REAL ESTATE BUSINESS LOSING CHARM IN GWADAR
July 21 - 27, 2008
Political uncertainty has adversely affected the real estate business in major cities of Pakistan including emerging port city of Gwadar. In Karachi, the Pakistan' industrial and financial hub, the property prices have dropped upto 10 to 15 percent. The local estate agents deem the political uncertainty as the major reason behind falling property rates in major cities. Other reasons include imposition of capital value tax of two per cent in 2007 by the former government of Prime Minister Shaukat Aziz. February 18 polls could not restore political stability in the country even after the mainstream political parties Pakistan People's Party (PPP), Muslim League (PML-Nawaz), Muttahida Qaumi Movement (MQM), and Awami National Party (ANP) had come together to form a coalition governments at the federal and provincial levels. There are still found differences between the ruling PPP and PML (N) over the issue of reinstatement of Supreme Court judges deposed last November when President Pervez Musharraf had proclaimed state of emergency in the country.
The real estate trading in the country's prize port at Gwadar in southwestern Balochistan is also showing a slight fall due to the uncertainty about the port operations. The Gwadar Port Authority (GPA) has not yet announced port tariffs and the port has not seen arrival of any vessel since March 10 when a ship M. V. Pos Glory loaded with wheat had called at the port from Canada. Port of Singapore Authority (PSA), the operator of Gwadar port had offered concessional rates, as compared to the country's other ports of Karachi and Bin Qasim, for unloading the imported wheat at Gwadar.
Under the former government of Prime Minister Shaukat Aziz, Gwadar witnessed a real estate boom and businessmen from all over the country and abroad have been showing interest in the area. After handing over of operating rights of Gwadar port to the Singaporean firm and its formal inauguration by President General Pervez Musharraf on 20 March 2007, the land prices in the new port city of Gwadar had increased manifold. The prices of residential, commercial and industrial plots at the port city went significantly up. The areas, which have been the focus of real estate investors and brokers in Gwadar include zero point, west bay, east bay, Sangar Housing Scheme, Newtown Housing Scheme Chib Kalmati, Kiya Kalat, Washin Door, Door Ghatti, Ziarat Machi, Jaurkan, Shanikani Dar, Ankara, Karwat, Shabi, Pishukan, main Jewani road, main Airport Road and main coastal highway. Today, the real estate investors and brokers seem less active in buying and selling commercial and residential plots in the port city.
Federal minister for Ports and Shipping Qamaruzzaman Kaira recently said that Gwadar port could not be made operational before 2011 as it lacks required infrastructure, communication network and utilities. Officials blame that many cases of embezzlement, corruption and misuse of authority were reported in the Gwadar port and other allied projects under the former government of Prime Minister Shaukat Aziz.
Before official opening of Gwadar port last March, there was seen a fall in property prices in the port city. The fall was mainly linked with the fears about security of investment. Moreover, a land scam involving big people also came to surface making people reluctant to invest their money in residential, commercial and industrial plots in the port city. This trend affected the prices of real estate as people who had purchased residential or commercial plots started selling them to save them from further loss.
A special industrial development zone (SIDZ) with an area of 4,000 hectare has been proposed for setting up various industries. The SIDZ is located on the north of Gwadar town at a distance of about 30km from the port. Though the industrial plots have been handed over to the allottees in Gwadar special industrial zone, yet industrial activity has not yet been started. SIDZ project is of great importance in the development of Gwadar. With the functioning of industrial zone, Gwadar would become a hub of industrial and trade activities. . A land of 3000 acres has been reserved for the development of Gwadar Industrial Estate (GIE) at Karwat on Mekran coastal highway about 40 km from Gwadar port city. Over 1,100 plots have been allotted to industrialists in GIE, which is the first industrial estate planned for the emerging port city.
Present coalition government of Prime Minister Yousaf Raza Gilani has earmarked Rs1 billion for setting up of Gwadar's Export Processing Zone (EPZ) in the current fiscal year 2008-09. EPZ will be established on a 1,000-acre plot of land at the SIDZ for providing better import and export facilities. A number of foreign investors have shown interest in establishing mega refineries, building storage capacity and undertaking other businesses in Gwadar to help expedite the process of industrialization. The EPZ has been planned for assembling plants and other industries which are to be set up by the prospective manufacturers for marketing in the Gulf region and Central Asian republics. Oil storage yard and refinery have also been proposed in the north of Gwadar town near the East bay for which an area of 1,000 hectares has already been identified. Initially, the government plans to build a storage tank farm and a refinery.
Gwadar port has so far been the focus of speculative trading in real estate that had touched almost a frenzy level after its official opening last year. The brokers had started booking sale and purchase orders for the property, which had been planned for future in Gwadar. The investors were lured into buying plots in Industrial Estates and housing schemes in the port city. Major groups belonging to Karachi and Punjab province have been engaged in real estate and construction business in Gwadar. Ironically, the business groups from Balochistan province and other local investors have so far remained inactive or less interested in purchasing land for housing schemes and industrial estates in Gwadar.
Presently, the real estate investors are losing their interest in Gwadar due to worsening law and order situation in Balochistan province and prevailing political uncertainty in the country. The development process in Gwadar has so far been carried out amid political instability and security threat. The incidents of violence and terrorism that took place in different districts of the province including Gwadar under former government had forced the government to carry out development activities at gunpoint, as it continued to beef up security in Gwadar. Three Chinese engineers lost their lives in an act of terrorism in May 2004 in Gwadar.
There are also political issues confronting the Gwadar port project in Balochistan province. Pakistan People's Party co-chairman Asif Ali Zardari has set up a committee to convene an all-party conference (APC) on Balochistan issue for addressing the grievances of its people and bringing them into the national mainstream. The committee has been tasked to contact leaders of all political parties and other groups and people concerned to attend the conference to launch a concerted effort for bringing normality to the province. The new Balochistan government has withdrawn all cases registered against former chief minister and nationalist leader Sardar Akhtar Mengal observing that all the cases had been registered on political grounds. After his release from jail, Sardar Mengal demanded that all Balochistan projects including Gwadar Port should be scrapped because they were formulated and finalized during the President Pervez Musharraf regime.