Mar 07 - 13, 2005



A few days ago, I happened to visit the Defence Shopping Mall a single-purpose shopping complex. Believe me, it was a wonderful experience. The Defence Shopping Mall is a magnificent addition to the architectural skyline of Lahore. Located at the main entrance of Defence Housing Society, this 580-shop emporium is an exquisite blend of structural beauty, glasswork and a felicitous colour scheme. It exudes altogether a different feel. A five-storey edifice, each of its floors offers a rich mosaic of tile work. The front shops are chiefly of glass i.e. the doors and the walls are a mix of glass and aluminum. Colourful signboards, which remain lit most of the time adds to its beauty. The roof has a beautifully designed glass dome, which keeps the shops well lighted and sunny. Below the dome, the interior is bedecked with the model of a World War-I plane. The atrium too is unique. A big glass capsule lift and escalators ply between the basement and the topmost floors. All these features enhance the charm of the place. In short, once inside, one can see all the shopping activity at a single glance. The basement is laid out in coloured marble with a copper-steel design. A recreational area for the buyers, on the lines of Sindbad, is under construction. The plaza is thus a fine composite of shopping, recreation and pleasure. A whole basement has been reserved for car parking. Apart from this, there is plenty of outdoor parking on the three-side open fronts. There is stand-by generator and fire-fighting equipment. It is, indeed, the best shopping mall in the country. Rafi Group in the past has constructed some splendid plazas in Lahore but the Defence Shopping Mall is its flagship today. I was so fascinated by what I saw that I decided to interview Imtiaz Rafi Butt, Chairman of the Rafi Group. Here are a few excerpts of the interview.

Q. Your Defence Shopping Mall is an impressive project. Would you like to say something about it?

A. Now that you have called it impressive, it leaves me little room to expatiate on the subject. Nevertheless, its architectural elegance and pleasant milieu make it the biggest and the most attractive project of Pakistan. When the project was launched, 70 percent of the shops were booked at the very start. The ownership of the shops is now being handed over to the buyers.

Q. Your articles on politics, history and real estate are read with keen interest. What would you say about the present and the future of real estate?

A. Articles on history and politics are motivated by my connection with the Quaid-e-Azam and the Pakistan Movement. Real estate is my profession. I have been active as a developer for the last 26 years. You can, therefore, count me among the handful of pioneers. I have been observing the ups and downs of real estate business for the last three decades. Before I talk about its present state, I would like to say a few words about its past. Real estate had its first boom in 1975, when after the Arab-Israeli war in October 1973, the Arabs doubled and trebled the price of oil and invested their capital in big developmental projects in the Middle East and the Gulf. Thousands of Pakistanis went there for employment and invested a large part of their earnings in real estate. This situation led to the emergence of a gang of double-dealers. Acting on Charles Pouzi's theory, they set up financial companies, flooded the newspapers with advertisements and defrauded the public. They promised to pay a monthly profit of 6% or an annual profit of 72%. Charles Pouzi, by the way, was the biggest conman of the United States in the first decade of the twentieth century. He offered a 40% profit to investors and robbed them of millions of dollars. His modus operandi was incredibly simple. Entice the investors with the promise of high profits and then use their money to pay off the previous investors. Pakistani companies emulated the Pouzi formula and netted crores of rupees. Later these companies themselves came to a sticky end. They saw the fleshy side of the Pouzi formula but ignored how he came to grief. Conmanship like crime does not pay but no one seems to be convinced. After the collapse of the companies, co-operative banks applied the same trickery with little or no change. They dangled big profits before the return-hungry investors and invested the ill-gotten wealth chiefly in land. Real estate thus registered a second boom. In the end, they also met the same fate. The huge co-operative bank scam hit the headlines in late eighties and early nineties. Billions of rupees got mired in property business, which suffered a terrible setback, and people lost faith in it. Thus in 1990, real estate business reached very low ebb. Investments were now made in dollars and the dollar appreciated. Real estate received a new boost after 9/11 and led to its third boom. Pakistani expatriates in Europe and the US remitted 7.5 billion dollars to Pakistan. A large chunk of this money went into real estate, especially in the purchase of plots. Noticing the impetuosity of the buyers, a number of housing societies surfaced. Sales were initiated in a thoughtless manner with little or no regard for business ethics. More scandals came to light and many more are likely to follow. The fervour of the buyers led to the advent of yet another class, namely, that property dealers who roped in investors and became investors themselves. They looked to their mutual advantage and raised the prices at random thus making the prices unrealistic. The present boom is also a bubble.



Q. How long will this bubble last?

A. The prices have already began to stabilise and the bubble could burst by 2006. It is true that money is circulating on a vast scale but it should also be kept in mind that foreign investors are moving into real estate, particularly into the housing sector in a big way. The buyers are in a fix because of the ill reputation of some housing schemes. Moreover, some buyers have already started investing in the already completed project in the country, and not much bullish activity is noticed in the booking of new projects that are coming up, while others are focussing on Dubai for investment or purchase of real estate. This boom, therefore, will not last very long, as the prices have reached at an unimaginable level. If not for other reason, it will still fall down with its own weight.

Q. In the final analysis, what is your message to the buyers?

A. I would advise them to invest in completed projects rather than in the commercial and residential plazas that are being launched or are about to start their construction now. For the simple reason that the land of the complete plazas has been purchase before 9/11 when the prices of land were low and realistic. For example, land of Defence Shopping Mall was purchased below Rs50 lacs per kanal a few years back. Now the price of such a piece of land is around 8 to 10 crore per kanal. Amazingly high! And the construction materials are also in a steep rise. The plazas, which are coming up now will have to be priced about 5 to 6 times higher at the same spot. And as for investment in plots is concerned, it is now pure speculation and the prices of plots are increasing unrealistically and entering in real estate speculation market is a very dangerous business activity because you never know when all the buyers start turning into sellers. When the hype breaks its like musical chair, one doesn't know when the music will stop and who gets no chair. When the bubble will burst, the prices of plots would nosedive while those of completed and operational plazas etc. will remain stable. The reason is that by then the plazas would have established their business activity and worthiness. Besides, it is also secure to invest in the commercial property rather than plots. Because you can rent out your shops or start your own business right away and start earning plus the appreciation, whereas you cannot do so with land. Secondly, during the recession period commercial property remain involves in business activities and its prices keeps on a gradual rise while plots' prices do not appreciate and as such your investment gets stuck.

Q. What made you conceive the idea of the Defence Shopping Mall?

A. Frankly, it was the Defence Society that motivated me to go in for a shopping mall. This colony houses an affluent section of society. The location that I chose was adjacent to the main entrance of the Defence Housing Society. We insured that the design and ambiance of the place be in keeping with the discriminating taste of the residents. The plaza is centrally air-conditioned and fitted with background stereo music. I am of the view that young men and women of affluent families, who wish to go into business after completing their studies, should begin their enterprise in the Defence Shopping Mall. Here they would find everything in accordance with their expectations and bent of mind. Capital cost of starting the business over here is designed to be very low. The shops are of reasonable size and perfectly suited for individual business. They can be obtained both on ownership basis or on rent. It is an ideal spot for conducting retail business. I invite the people to visit the Defence Shopping Mall and see things by themselves. I am sure they will like what they see. It is a fine place for setting any kind of retail outlet. One can do business even with less capital. This Shopping Mall is most suitable for conducting business in innovative products. Joint venture can be considered if the proposed project is viable.