INVESTMENT IN REAL ESTATE OFFERS LUCRATIVE RETURNS
Emmar Committed To Invest Heavily Next Two Decades
Nov 12 - 18, 2007
The rate of return on investment in real estate is so lucrative that world's top developers and builders especially from the Middle East have acquired prime lands and are actively engaged in developing world class property projects in all major cities of Pakistan.
Not only the real estate prices have blown up out of proportion but the sky rocketing rental value has also become a major attraction for the investors in real estate development. It is interesting to note that a backlog of 6 million new housing units continued to persists while a demand for 6 lakh new housing units every year offers ample scope for investment in the real estate industry.
One of the positive developments of the bustling activity in property development is the trickle down effect on over 42 down stream industries such as Cement, Steel, Ceramics, Woodworks, Glasswork and Marble and Tiles etc, which are working day night to meet the market demand. However demand and supply theory prevails over the prices of the products used in property development.
After the demand of cement, the steel is considered as the most sought after building material. So far, Pakistan Steel is the major source of supplying steel bars for construction industry, however the capacity of 1.2 million tons a year is naturally too small to meet the demand. The short supply of steel has taken the prices of steel bars beyond Rs40, 000 a ton in Pakistan. Though foundries operating in the private sector are quite helpful in meeting the demand yet their limited capacity is not enough to cater to the market demand.
There is however good news for the property developers that a new steel mill with a production capacity of 1.1 million is due to go into production within next 15 months in Karachi.
Actually Al-Tuwairqi Group of Saudi Arabia which is coming up with 1.2 million ton of steel making project and has entered into an agreement with Kawasaki Gas Turbines Asia for setting up a captive power plant of 35 mw last week. Kawasaki, which is a subsidiary of Kawaswaki Heavy Industries in Japan, under the agreement, will supply and erect the power-generating unit at TSML site Bin Qasim Karachi.
This power-generating unit will be comprised of four turbines each of 6.5-mw capacities to cater to the power requirement of phase-1 of Iron making plant of 1.28 million tons per annum.
Kobe Steel of Japan is the original manufacturer and technology supply of Iron marking plant. The power-generating unit will cost around $30 million with combined cycle technology to cumulatively generate 35mw of power.
Zaigham Adil Rizvi Director Project TSML and Yuji Tanaka, Managing Director Kawasaki Gas Turbines Asia signed the agreement on behalf of their respective organizations.
It may be mentioned that on completion of first phase of the steel mill in next 15 months the steel project will start steel production. The first phase of the steel project is being developed at a cost of $ 197million. Tuwairqi Steel project has been designed to enhance its production to 1.5 million tons per annum in future.
However it not the demand alone instrumental in price hike of property in Pakistan, actually getting connections of electricity, gas, water and other infrastructure requirement like approval of site plan, maps, transfer and leasing of the property has become an uphill task due to lack of coordination among the relevant organizations. All these hindrances have made it difficult for an individual to development his own house. Under the prevailing circumstance the only way out for a common man to go for the housing projects developed by the builders who know the art of dealing with the relevant authorities in housing industry.
The foreign investors having a privilege of direct links at the top level in Islamabad hardly face such hurdles hence they are doing well without facing any problem from government organizations.
Emaar Pakistan, the country subsidiary of Emaar Properties PJSC, the Dubai-based property developers, is one of leading investors in the real estate sector of Pakistan. In fact, Emmar has reiterated its commitment to invest heavily in the country's real estate sector in the next 20 years.
Mohammed Al-Falasi, Managing Director, Emaar Pakistan, said the country is one of the most attractive destinations for foreign investment in the real estate sector and underscored the company's objective of developing world-class residences.
He was addressing a group of officials during a ceremony to launch in Pakistan, the Tunnel Form System, an innovative construction technique. He said the new system would help Emaar meet its commitment to provide quality residences. Tunnel Form Technology (TFT), which is new to housing projects in Pakistan, is the system to ensure speedy construction. On an average it will take only two days to complete a villa with high quality construction and better finishes. It will also eliminate chances of any settlement of foundation and give higher tensile compressive strength to walls and roof by strengthening concrete.
Emaar Pakistan has unveiled projects of development value PKR 145.8 billion (US$2.4 billion) in Islamabad and Karachi. The company is developing Canyon Views and The Highlands in Islamabad, and Crescent Bay in Karachi. Response to the sales of villas and town homes at Canyon Views has been overwhelming.
With 1,500 acres of master-planned community area between them, the Islamabad communities offer 9,000 luxury single-family town homes and villas in a range of architectural styles offering easy access to amenities including retail centers, community clubhouses, parks, lakes, schools and mosques.
Mr. Al-Falasi said the company's goal is to set new standards in commercial and residential property. "Highlands, Canyon Views and Crescent Bay will serve as benchmarks in developing master-planned communities, and are the first of many projects that we have planned for other cities in Pakistan, which we will be developing over the next few years," he said.
World-renowned architects are working on the Islamabad projects and the master planners have derived inspiration from the world's best-designed residential communities - offering another Emaar signature landmark to the region.
Crescent Bay is a 108-acre development featuring high and mid-rise towers for residential and commercial use, a shopping center and five-star beachfront hotel. The towers have approximately 4,000 residential apartments. It is planned to have 13 Residential Plot with 34 High-Rise residential towers with height ranging between 16 to 28 storeys.
Mr Al-Falasi said Pakistan represented a vital link in Emaar's global and regional plans in line with its Vision 2010 to become one of the most valuable companies in the world.
He also highlighted the benefits of the new technique and said the company is committed to meeting international standards in construction.