If you’re asked to think about Pakistan, exotic villas, sprawling landscapes and architectural marvels might not immediately come to mind. Yet, the gradual resurgence of the luxury segment of Pakistan’s real estate has brought all such amenities into focus. The segment clearly seems to be on the upswing as developers in the country are working hard to entice buyers.
Investors and buyers alike are showing interest in these projects despite being aware that the appreciation on such properties is always more than those in mid-income projects. There also seems to be a growing trend for environmentally conscious development as it opens access to land in zones that would not normally be available for development.
Apart from ultra-modern residential and commercial projects undertaken on a massive scale, the concept of gated communities ensconced in the lap of extravagance isn’t just changing the dynamics of Pakistan’s luxury realty segment, but also the way residents of these projects are living in the country’s major cities like Karachi, Islamabad and Lahore. “The luxury property market in Pakistan has traditionally been unorganised and fragmented. However, the recent past has seen consolidation of a few developers who are stretching their capacities to the maximum to meet the growing market demand,” says Naveed Merchant, Managing Director, Merchant & Associates.
“REIT [real estate investment trust] regulations are in the process of formulation which will encourage large projects with sourced financing. While the Pakistan real estate market still lacks transparency and liquidity compared to more mature real estate markets, REITs would provide an opportunity to diversify the investor base in the sector through a regulated, tradable investment,” he says.
Nida Zahoor, Group Marketing Manager, Bahria Town, touted to be Asia’s largest private real estate developer, also vouches for this maturity in the market. “Generally the Pakistani luxury home buyer in this day and age, expects nothing but the best in quality. Most of them have travelled extensively to countries abroad, making them abreast with the latest trends in construction. Then there is also the growing middle class which is not as aware, but that too is changing over time” she says.
Zahoor says there is a shortage of one million homes in Pakistan with a 0.6 million (backlog) demand growing every year, which includes in it a large ratio of demand for luxury homes. In the next five years, predicts Zahoor, Pakistan will experience a tremendous growth in the luxury realty segment as awareness among the people, the trends, the policies by the government will give a fillip to this segment. So, what would Bahria Town’s benchmark project be? “It would be Bahria Golf City, Pakistan’s first ever branded luxury resort designed over a total area of 5.5 million square metres,” Zahoor says.
Bahria Golf City is expected to accommodate 18,000 people in about 7,500 housing units. “From architects such as BEAMS construction to Nayyar Ali Dada, interior designers such Wingchair, Cracknel landscape designers; and Kroll security consultants; we are working with the best in the world who have been involved in prestigious projects like the Burj Al Arab, KL towers, Atlantis Dubai and Jumeirah Beach Resort,” says Zahoor.
Bahria Town isn’t the only player in the market, there are several interesting offerings such as Lake City, a 2,104-acre development on the outskirts of Lahore, which has a plan to have almost 4,000 residences, hundreds of shops, malls and dozens of office buildings. “When the project was envisaged in 2004, it was obvious that future developments in real estate in Lahore could only take place towards the south and south west. The trend in Pakistan, outside Karachi, is not towards vertical expansion but horizontal expansion,” says Farouk Khan, ED Coordination, Lake City Holdings and Rida Sarfraz, GM Marketing and Events, Lake City Holdings.
Besides, there are other attractive projects such as Defence Raya, a 400-acre development and The Centaurus, a project featuring a five-level shopping mall, two residential complexes, the corporate complex and a luxurious five-star hotel in Islamabad. The Centaurus is by Pak Gulf Construction (Pvt) Ltd, a joint venture between Al Tamimi Group, Saudi Arabia and Sardar Builders, Pakistan. Sajjad Baig, director, Al-Tammimi Group, says Pakistan’s economy has evolved during the last decade resulting in a boom in people’s lifestyle expectations. “Islamabad has always been home to foreign delegates and diplomats. Therefore, the need of a world-class shopping mall was felt,” he says.
Recently, Emaar Pakistan, subsidiary of global property developer Emaar Properties PJSC, handed over its 50th new villa in the Mirador Village section of the Canyon Views housing society, to its owners in a record time frame.
Advantages of investment
According to Baig global recession has seen expats investing in their home countries. Real estate remains the safest as proved in the past. “ROI [Return on Investment] on real estate has been high in recent years. A project like the Centaurus being in the capital city attracts huge premiums as apartment rentals are high,” he says.
Zahoor seconds this, pointing out that the Pakistani real estate sector has not been affected by the credit crunch like developed countries. “Investing in the Pakistani real estate sector is the safest investment because it is progressing swiftly even through the critical economic crisis and is clearly on the road to recovery,” she says.
Zahoor also says that government policies in Pakistan are among the most liberal in emerging economies. “It is clear from the 2001 housing policy in Pakistan that the government is serious about facilitating the development of housing and construction sector. Pakistan has a very liberal policy on repatriation for foreign direct investors, therefore, investing in Pakistan may give added advantages,” she concludes.