FOREIGN INVESTMENT IN HOUSING SECTOR
Government is also taking keen interest to support investment
By AMANULLAH BASHAR
Mar 01 - 07, 2004
Housing and Construction sector after remaining stagnant for almost two decades seems to poise for a second boom in Pakistan.
Certainly, it's a good sign for the economy, as activity in housing and construction sector ignites a larges number of down stream industries allied to the construction and housing business.
Besides growing interest of the domestic investors who are coming in with large investment in this sector, there are strong indications of growing interest of the foreign investors for the first time in Pakistan.
Kanooz, a leading industrial group of Saudi Arabia, in collaboration with private sector in Pakistan has entered into an agreement to invest $100 million in the housing and construction, which has already taken a kick-start almost after a gap of over three decades.
This Saudi group, it may be noted, is also a prospective Buyer of Karachi Electric Supply Corporation, in collaboration with Siemens Germany, which has been short-listed by Privatization Commission for KESC'S bidding.
Another investor's delegation from Canada recently visited Association of Builders and Developers (ABAD) on February 28 and discussed matters of interest to explore investment opportunities and joint ventures in the housing and construction sector.
Yet another delegation from Malaysia is also due in March to explore possibilities of joint ventures and investment in the housing sector already flooded by the local investors in a big way.
According to details, the Orient Group of Pakistan has recently signed Memorandum of Understanding (MoU) with KANOOZ Group of Saudi Arabia for $100 million Housing and Construction projects in Pakistan.
Hafeez ur-Rehman Butt, Chairman of the Orient Group, says that the agreement with Saudi group is the first ever investment agreement in the sector with any foreign investor in Pakistan.
Although the agreement features mainly in the Housing and Construction sector, yet the Saudi partners have also expressed interest in other areas like Petroleum, Mass Transition, and Tourism and leisure industry.
Spelling out the investment plan, Butt said that infact the plan evolved for investment spread over various projects including a low cost housing projects for the homeless. A certain portion of the low cost houses would be given free of cost through balloting to the needy homeless people. That would be a gift from Saudi people for the shelter in Pakistan. Besides low cost housing, plans include development of high rises commercial and residential complexes in Karachi, Lahore and Islamabad.
Hafeez Butt, who is also the former Chairman of ABAD said that government is also taking keen interest to support investment in housing sector, which offer tremendous opportunities for the investors at home and from abroad. He said that there is a shortfall of over 6 million housing units in Pakistan, while the annual demand for new housing was estimated at about 6-7 lakh. It is irony that both public-private sectors could never meet more than half of the annual demand. That leaves a carry over demand for some 3 lakh new units every year.
In the backdrop of the above situation, there were tremendous opportunities for investment in the housing sector. As a result of the positive policies of the government, and financing facilities offered by almost all commercial banks, the housing sector is going to touch new heights in Pakistan, he said.
Regarding agreement with Saudi Group Kanooz, he said that H.H. Walid Bin Hassan Bin Mohammed al Saygh, President and Vice Chairman of Kanooz Group and Hafeez ur-Rehman Butt, Chairman of Orient Group signed the MoU and a final shape to the agreement will be given soon.
Kanooz Group is a prominent business of Saudi Arabia, which headed by Prince Abdul Aziz Bin Metab Bin Abdul Aziz Al Saud, who is the Chairman of the Board. This deals in Construction, Tourism, Petroleum, Mass Transit, Energy and Hotel and tourism sectors in and outside Kingdom of Saudi Arabia.
On the home front, some leading public and private enterprises have launched huge commercial and residential projects in Karachi, Lahore and Islamabad involving massive investment in the housing sector. Among the forthcoming projects, Defense Housing Authority's "Creek City" is a prestigious project at the fascinating beach of the Arabian Sea at Karachi Shore. DHA has already achieved financial close of the project which is expected to generate about 120,000 new jobs. This project would give a tremendous boost to economic activity in the country by opening avenues for investment and employment.
Creek City is said to involve a direct investment worth $1.5 billion that would impact on the GDP of Pakistan to the tune of $4.4 billion earning for the government. This project when completed is expected to add $76.1 million in taxes every year. It is estimated that revenue that these activities will generate are estimated to the tune of $500 million annually.