By Alauddin Jami
Aug 09 - 15, 2004

Rafi Group is one of the most distinguished names in real estate development. A pioneer and trendsetter, it has given Lahore some splendid buildings, which have lent grace and beauty to the city. Imtiaz Rafi Butt, the Chairman of Rafi Group, is a man with rich professional experience, innovative outlook and a passion for excellence. He is the Honorary Consul for Malaysia in Lahore and Chairman of the Jinnah-Rafi Foundation. In an interview with the writer, Imtiaz Rafi Butt spoke about the Rafi Group, the post 9/11 trends in real estate business and the Defence Shopping Mall, his pet project nearing completion.

Q. When did you set up the Rafi Group? Could you shed some light on the changing fortunes of the real estate business?

A. I established the Rafi Group in 1978. Since then real estate business has seen many ups and downs. It was, in fact, at its peak in the eighties. This was chiefly because of the United States' war against the Soviet Union, which was being fought in Afghanistan by the Jihadis and Pakistan fully supporting it. American money was being liberally poured into Pakistan and the remittances sent home by expatriate Pakistanis. Houses, shops and offices were quickly snapped up. It was a time when, compared to other enterprises, real estate was paying the highest dividends. But then in the late eighties there came the huge cooperative scandal. This gave a great blow to real estate business. Billions of rupees got blocked. It shook the confidence of the people who turned away from this sector. Secondly, banks started offering higher rates of interest on deposits. Moreover, the constant steep rise in the value of the dollar also induced people to convert their rupees into dollar and place them in banks. Consequently, real estate business came to a standstill. The exodus of Pakistanis to other countries and the erratic policies of the Nawaz government and the resulting uncertainty also took their toll. When, thereafter, General Pervez Musharraf assumed power, the first step that he took was to set up the NAB to eliminate corruption. At the same time, he announced the imposition of sales tax. As a consequence, investors withdrew their money and real estate suffered a further set back.

Q. How did the events of 9/11 affect real estate business?

A. Real estate business received a sudden boost. There were several reasons for it. Firstly, disillusioned with the ill treatment meted out to them in the US, Pakistanis started investing in Pakistan. A major part of these investments were made in Lahore. The second factor was the decline in the value of the dollar and in the rates of interest on deposits in the bank. People withdrew their money from the banks and reinvested it in property. Thirdly, with the end of the 'hundi' system, remittances were now being sent through banks. Moreover, Pakistan also began to receive massive aid from Europe and the US people thought less about going abroad and considered real estate the best avenue for investment. These factors boosted property business. Now everyone rushed to invest in property. Prices soared. To my mind, the sharp rise was unrealistic. Thrilled by the 'prospects', some of my friends became too optimistic. They advised me to invest in proposed Phases of Defence and the new airport area. But the prices they quoted were so obnoxious and made no business sense to me. I told them frankly that I for one would never buy land at such an unviable price. However, what I had forecasted is happening. After a short while the purchasers are getting disappointed. Now my wide-eyed friends are sitting on their costly investments in the above mentioned areas and waiting. I pray that they overcome their predicament. It may take a long time before a buyer turns up to offer them their fancy price.

Q. Was the unrealistic rise in prices limited to plots or did it affect the plazas as well?

A. No, it did not affect the plazas much. Our own plazas are a case in point. There is the Central Plaza, which is now complete, and two others Empress Towers and Defence Shopping Mall are nearing completion. There is not much increase of prices in these units. The little price rise is logical and justified but the way things are now, I see a big price rise coming to commercial plazas as land prices and cost of construction have increased tremendously and buyers are more and more turning towards getting shops/offices in completed plazas for investment and personal usage.

Q. Rafi Group's Defence Shopping Mall is a magnificent project. Where exactly is it located?

A. Defence Shopping Mall is located in the heart of Defence Boulevard of Defence Housing Authority. It is the flagship of Rafi Group's range of projects. It is the largest single-purpose shopping complex in this part of the city. No such facility exists there at present. It is located at the entrance of Defence Housing Authority the largest, the latest and the most organised housing complex in Lahore. It would cater for the folk in Defence, Cavalry Ground, Cantonment and Gulberg. The Defence Shopping Mall subscribes to the highest international standards and is a masterpiece of modernity and architectural ingenuity.

Q. What are the special features of your new shopping mall?

A. The Defence Shopping Mall, as I have said earlier, has been conceived as a 'one use only' shopping mall with a large number of shops under one roof a bazaar of the 21st Century. A spacious, six-storey atrium integrates all the floors including that for parking. Secondly, a big capsule lift and escalators have been provided to bridge the height. Thirdly, void spaces and skylights provide natural light and ventilation to the upper floors and thus make shopping convenient and enjoyable. An entire floor has been set aside for parking. There is, in addition, ample outdoor parking space in the three-side open fronts. Its prime location lends a pleasing look to its surroundings. It is almost like a drive-in shopping centre. I am certain that the Defence Shopping Mall will have an edge over all the other shopping centres in the city. The business community should bear in mind that Defence Society is fast expanding as a trading centre. Investing in plots at present high prices would not be a very wise thing to do. Defence Shopping Mall is ready for business. It has 580 shops. 400 of these have already been sold. I would advise investors and buyers to benefit from this offer and buy shops at their earliest. The shops' prices are bound to increase also rapidly and there is good demand for rental shops.

Q. In terms of price appreciation, which type of property for investment is more viable, commercial or residential?

A. Commercial property mostly increases in value more than the residential because residential price rise is in general limited to time and devaluation/inflation of money but commercial property rise is of course due to these factor also plus more importantly as the commercial activity increases in that vicinity, the property surrounding it also increases. For example, if a big or busy store/shop opens up next to your commercial plot or in a commercial plaza that will immediately affect in price rise on your commercial plot or shop in that vicinity.