 150,000 units.
As to the second factor, the major projects currently moving forward are being executed by risk-tolerant developers from regions such as the Gulf Cooperation Council(GCC) and government or government-linked landowners in Pakistan. This has significantly reduced the scope to provide housing at the level required to supply the backlog. Recently, however, there are reports that Malaysian developers are coming to Pakistan, according to Malaysian news agency Bernama in August 2009. The Malaysian developers are negotiating to build some 500,000 low-cost houses annually in various parts of Pakistan.
The recent Dubai debt crisis will likely hurt some Pakistani workers in the Gulf region. However, the flip side of Dubai troubles is that many of these Gulf developers will look at Pakistan where real estate investments have always been winners, regardless of the political or economic environment. The supply has continued to lag demand for housing, retail and office properties.
The Gulf and Malaysian investments in housing can potentially help resuscitate Pakistan's currently moribund economy by creating millions of new jobs directly and indirectly. Construction is one of the most labor intensive economic activity requiring large numbers of workers, creating hundreds of thousands of jobs. And when the buyers move in, they will demand all kinds of products and services to furnish their homes, thereby creating further employment opportunities. All of this is offers a great recipe for reigniting economic growth and renewed prosperity in Pakistan.
A new wave of housing construction offers an opportunity to the PPP leadership to live up to at least one of their election promises included in their "roti, kapda and makaan" platform. Looking back at the history of the political platforms that have succeeded, what comes to mind is the name of President Franklin Roosevelt and his "New Deal" , as well as the successive US Presidents' policies on "The American Dream" of home ownership for all. These policies helped reduce poverty and enhanced education and housing for a large number of people in the US. New housing construction can also help reduce poverty in Pakistan.
Related Links:
Food, Clothing and Shelter in India, Pakistan
Pakistan Real Estate Report Q4 2009
Dubai Debt Crisis
Food, Clothing and Shelter For All
What Does Pakistani Democracy Deliver?
Urbanization in Pakistan Highest in South Asia
Housing: Global and Local Perspectives
Uncle Sam Saves Fannie and Freddie
Pakistan Attracts FDI Despite Security Concerns
Witness a Failed State: Try Pakistan's M2
Doing Business Rankings of Countries
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It says that "Pakistan's finance-to-GDP ratio in below 1 percent. The ratio in developed countries is 50-70 percent, and 7 percent in India."
It adds that "in spite of active and robust financial sector reforms led by the State Bank of Pakistan [SBP] in the recent decade, the unweildy land administration environment, unprecedented rises in land prices, and inadequate mortgage lender experience with lower-income housing have prevented the market from advancing in the provision of housing and housing finance solutions."
...as the middle class of the city has expanded, real estate developers have now increasingly begun to offer more affordable variants of the gated housing community, primarily by reducing the size of the average house. Builders predict the fastest growth in demand for the 125-square-yard duplex or townhouse, which is made affordable by offering an instalment plan for the full price, which can start as low as Rs1.2 million.
“The higher end of the market is saturated. Now the industry needs to cater to the rapidly growing middle class that is seeking comfortable housing facilities,” said Abdul Aleem Khan, who runs a real estate development business based out of Lahore.
“After completing one project with mostly larger units, I announced that I would build one with smaller, more affordable units and an easy instalment plan,” he said. “The response was very positive. People clearly need affordable housing and this [middle class] is a very neglected market segment.”
Eden Housing, one of the largest real estate companies in Pakistan, was the first to create such housing schemes in the 1990s, which typically include better roads and infrastructure than the rest of the city they are in. Since then, this formula has been copied by many developers, who saw how rapidly Eden was able to sell off its inventory.
“To live in such a community, which provides you with good infrastructure and security, is relaxing,” said Mujahid Ali, a resident of Eden Avenue, a gated community in Lahore developed by Eden Housing. “I moved here two years ago and have the peace of mind that there is no street crime or robberies within the scheme’s premises. My job requires me to visit other cities and I used to worry for my family’s safety. But since moving here, I can travel without that tension.”
Many of the facilities have hired a full-time staff of maintenance staff. The security is often provided by one of the more than 600 private security companies that now hire out both equipment and guards to a Pakistani middle class that is increasingly concerned for its safety.
Lahore has at least two dozen of these gated communities. In keeping with the temperament of the people in the Central Punjab region, there are hardly any apartments. Most of the housing units are bungalows, townhouses or duplexes. Some of the largest units can be spread over as much as 1,200 square yards, with the smallest ones generally being no more than 125 square yards. Other common sizes include 150 and 200 square yard units.
Builders often locate these communities close to major thoroughfares. Yet as real estate within Lahore proper grows increasingly scarce, many developers have begun to create such offerings on the outskirts of the city, taking advantage of the improvements in the transportation infrastructure in Punjab that includes a highway network comparable to that in some parts of the developed world. Once Lahore’s Ring Road is completed, such housing projects will be able to offer even faster access to the inner city.
Khan, the real estate developer, says that nearly all of the buyers of houses in these projects tend to be buying their own primary residences. “These schemes are not really meant for investors,” he said.
http://tribune.com.pk/story/328177/the-rise-of-pakistans-middle-class-as-crime-rises-property-developers-beef-up-security/
While the private sector performed magnificently whenever provided with an enabling environment, the response of the present government remains mired in confusion and inertia. Installed capacity was a paltry nine million tons in 1990, much of it being grossly inefficient as it was based on the outmoded wet process technology. As demand rose, the industry responded by launching a massive expansion programme. Over time, the installed capacity rose to nearly 44 million tons, a magnificent feat by any standards and a credit to the entrepreneurial spirit of the private sector.
However a number of adverse developments from 2007 onwards have brought the GDP growth to some two per cent. It is being reported by the media that the revised allocation after the latest cut, is a measly Rs180 billion. High inflation combined with slump in real estate and increase in the cost of production due to weakness of the dollar, resulting in a spike in coal prices, electricity and freight rates and accounting for 70 per cent of the cost, has adversely affected consumption while production cost soars, retarding construction activity in the private sector.
The current economic environment including low public spending has had disastrous consequences for the cement sector.
Local sales during the first half of the current fiscal year have witnessed an eight per cent year on year drop to around 10.1 million tons. Simultaneously, exports fell from 5.6 million tons to 4.6 million tons. The bad news does not end here. On top of low volumes, the average cement FOB prices fell to $48 per ton during the corresponding period— a level low enough to hardly break even.
Consequently cement sales through the sea route alone declined by about one third. Cement sales to India were also hard hit on account of non renewal of BIS certification (a quality control licence). Burdened with high energy and freight costs as well, the manufactures are desperate for some government support.
But no support is forthcoming. One would expect the government’s economic planners to appreciate the tremendous odds against which the industry is battling. If care of the cement industry is in short supply, then some thought may be given to the enormous exposure of the banks which have provided financing to the tune of $1.5 billion to the sector during 2003-2008.
http://www.dawn.com/2011/03/14/opportunities-missed.html
Cement is one of the most important industries of Pakistan. Limestone and gypsum are the main raw materials for manufacturing of cement and they are present in abundance in Pakistan along with good supply of Natural gas. This great potential makes the country capable of producing cement not only for local use but also for export as well. Pakistan cement industry has exporting cement to the neighbouring countries like U.A.E, Afghanistan, India, Iraq and Russia.
At present there are 22 cement plants are operating in Pakistan with the production of approximately 9.403 million tonnes. Out of these 22 cement plants, 17 are private and 5 are publicr. 11 new plants are also in planning stage and the capacity of these plants is estimated around 12.988 million tonnes. The industry has achieved a growth of 32% with the domestic demand increasing by around 24.95% and the exports by nearly 111.86% according to the financial year end June 30, 2007 ratings. Recently the country has been able to export to some of the African countries as well.
Cement industry is divided into two main regions; the northern and the southern region. Northern region is producing 35.18 million tonnes and southern region is producing 8.89 million tonnes of cement per year.
Per capita consumption of cement is an indicator of rate with which any country is developing. Unfortunately per capita consumption of cement in Pakistan is less if we compare it with other developing countries. It is about 131 kg per person annually; whereas world average is about 270 kg. This less consumption is due to the negligence given to the construction sector. However in last few years consumption of cement showed some rise due to increased commercial activities, infrastructural development and increasing demand of constructing houses.
Local demand for the year 2007-2008 was 20 million tonnes. Pakistan has started exporting cement few years back and has earned repute as a premium quality cement producer in the global market in this short period. Pakistan exported around 7.716 million tonnes of cement in 2007-2008 and earned a foreign exchange of 459 million dollars. There is surely a great potential of growth in this industry in Pakistan.
http://pakistan360degrees.contentcreatorz.com/cement-industry-of-pakistan/
Beginning with just 500,000 tons in 1947, Pakistan's cement production almost tripled from 16 million tons in 2000 to 44 million tons in 2010.
At 145 Kg per person, Pakistan's cement consumption is up from 75 Kg in 2003, but still about half of the world per capita consumption average of 270 Kg.
http://www.slideshare.net/msaadafridi/cement-industry-of-pakistan
The local bourse broke the 14,000 level on an intraday basis for the first time since 16th May 2008. The positive sentiment was on the back of expectations of the issuance of the much awaited SRO on capital gain tax rules. Additional impetus also came after the release of the robust cement dispatches data and easing of Consumer Price Index (CPI) to 10.8 per cent in March-12. As a result, the KSE 100 Index gained 113 points (up 0.8 per cent WoW) to close at 13,875 level. Volumes improved by 5 per cent WoW to 387mn shares indicating the upbeat investor sentiments. Foreigners, on the other hand, offloaded shares worth $1.6 million. Pakistan Bureau of Statistics (PBS) released CPI figure for the month of March-12 during the week. CPI clocked in at 10.8 per cent YoY in March-12, down from 11.0 per cent in February-12. The marginal improvement in the headline inflation came on the back of ease in food prices.
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Release of robust cement dispatches numbers kept the cement stocks in the limelight once again. Consequently, LUCK and DGKC both outperformed the market by 11.6 per cent and 6.9 per cent respectively. Conversely, HUBC underperformed the market by 2.4 per cent on news that the company’s dividend payments may get delayed after FBR froze the company accounts.
Though the market increased by 0.8 per cent during the week but it managed to cross 14,000 points level on intraday basis during the week. Cement stocks remained in the limelight on the back of increase in export price to Afghanistan and expectations of healthy earnings. Restoration of gas supply to Engro Corp new plant also kept the stock in investors’ radar. While lower than expected inflation numbers for March did not have any impact on the market sentiments.
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As per monthly data released by All Pakistan Cement Manufacturers Association (APCMA) total dispatches witnessed a modest rise of 4 per cent YoY to 23.63m tons in 9MFY12 as against the total dispatches of 22.81m tons in the corresponding period last year. During the 9MFY12 growth in overall industry dispatches was primarily on account of 8 per cent YoY rise in local dispatches to 17.39m tons in comparison of the local dispatches of 16.04m tons in the same period last year. Local dispatches were higher in north zone by 7 per cent YoY to 14.09m tons and in south zone by a sharp 13 per cent YoY to 3.30m tons. On MoM basis, local dispatches were seen substantially higher by 32 per cent MoM mainly because of the reconstruction activities in flood affected areas, normal construction and on going work on mega projects.
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/09-Apr-2012/cement-sector-outperforms-others-at-kse
Bahria Town has won five highly prestigious awards under various categories in Kuala Lumpur, Malaysia at the award ceremony for “Asia Pacific International Property Awards 2012-13”, the world’s most prestigious competition recognised as the highest standard of excellence throughout the global industry. Bahria Town was the only property developer from Pakistan to win the prestigious property awards. Out of the five accolades two received were in the “Five Star” category whilst the other three were ranked as “Highly Commended”, another great achievement and proud moment Bahria Town earns for Pakistan. The awards are a sure proof that Bahria Town standards are at par with the global standards, says a press release. Speaking on the achievement, Malik Riaz Hussain, Chairman Bahria Town, said “This is an extremely proud moment for not only Bahria Town but the entire nation. We are honored to be a part of a historical moment in real estate sector of Pakistan. The accolades are a testament of the exceptional standards maintained in all our developments. We will Inshallah continue to deliver world class projects exceeding everyone’s expectations.”
Bahria Golf City Islamabad triumphed with two Five Star honors. It won the “Best Five Star Golf Development” award for the master planning and provision of complete international standard facilities and amenities along with the 18-hole USGA standard golf course. While the Sheraton Golf & Country Club in Bahria Golf City won for “Best Five Star Leisure Architecture”. Bahria Golf City Islamabad is a branded golf resort community with Sheraton Hotel, villas, apartments and plots to be launched soon.
Bahria Town’s first project in Karachi, Bahria Town Icon, also to be Pakistan’s tallest high-rise building was ranked ”Highly Commended High-rise Architecture”. Green Valley, Pakistan’s first Premium Supermarket, also a project of Bahria Town with its flagship store at the Mall of Lahore, won a “Highly Commended Retail Interior” award for its outstanding retail environment.
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/20-May-2012/bahria-town-puts-pakistan-on-global-real-estate-map
The UN refugee agency has joined local authorities in handing over ownership of 400 new one-room homes to a fishing community in Pakistan left homeless by devastating floods in 2010.
The families receiving the new shelters belong to the Jam community, which for decades has lived along the banks of the Indus River in makeshift huts, or simply under their boats. Their homes and what few belongings they had were washed away by the floods that inundated large areas of Pakistan in 2010. UNHCR wrote about their plight in a story published on this web site in May last year.
"We're not used to such houses," said Zakir Hussain, who moved into the Boat Model Town with his family several months ago. "At first, we experienced a bit of culture shock, but now we are so grateful to have a solid roof over our heads."
The land for the new development was provided by the government of Punjab province and each unit consists of one common room, a small kitchen and separate toilet.
The families' new ownership of land and property is complemented by the gradual restoration of many basic rights that this marginalized group have been denied for decades. There are also plans for them to receive national identity cards, and they will have their own community centre, a mosque and water supply as well as access to health care and education.
The shelters are part of nearly 4,000 one-room houses that UNHCR has constructed for flood victims in areas of Punjab that were damaged in the floods. The agency's flood response interventions targeted the most vulnerable among the flood victims, including people with disabilities, female headed households and families unable to rebuild their own houses.
"We used to drink river water and we had no health and sanitation facilities, no schooling for the children," said Zakir's wife, Bashir, recalling their former lives. "For us, who were born and grew up on the boats, having a home and being able to live a normal life is like a dream."
Speaking at the handover ceremony, UNHCR Representative in Pakistan Neill Wright thanked the government of Pakistan and, in particular the Punjab administration, for providing the land. "Access to shelter is a basic human right," he said. "I am proud that together with government and non-governmental partners, UNHCR has been able to support the government in assisting some of the most vulnerable victims of the devastating 2010 floods."
In addition to the shelters in Punjab, UNHCR has constructed nearly 30,000 additional homes in the provinces of Sindh, Balochistan and Khyber Pakhtunkhwa, which were also affected by floods in 2010 and again in 2011.
http://www.unhcr.org/4fbcd6f09.html
In Pakistan, average monthly expenditure on rent per household has increased at an annual rate of over 13% for the last nine years, according to the Pakistan Bureau of Statistics (PBS).
A look at the Household Integrated Economic Survey (HIES) released by the PBS reveals that an average Pakistani family spent Rs888 every month on house rent in 2001-02; which rose to Rs2,693 in 2010-11; signifying an annualised increase of 13.12% over a period of nine years.
Interestingly, in the same period, annual rise in average house rent in rural areas was 2.7% higher than the corresponding increase in urban areas – even though 85.63% of the populace of rural areas lives in owner-occupied houses. In contrast, 75.79% of the urban population lives in houses that they own.
Urban housing
The highest number of people living in rented houses in urban areas belongs to the third quintile of the population in terms of income distribution at 22.38%. The third quintile in income distribution is representative of the middle class in a society.
The lowest number of people living in rented houses in urban areas – 15.93% – belongs to the fifth quintile of the income distribution. This suggests that the richest people in urban areas are most likely to own the house they live in.
The HIES figures also reveal that the poorest people, belonging to the first quintile in urban areas, end up spending 83% more on house rent as compared to a comparable group living in rural areas. Similarly, the richest people belonging to the fifth quintile living in urban areas tend to spend 220% more on average house rent per household, as compared to a comparable segment of the population living in rural areas.
Home ownership and per-capita incomes
“Rise in per-capita income does not seem to display any correlation with the percentage of owner-occupied houses in Pakistan,” economist Kaiser Bengali said, while talking to The Express Tribune. “In many cases, someone who works as a peon and earns a low monthly income can still own a house in Pakistan. This is so because people belonging to certain professions – such as the civil service, military, police, government teachers, journalists etc – receive free or subsidised land from the government or other trusts.”
Data supports Bengali’s view. Pakistan’s Gross National Income (GNI) per capita, formerly known as the Gross National Product per capita, increased by 9.62% annually between 2002 and 2011; but the number of persons living in owner-occupied houses over the same period remained almost stagnant at around 79% of the population.
Bengali says an overwhelming majority of Pakistanis can afford to live in their own houses because the free-market mechanism does not actually operate in the country’s real estate sector. Many people receive land on subsidised rates, he informs us, because of professional affiliations. “The government announces housing schemes regularly for its employees in different ministries and departments. That enables people to acquire land at negligible costs,” he says; adding that land is the primary expense in real estate, because physical structures can be built gradually over an extended period of time.
http://tribune.com.pk/story/414818/real-estate-the-pakistani-housing-and-accommodation-market/
People from all over Pakistan gave an overwhelming response to Bahria Town Karachi Project, according to the registration process which concluded on Friday.
According to a press release, people swarmed the Bahria Town offices, branches and customer support centres as soon as it announced the registration process. However, the registration process reached its peak as the deadline approached.
The BT has announced three projects – Bahria Town Icon, Bahria Town Tower and Bahria Town Karachi – in the megacity with the aim to contribute to the economic activity in the country and lay foundation of a prosperous Pakistan.
“The Bahria Town commits to complete and hand over the projects on the stipulated time,” says the press release. All projects will have 100% power backup, a foolproof security system, spacious parking and complete maintenance.
http://tribune.com.pk/story/613784/bahria-town-karachi-projects-received-overwhelming-response/
After passing through a correction phase of nearly five months, the real estate market in Lahore is once again on the path of growth. However, there are a number of reasons why the extent of the growth may not meet investors’ expectations.
For the past few years, developers, after failing to find a suitable place in Lahore, have tended to focus on neglected but other populous cities of Punjab including Multan, Faisalabad, Gujranwala and Sialkot.
Hashu Group is one of them, Bahria town, city housing schemes (once a part of Bahria town) are the others. The latest name is the Defence Housing Authority (DHA). Since DHA is the most trusted name for any investor – in Pakistan and overseas – people find a reasonable alternate to invest.
Gujranwala, Multan and Bahawalpur are three cities where DHA has planned to establish housing societies, among which the sale and purchase for DHA Gujranwala has already kicked off. Such developments are observed as a positive for the long-term growth of the real estate sector.
“This spread out is good for the market in general,” said Mian Talat, chief executive officer at Talat Enterprisers, a real estate firm. “People now have more choices to invest and live according to their convenience.
The correction in the Karachi Stock Exchange is also a factor behind the recovery of the real estate market recovery.
Common investors of both markets believe that the KSE may crash any time. Given the situation, investors tend to switch to the real estate market. When stock index starts declining, many investors switch over to the real estate market and this is what is happening exactly now”, Talat added.
Few years back, Lahore, Karachi and Islamabad/Rawalpindi were the only places where investors found some room to put their money in for some profits. However, these cities are now pushing their limits — Lahore’s boundaries are now merging with some of its districts due to various factors.
Property prices in Lahore, despite almost a 20% correction in these five months, are quite abnormal. It is hard to find a piece of one kanal of land in a decent housing scheme below Rs10 million. If the same amount of land is located in a prime location inside a housing schemes then the price exceeds Rs20 million.
“Since Lahore is one of the major beneficiaries of the real estate boom, it is unlikely that real estate activities are stalled in the future. This is due to developments of housing schemes in other cities”, said Waseem Tariq, Chief Executive Officer of F-1 Properties. “The price fluctuation mechanism for real estate, as per our expectations, will be solid now.”
http://tribune.com.pk/story/675018/real-estate-market-hits-growth-trail-again/
The visitors also appreciated the Jang Media Group efforts for creation of awareness and consultancy for the general public regarding the purchase of land or house of their dream through Dream Home Expo. They enjoyed food at food courts, children enjoyed puppet show and entertainment games there. The representatives of the companies who established their stalls provided consultancy and guideline to the visitors about their future land purchase and investment. The stall holders of big builders, real estate, home appliances, paint, and furniture brands told the visitors that how they can amicably utilise their budget. They vowed to participate in future Expo of Jang Media Group too.
The participants of the Expo were Izhar Monnoo Developers, Athar Marketing Network, Eden Housing Ltd, Paradise Holdings, Bahria Town, Start Marketing, Fast Marketing, Green Land Housing, Orient Group of Companies, Super Asia, SA Garden, Royal Residencia, NM estate, Athar Associates, Ali Saqlain Real Estate & Builders, Haroon Estate, LDA City, Brighto Paints, Hapilac Paints, Master City Gujranwala, Honesty Estate, Boss Furniture, Hayat Lahore, Sheranwala Heights, Sonica-Chawla Group, Venus, G M Cable, City Estate, Alfa Estate, Value Group, Royal Estate and others. It is pertinent to mention here that the Dream Home Expo 2015 was opened by the Punjab Minister for Excise & Taxation Mian Mujtaba Shuja-ur-Rehman.
http://www.thenews.com.pk/Todays-News-5-353427-Dream-Home-Expo-2015-concludes
Pakistan's property boom is here, but is it here forever?
https://tribune.com.pk/story/1385594/property-boom-forever/
KARACHI: Everyone in Karachi believes that the safest and most lucrative investment is in the real estate sector these days since it provides the best returns with much less risk and effort.
That is why, every other day, housing schemes are being launched. It means that the property boom is here. But is it here forever? That’s the million-dollar question.
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It is true that per square metre prices in Karachi ($760.78) are much lower than average per square metre prices ($8,824.60) in the metropolitans.
However, we must realise that the fundamental value of a real estate investment is largely influenced by its rental value. Rent-to-price ratio in Karachi (0.54) is lower than the ratio of Dubai (0.83) only. Shanghai, Mumbai and Singapore have much lower rent-to-price ratios than Karachi.
This means that, on average, rents in Karachi have already peaked as a return on investment relative to other big cities. Furthermore, people in Karachi are already paying much more rent in comparison to their salaries.
Rent-to-salary ratio of Karachi (1.30) is only lower than the ratio of Mumbai (2.07) and Shanghai (1.88). Dubai and Singapore have lower rent-to-salary ratios.
This means that, on average, people in Karachi are paying too much rent in comparison to their income when compared with other big cities.
From Dubai back to Pakistan: the real estate investors’ journey
The only plausible reason for such high prices in Karachi is the burial of illicit money in the property market. Furthermore, tax avoidance also makes property investment a lucrative strategy.
A few changes in regulations (filer/non-filer issue) have been tried to curb the above two avenues. Otherwise, as per the rental yield analysis, fundamentals of property investment in Karachi seem very weak.
https://www.khaleejtimes.com/business/real-estate/why-its-a-good-time-to-invest-in-pakistans-real-estate
Factors such as federal budget, law amendments and introduction of real estate investment trust have influenced sector's advancement
akistan's real estate industry continues to evolve as companies try to resolve real estate complexities in order to increase its growth, experts have revealed.
Factors such as the federal budget, law amendments and the introduction of the real estate investment trust have influenced the advancement of the industry. According to reports, investors have pulled out money from several banks in Pakistan after the introduction of 0.3 to 0.6 per cent withholding tax on filers and non-filers on tax returns.
These components, along with the rise of safe property investment bets in various parts of the country and abroad, encourage Pakistanis and non-resident Pakistanis (NRPs) to invest in valuable long-term investments compared to short-term purchases.
Showcasing the change in the industry, this year's International Real Estate and Investment Show brings the third Pakistan Property Exhibition in Abu Dhabi. The specialised event, held with the support of the Pakistan Embassy, Pakistan Business Council and Pakistan Association Dubai, showcases the country's leading developers and realty agents under one roof to showcase the best options for investment, provide spot sales and learn about the leading insights into the market. Visitors can expect to see properties from cities including Islamabad, Lahore, Karachi, Gwadar, Gujranwala and many more.
"Studies have continuously shown new global trends that the real estate market in Pakistan is tapping into. Apart from new demographic movements, Pakistan has also witnessed a heavy intercity migration over the last five years due to security and economic benefits that specific cities offer," said Antoine Georges, managing director of Dome Exhibitions. "The International Real Estate Exhibition Show enables Pakistanis to secure homes and investment properties in their country by bringing the opportunities to them through the Pakistan Property Exhibition. The pavilion aims to attract more than 10,000 Pakistani investors from the UAE."
To be held at the Abu Dhabi National Exhibition Centre from November 2-4, the exhibition enables Pakistan's realty giants such as DHA, Model Housing Lahore, New Lahore City and Bahria Town to showcase the latest properties available for aspiring buyers.
Real estate and investment companies will also have the chance to market their products to Pakistani investors through well-tailored marketing strategies made available by marketers such as Athar Marketing, Star Marketing, Midas Group and Q&A Marketing and more.
http://www.worldbank.org/en/news/press-release/2018/03/29/housing-finance-in-pakistan-to-become-accessible-and-affordable
The World Bank today approved $145 million to expand home owner-ship including women and the poor through access to affordable housing finance in Pakistan.
The Pakistan Housing Finance Project (PHFP) will support Government of Pakistan’s vision and strategy for housing development. The project will extend financial and technical assistance to Pakistan Mortgage Refinancing Company (PMRC), the Planning Commission (PC), and other institutions to increase availability of mortgage financing for households. Nearly a third of country’s population does not own homes and this pressure is rising with growing demand.
“This project will spur the development of housing mortgage market in the country and make housing fi-nance affordable and reachable to many Pakistanis,” said Illango Patchamuthu, World Bank Country Di-rector for Pakistan. “The beneficiaries will include women and low-income groups through improved incen-tives for ecofriendly homes.”
The project adopts an innovative approach including crowding in commercial financing for home ownership and providing greater incentives for women to become home owners. It also incentivizes people to build energy efficient and green homes and adopt climate and disaster-resilient construction designs and materi-als.
“Pakistan’s mortgage finance to Gross Domestic Product ratio of 0.25 percent is extremely low compared to the South Asia average of 3.4 percent,” said Korotoumou Ouattara, World Bank Senior Financial Sector Economist. “There is a significant market gap across all segments of the population. The creation of PMRC marks an important step in achieving the Government of Pakistan’s objective to improve access to housing finance in the country. The project will address the liquidity constraints of lenders, support capital market development, and create an enabling environment for a sound national housing policy.”
PHFP is financed by the International Development Association, the World Bank’s fund for the poor, with a maturity of 25 years, including a grace period of 5 years.
https://www.thenews.com.pk/latest/381581-naya-pakistan-housing-programme-10-more-cities-to-be-part-of-scheme
The government has decided to extend `Apna Ghar Housing Scheme’ to 10 more cities of Punjab and applications for registration form submission will be collected for these cities in January 2019.
This scheme has been extended to more cities of the country to fulfill housing needs of the poor segments of the society and the government will leave no stone unturned to achieve the task of constructing five million houses, the sources in the Housing Ministry told APP here on Tuesday.
The sources said that it has been decided to extend Apna Ghar Housing Scheme in 10 more major cities and forms will be collected in the first month of nest year. The cities being included in the next projects are Lahore, Multan, Rahim Yar Khan, Layyah, Bahawalpur, Vehari, Kasur, Sialkot, Jhelum and Gujranwala.
It is to mention that 5 million houses would be constructed under this scheme while first phase of the project was announced for seven cities which include Islamabad, Sukkar, Gilgit, Muzaffarabad, Quetta, Swat and Faisalabad.
Federal Housing Taskforce and the government of Punjab have completed the initial preparations for the project while registration forms of the scheme are available on website of NADRA while it can be obtained from District Housing Program Office from October 22, 2018 for the first phase.
The scheme’s pilot project in various cities is currently underway and people would be greatly benefitted from this scheme besides economic boom in the country, the sources maintained.
Egyptian billionaire Naguib Sawiris has offered to build 100,000 housing units in Pakistan to help realize Prime Minister Imran Khan’s dream of an ‘ambitious’ housing project, officials said on Friday.
“Naguib Sawiris has expressed his will to invest in 100,000 units of affordable housing to help prime minister (Imran Khan) in his vision toward Pakistan,” Tarek Hamdy, Chief Executive officer of Elite Estates — a partnership between Ora Developer and Saif Holding — told Arab News in an exclusive interview.
Owned by Sawiris, Ora Developers is already engaged in the construction of a multibillion-dollar housing scheme named ‘Eighteen’ which was launched in 2017 in Islamabad with local partners, Saif Group and Kohistan Builders.
Sawiris’ first investment in Pakistan was in Mobilink, a cellular operator.
PM Khan in October 2018 had launched ‘Naya’ (New) Pakistan Housing Project in line with his party’s election manifesto, which promised fivr million houses for the poor.
Hamdy says they have “set rules or guidelines of the way of doing things” that apply to every real estate projects — whether they are affordable or high value units.
“We will use our experience and knowhow to deliver this properly to the people of Pakistan,” he added.
Since the announcement of the low-cost housing project for the poor, the scheme has been at the heart of all political and economic discourses with several calling it too ambitious.
“This scheme is very ambitious yet very promising for the people of Pakistan. I think all the developers should help in this scheme. You cannot solely rely on the government to build five million houses,” Hamdy said.
Recently, the governor of Pakistan’s central bank had said that the massive housing project would require financing of upto Rs 17 trillion.
Hamdy believes that the promise of building five million affordable housing units cannot be realized in a short span of time. “I think the plan is right but it has to be in stages, has to be in steps. It could be achievable obviously that is not the project (to be achieved) in one or two years... may take few good years, may be couple of decades to be achieved,” he said.
In the Islamabad project the Ora Developers own a 60 percent stake in the project comprising a five-star hotel, 1,068 housing units, 921 residential apartments, business parks, hospitals, schools and other educational facilities and 13 office buildings, and a golf course. The networth of the project is $2 billion.
The next cities on the radar for real estate projects are Lahore, Karachi, and Faisalabad. “We intend to do more, we intend to invest more. I think that our portfolio of real estate could come to $10 billion worth of investments in the next five to 10 years including all the projects that we intent to do,” Hamdy said.
Pakistan’s housing sector is marred by frauds, scams and unfinished schemes which has been discouraging many potential investors from venturing into the sector. However, Hamdy says he is confident of delivering the promise by 2021.
Analysts say that Pakistan’s housing sector offers great opportunities for investment due to increasing demand. “According to estimates, the current real estate market value is around Rs900 billion which is three times that of the GDP,” Saad Hashmey, an analyst at Topline Securities, told Arab News, adding that the PM’s housing project is the need of the hour.
Pakistan faces a shortage of nearly 12 million housing units that may require a massive investment of around $180 billion, according to the former Chairman of the Association of Builders and Developers, Arif Yousuf Jeewa.
Pakistan expects to attract more than $40 billion foreign direct investment in the next five years in oil refining, petrochemical, mining, renewable energy, and real estate sectors. “We estimate that roughly around $40 billion investment will be made by three countries (Saudi Arabia, the UAE, and China) during the next three to five years,” Pakistan Board of Investment BoI chief, Haroon Sharif had told Arab News earlier, adding that “the investment would start materializing within the next two years”.
Pakistan suffered at the hands of corruption and irregularities over the span of last ten years and it will require time to set it right, said Chaudhry Aneel Musarrat, Prime Minister Imran Khan's adviser and friend.
“The last ten years witnessed high incidence of mismanagement, poor decisions and wastage of national money,” he told Geo News. “It will require time to repair such a massive backlog. Had the PTI-led government not aggressively controlled over such malpractices, the situation would have gone far worse.”
The PM’s adviser also informed that Prime Minister Imran’s Naya Pakistan Housing scheme for five million houses has already been kick-started in different cities of Pakistan, including Quetta, Islamabad, and Faisalabad. The project is underway on seven locations in Pakistan, he pointed out, adding private developers also are going to contribute shortly.
He said the government’s foremost responsibility is to follow through the process of eliminating corruption and keeping up the accountability. “Khan Sahib said he will abolish corruption from Pakistan. Now, the corrupt people are being subjected to accountability,” he said.
The pilferage and robbery of the national coffers will come to an end, he added.
Musarrat also lauded the services rendered by the Pakistan’s armed forces. Services of the armed forces are highly commendable, as they have laid down their lives to fortify the country’s defence, he remarked.
The Pakistan Army is one of the best institutions in the world and we should thank God that they have curbed extremism and terrorism in the country, he pointed out.
Housing & Construction Industry of Pakistan
Housing & Construction Sector is among the identified sectors by the Government of Pakistan as the driver of economical growth. A spurt in activity in this sector unleashes a chain reaction in other allied industries. It is also said that no less than 60 industries are linked to construction & housing sector.
https://www.buildasia.net/page.php?id=143
Investment Potential in Housing Sector
There is an annual shortfall of 270,000 housing units at present while the backlog of around 7.0 million units is in addition. The Prime Minister has issued a number of policy guidelines under “HOUSING FOR ALL” program for launching housing schemes for Government employees & provision of infrastructure to the housing development schemes. The Government has identified housing and construction as one of the major drivers of growth and has undertaken a number of measures to give impetus to this Sector which have helped reviving construction activities in the Country. Some of these include:
â–ª Significant reduction in duties and taxes on import of building materials including steel & its products, Construction Machinery & Equipment
â–ª Removing uncertainties from the real estate market by computerizing ownership documents
â–ª Free Trade Agreement between Pakistan & China.
Huge investments are pouring in from international investors from UAE, Singapore, Malaysia, China etc. who have committed for US$ 43 billion on two islands of Bin Qasim, US$68 billion on a New City Project in Hawksbay, Karachi and are also executing mega housing projects in Lahore, Gwadar, Mangla & DHA Karachi and Islamabad. The new home financing schemes by local and foreign leasing and financial institutions, through aggressive marketing, are playing an important role for the growth in this sector. Also, there are numerous infrastructure development projects in progress in the Country that include a large number of flyovers, underpasses, highways, tunnels, dams, roads and industrial projects which have lead this industry to surpass its past status and glory.
Ideal Investment Opportunities for Overseas Entrepreneurs to develop infrastructure
Every big city of Pakistan solicits Mass Transit System. The roads, highways and motorways all over the Country, specifically from Gwadar to Central Asian Republic Countries is another sector for investment on BOT basis. The Government is looking forward for investors to build these on BOT, BLT, BOOT basis. Overseas Entrepreneurs have ideal opportunities to make joint ventures with Pakistani entrepreneurs to invest in these projects on turnkey basis for very lucrative returns.
Furniture Industry - another potential sector for investment
Government plans to set up a Sector Development Company on the recommendations of the Furniture Strategy Working Group “SWOG” to boost furniture industry. At present, quality furniture is being produced mainly at Chiniot, Gujrat, Peshawar, Rawalpindi and Karachi. Pakistan has the potential to export US$1 billion worth of furniture annually in the international market. Pakistan’s furniture industry can be transformed from cottage to a modern industry through training, upgrading supplies and imports, setting up a woodworking institute including testing labs of international standards in Pakistan.
A mirrored glass ziggurat stands on a corner in central Karachi, flanked by a pair of polished granite towers. Golden bubble elevators glide up and down behind the tinted windows, shuttling oil executives to their offices through the sparkling five-storey atrium. The Pakistan State Oil House is a power-dressed monument to the petroleum-fuelled excesses of the early 1990s, oozing ostentation from every gilded surface – so it comes as a surprise to learn that its architect is now building mud huts for the poor.
“I feel like I am atoning for some of what I did,” says Yasmeen Lari with an embarrassed chuckle. “I was a ‘starchitect’ for 36 years, but then my egotistical journey had to come to an end. It’s not only the right of the elite to have good design.”
The 79-year-old architect was awarded the prestigious Jane Drew prize in London in March, a gong that recognises women’s contribution to architecture, for her tireless humanitarian work over the last two decades. She joins an illustrious cast of previous winners, including Zaha Hadid, Denise Scott Brown and Liz Diller, but her career has been like no other, moving from glitzy corporate monuments to shelters built with the barest minimum of means.
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While international aid agencies busied themselves erecting costly prefab housing with concrete and galvanised iron sheets, Lari worked with dispossessed families to rebuild their homes using mud, stone, lime and wood from the surrounding debris. Working with volunteers, she trained local people how to use whatever materials were to hand to rebuild in a better, safer way.
“I think we often misunderstand what kind of help is needed,” she says. “As an outsider, you do things that you think are appropriate, but the reality here is different. The aid mindset is to think of everyone as helpless victims who need things done for them, but we have to help people to do things for themselves. There’s so much that can be done with what’s already there, using 10 times less money.”
She says that the process of co-creation can also be a crucial part of healing. “Disasters can be truly devastating and people easily fall into deep depression. But if you give them something to do, it really helps with recovery. Something people have helped to make is much more valued than something simply given.”
Since 2005, a sequence of further earthquakes, floods and conflicts have kept Lari and her team at the Heritage Foundation on their toes, developing agile techniques with bamboo, mud and lime, always following the principles of low cost, zero carbon and zero waste. Severe flooding in Khyber Pakhtunkhwa and Sindh provinces in 2010 saw them develop a design for modular community centres raised on stilts, which safely survived more floods a couple of years later.
When earthquakes hit Balochistan province in 2013 and Shangla in 2015, Lari designed shelters using a cross-braced bamboo framework, learned from the vernacular dhijji technique. Testing the prototype on a shaking table at NED University in Karachi, they found the structure was capable of withstanding an earthquake more than six times the strength of the 1995 Kobe disaster. If the homes ever did begin to crumble, they could be easily rebuilt using the same organic materials – unlike their concrete and steel counterparts.
https://www.dawn.com/news/1454188
Bamboo is not only used domestically but it is also exported to other countries and if the government patronises its production and business, it can be a big source of poverty alleviation and strengthening of the economy.
Bamboo used to be cultivated in certain areas and sandy places in the past but now it is cultivated with proper care like other crops to get the maximum possible produce. High quality bamboo is cultivated at more than 85 places in district Narowal, including villages of Thillay Kalan, Wazirpur, Kandhala and Porokey. It is also cultivated in districts of Kasur, Sheikhupura, Gujranwala, Mandi Bahauddin and Sargodha.
The bamboo crop is ready within a year while the annual cost of cultivation of one acre of bamboo is just Rs15,000 to Rs20,000. As is the case with sugarcane, bamboo roots are sown in the land at certain distance, the crop is manured only once a year and watered thrice a year. It does not need medicines or chemicals spray and it can bear severe weather conditions.
One acre of bamboo crop is sold at the rate of Rs200,000 to Rs400,000. Three to five thousand bamboos are produced on one acre of land. Labourers are paid Rs17 per bamboo for cutting and cleaning before they are shifted to the factories where bamboos are cut in different sizes and straightened with the help of furnace and machines. Wages are fixed with labourers for straightening and painting the bamboos and the rates range from Rs5 to Rs18 per bamboo. Each labourer can earn Rs1,000 to 3,000 per day. The bamboos are sold to shopkeepers on the wholesale rate of Rs4 to Rs9 per foot while a bamboo ladder of 10 feet is sold in the market at the price ranging from Rs500 to Rs600.
Besides production of ladders, bamboos are used in scaffoldings, construction of buildings, animal shelters and poultry farms. The villagers use bamboos to fix mosquito nets around their cots in the fields. Bamboo furniture is also used in houses for its beauty.
“My 10-member family has been working in the bamboo factory for the last 15 years. Some years ago, there was no business activity and I was living from hand to mouth. Now Pakistan has started exporting bamboo, so I earn Rs1,000 to Rs3,000 per day. Now I am happy and I save some money also,” labourer Muhammad Akram says.
Shaikh Ansar Ali, the owner of a bamboo factory, says the bamboo of Pakistan is of good quality and it is in big demand in the UAE, Afghanistan, Iran, Iraq, Malaysia, Indonesia and other countries, therefore, it’s produce is increasing day by day.
All the people investing in the construction sector this year will not be questioned about their source of income.
The tax rate will be fixed for the construction sector, and constructors will be charged tax per square foot or square yard.
People carrying out construction in the Naya Pakistan Housing Scheme for the poor will only have to pay 10 per cent of the fixed tax.
Withholding tax will be waived off for all construction sectors except the formal sectors of steel and cement.
Sales tax will be reduced in coordination with provinces.
Any family selling their house will not have to pay any capital gains tax.
A subsidy of Rs30 billion to be given for the Naya Pakistan Housing Scheme.
Construction sector to be given the status of an industry.
Construction Industry Development Board to be set up to support the sector.
https://www.dawn.com/news/1550979
The Punjab government is seeking a loan of $150 million from the World Bank for a land mapping project for accessing land records and for housing programmes in the province, it is learnt.
The proposed project aims to achieve provision of a cadastral map (a map that shows the boundaries and ownership of land within specified area) linked to digital land records, access to land for housing and a unified modern land information system.
As a first step towards the land mapping, the project envisages installation of geodetic control points (permanent reference markers placed in the ground to support the production of data collection for surveying and mapping projects) and generating base maps (maps having only essential outlines and used for the plotting or presentation of specialised data of various kinds).
These geospatial (data that is directly linked to specific geographical locations) products could then be made accessible to a larger community for a variety of decisions which could contribute to the National Spatial Data Infrastructure (NSDI) initiative in Pakistan, according to project details. The proposed project also aims to have revenue maps scanned and made available in digital form.
ARTICLE CONTINUES AFTER AD
With regard to digital cadastral maps, the project intends to inform the public and in case disputes arise, safeguards have been promised to be placed for the mediation and resolution of the land mapping disputes. The new cadastral maps would then be linked to the land records in the Land Records Management and Information Systems.
Another major reason given for seeking the World Bank loan for this particular project is that both federal and Punjab governments say they will not be able to achieve the goal of “Naya Pakistan Housing Programme” of constructing nearly 2.6 million low-cost housing units in Punjab if the province’s urban land record challenges are not resolved.
Under the “Punjab Growth Strategy 2023”, the provincial government plans to increase the average number of housing units to 640,000 annually over the next five years.
Prime Minister Imran Khan has made another move to revive the coronavirus-hit economy with an initiative to promote the housing and construction sector with Rs330 billion of mortgage financing by the commercial banks in just 18 months.
The prime minister himself unveiled the plan for the revival of the construction sector after a maiden meeting of the newly formed National Coordination Committee on Housing and Construction on Friday.
Commenting on the government's initiative, a leading property developer and businessman Ejaz Gohar said that it was the first plan, which would make it affordable for the low and middle income people to build houses with mortgage financing of as low as 5 to 7% mark-up.
The commercial banks would allocate 5% of their portfolio amounting to Rs330 billion for the construction activities.
He noted that around Rs20 trillion was circulating in the informal unregistered economy and now was the opportunity for the people to get the huge amount of money declared by investing in the real estate sector by December 31, 2020.
Now a person with an income of Rs30,000 to Rs100,000 can build a house of 5-marla with the mortgage financing at 5% and that of 10-marla at 7% mark-up.
Gohar observed that mortgage financing started in the United States 82 years back to kick-start its economy. The government will give a subsidy of Rs30 billion for the construction of houses.
The prime minister has planned to hold meetings of the housing coordination committee every week to remove hurdles that come in the way as the country is far behind in terms of home mortgage financing as compared to the developed world.
As Covid-19 had hit hard the global economy, Pakistan too suffered a great deal due to the pandemic with rise in unemployment and shutting down of businesses, the government's measures for the construction sector would be a much needed timely relief.
Many economically strong countries like China, the United Kingdom, Italy and Spain were forced to impose strict lockdowns spread over months to contain the cases of Covid-19. However, economically fragile countries like Pakistan were caught in a dilemma as the option of complete lockdown was a recipe for disaster, especially for the vulnerable section of the society which comprised a significant portion of the country’s population.
Prime Minister Imran Khan – known for his leadership qualities since his cricketing days – went for a policy of smart lockdown, balancing the need to halt the spread of coronavirus and keep different sectors of the economy functional simultaneously.
The strategy largely worked and the primary sectors of economy are now open with the number of coronavirus cases after hitting the peak are lowering on a daily basis.
In order to deal with the adverse effects of Covid-19, the government had announced a relief package worth Rs1.2 trillion on March 24.
An important component of Pakistan's economic revival plan was the second phase of China Pakistan Economic Corridor (CPEC).
Despite hurdles, Pakistan and China went ahead with the second phase of the mega project during the last two years. After undertaking of the infrastructure, road and energy projects across Pakistan in the first phase, the focus was shifted to the building of eight special economic zones and socioeconomic and human development with the Chinese financial assistance of $1 billion.
The Pakistan Tehreek-e-Insaf government established the CPEC Authority and appointed Lt General (retd) Asim Saleem Bajwa as it head.
Bajwa set his sights on executing vital projects, including M8 motorway from Gwadar (Balochistan) to Ratodero (Sindh) and $230 million Gwadar international airport.
Pakistan is set for its first real estate investment trust in more than six years as Prime Minister Imran Khan seeks to stimulate the economy through a construction boom.
Arif Habib Dolmen REIT Management Pvt. plans to raise 8 billion rupees ($51 million) via private placements in two REITs for a housing project in Karachi, Muhammad Ejaz, the firm’s chief executive officer, said in an interview Tuesday. It plans to purchase the land in about two months, partly from Silkbank Ltd., he said.
Arif Habib Dolmen had created Pakistan’s only REITin 2015 and the industry, which had gone silent since then, is reviving now on Khan’s incentives and regulatory changes. Pakistan is willing to forgive tax evaders if they invest in construction projects, while banks have been asked to increase their outstanding mortgages by at least 5% by December.
One of the new REITs will focus on villas and the other on apartment buildings and commercial developments. This is a developmental REIT with an expected internal rate of return of more than 30%, according to Ejaz. The older REIT, which holds rental assets including Karachi’s most prominent mall and an office tower, offers a dividend yield of around 12% a year, he said.
Pakistan has been revising rules to make REITs more attractive for investors and developers. Finance Minister Shaukat Tarin in his budget this month lowered the dividend payment tax on REITs to 15% from 25%.
“The government has chosen the right sector for growth,” Ejaz said.
Silk Islamic Development REIT is scheduled to be launched next week for the commercial and apartment building section. Its five equal shareholders are Yunus Brothers Group that owns Lucky Cement Ltd., Fatima Group, Arif Habib Corp., Liberty Group and Arif Habib Dolmen. The second Silk World Development REIT includes real estate developer World Group, which will develop the villas.