Pakistan Property & Real Estate News

Financial Market Report-GDP Shrinks, Jobless Claims Stay High

It's official: the economy is contracting. U.S. GDP shrunk at an annualized rate of 0.3 percent during 3Q08, mostly as consumers decided that they needed to do less shopping. How long will the contraction continue? It's anyone's guess, but if it continues at the current pace through 1Q09, that would be the worst recession since the mid-1970s. At this point, the nation might be lucky if the current slump were merely as bad as the '70s, and not like that grim period of time nearly 80 years ago that rhymes with "recession."

Still, the GDP numbers were better than expected--economists in the business of predicting such things had forecast a 0.5 percent contraction. That, or the prospect of interest rate cuts by the European Central Bank and the Bank of Japan later this week, could account for the DJIA's modest uptick today: 189.7 points, or 2.11 percent. The S&P 500 and the Nasdaq were similarly up today, 2.58 percent and 2.49 percent, respectively..

More grim news out of the economy on the employment front, as the Labor Department reported that jobless claims remained at an elevated level. 479,000 Americans filed for initial unemployment benefits last week, which was about the same as the previous week's level.

Predicting how the increasingly skittish market will react to any bit of economic news these days is far from a science, but as of early afternoon eastern time, the Dow Jones was up 183 points. Perhaps things have reached the level where news anything less than horrible is greeted with open arms.

How low can the Fed go in the interest-rate limbo dance? One percent's as low as the key rate has been since early 2004. It has been lower, but not since 1958. Still, there's talk of another half-point drop when the Fed meets again in December. There's also talk of zero percent, which is uncharted territory in this country, but which didn't really work out for the Japanese.

Federal mortgage assistance for homeowners isn't exactly uncharted territory -- the New Deal had a response to that earlier mortgage crisis in the form of the Home Owners' Loan Corp., which did most of its lending in the darkest days of the Depression. The federal government is again considering assistance to sinking mortgage-holders, though not precisely in the same way. According to the New York Times, "the government would agree to shoulder half of the losses on home loans if mortgage companies agreed to lower borrowers' monthly payments for at least five years."

Deutsche Bank has lately let it be known that "we don't need no stinkin' bailout," even posting a third-quarter profit of about 435 million euros ($573 million). But the "profit" was actually something of a sleight-of-hand, since recent accounting rule changes allowed the firm to write down investment losses for the quarter to 1.2 billion euros, instead of posting more than 2 billion-euro writedown.

Abu Dhabi’s Real Estate Sector Set For Continued Growth

The unique strengths of Abu Dhabi mean the Emirate’s real estate sector is poised for continued growth despite the global downturn, said Sorouh’s Managing Director, Abubaker Al Khouri, in a speech on Tuesday in London. Speaking at the Abu Dhabi Investment Forum at the Dorchester Hotel, Al Khouri outlined the strong market fundamentals which ensure demand will remain strong over both the short- and long-term. These include an economy which is experiencing high levels of GDP growth, a booming population and recent liberalisation of the real estate sector. Al Khouri said: “In the last three years, we have seen liberalisation of the property laws, a new surge of private development and the strengthening of the mortgage market, which have all fuelled the growth of the real estate market. “There is heavy demand in Abu Dhabi from many different segments: Abu Dhabi locals and the other UAE locals who work in Abu Dhabi; the expats who have been living here; and the ones yet to come.

Demand is clearly strong but that massive demand cannot be met overnight and there are short-term shortfalls in supply. Earlier this month, the Chamber of Commerce released latest forecasts, which predict a shortage of at least 28,000 units this year. But the resources of Abu Dhabi are being mobilised to meet that demand, through Government and private sector investment. He said that Abu Dhabi was comparatively well-cushioned from the global financial crisis, commenting: Abu Dhabi is not immune to the tightening of the credit market and the global financial downturn but it is well inoculated and it has unique strengths which ensure that the real estate sector will prosper over the long term, even in spite of the current short term challenges. Our oil reserves, the strong spending by Government, the recent injection of Dh120 billion into the banking system and above all the strong demand for property - all these factors will help protect us from the global situation. Our real estate sector will prosper over the coming years.

Al Khouri predicted a “rush to quality” by consumers and by banks, both of which would look for solid real estate developers and developments into which they would make investments.The larger and well-capitalised companies such as Sorouh, which has projects worth more than Dh70 billion under development, would benefit from this. Overall, though, the Emirate is well positioned, he said: The severity of the global situation will bring challenges. Our real estate sector may see some short term margin compression, mostly affecting the smaller developers, but overall, the fundamentals have not changed and it will prosper over the coming years. At the heart of that future growth lie the fundamentals of strong demand and as yet limited supply. That is why, for any real estate developer, Abu Dhabi is the best place in the world to be today. Abu Dhabi-based Sorouh Real Estate PJSC is one of the UAE’s leading property companies, with more than Dh70 billion worth of projects under development in the UAE and internationally. Established in June 2005 with a capital of Dh2.5 billion, Sorouh is now one of the largest real estate developers on the Abu Dhabi Securities Exchange. In July 2008, the company’s market capitalisation was Dh23.2 billion.

Elevated expressway to make Rapid Mass Transit project obsolete

LAHORE: The Punjab government’s plan to construct an elevated expressway from Kainchi Stop to the Niazi Interchange will render the Lahore Rapid Mass Transit (LRMT) project obsolete, said experts associated with the project.

The experts told Daily Times that the elevated expressway is estimated to cost Rs 40 – 50 billion while the LRMT project would have cost the government about three billion dollars. A National Engineering Services of Pakistan (NESPAK) official said that the department had prepared a feasibility of the expressway, which will be presented to the government soon. According to the report, the expressway will have two lanes on both sides, and would be supported with pillars erected on the greenbelt running down the middle of the Ferozepur Road. He added that a couple of unavoidable linkages would be provided, which have not been determined yet.

International: The official maintained that the project was very practical and would cost about Rs 50 billion. He said that only international firms with a good track records could execute the project with limited local expertise. If this project is completed, there is very little chance that the LRMT will ever be undertaken, he added.

Utility: A Traffic Engineering and Planning Agency (TEPA) official associated with the LRMT project said that the LRMT project was better as it benefited commuters more than car owners, adding that the elevated expressway was designed to facilitate private vehicle owners. However, he admitted that as far as cost effectiveness was concerned, the expressway was far cheaper and would be completed much faster than the LRMT project, which would take at least another five years.

Funding: Lahore Road Rehabilitation Programme Phase-II Steering Committee Chairman Khawaja Ahmad Hassan said that the committee was waiting for a presentation on the expressway project, adding that the utility of both projects for the city would be evaluated before any final decision was taken. He said that the LRMT was undoubtedly a larger project in terms of monetary expenditures, adding that the availability of funding for either project would also be taken into account.

Ring Road phase II to start in January

Lahore: PUNJAB Chief Minister Mian Shahbaz Sharif has said that work on the second phase of the Lahore Ring Road project will start in January and will be completed within two years.

Presiding over a meeting regarding the ring road project here on Monday, he said the link roads for connecting the ring road to different areas of the city as well as the underpasses should also be constructed to benefit the maximum number of people. He directed the NESPAK authorities to include the link roads and underpasses in the design of the project, keeping in view the future needs of the city. He said the quality of construction should be ensured in a transparent manner.

“The construction of the ring road will minimise the entry of heavy traffic in the city, which will also reduce the burden on the city roads,” he maintained.He said the project was already delayed, therefore, all the hurdles in the way of its execution should be immediately removed.

The chief minister constituted a special committee, comprising the chief secretary, the Planning and Development chairman and the Communication secretary, to take a prompt action to remove the hurdles in the execution of the project.

He directed the revenue authorities to adopt a transparent procedure for acquiring land for the project, adding that the valuable land near Thokar Niaz Baig had been sold at a price less than the market rate. He ordered formation of a committee to look into the matter and to take action against the officials concerned in this regard. Shahbaz said that before launching the project, modifications must be made in accordance with the needs of the people, adding that he would visit the area to review the proposed route of the project within a few days.

“The Punjab government has started a number of projects worth billions of rupees for improvement of infrastructure and their completion will give an impetus to economic and trade activities,” he said, adding that the Lahore Ring Road would not only benefit the Lahorites but people of the nearby areas as well.

Earlier, AZK Sherdil, the chairman of the administrative committee of the Lahore Ring Road project, gave a detailed briefing about the project. He said lack of coordination among different departments was the cause of delay in the project’s execution. He also apprised the meeting of various matters, including necessary modifications in the design and acquisition of land for the project, and submitted various recommendations for its early completion.

A senior member of the Board of Revenue gave details about acquisition of land for the ring road, mode of payment while the Communication secretary informed about the construction work. The NESPAK director informed the meeting about the design of the project.

PML-N chief Mian Nawaz Sharif, MNA Hamza Shahbaz Sharif, Task Force Chairman Khawaja Ahmad Hasaan, Special Assistant Pervaiz Rashid, the chief secretary, Planning and Development chairman, the Board of Revenue member, the DCO Lahore as well as senior officers of the departments concerned were present on the occasion.

Benazir Bhutto Shaheed Road

RAWALPINDI: The City Traffic Police’s (CTP) experiment to make Benazir Bhutto Shaheed Road signal-free has gone down like a lead balloon, as the road and its links roads could be seen chock-a-block with traffic all the time causing wastage of time and fuel and botheration to the motorists.

During a visit to Murree Road, Saidpur Road, Sadiqabad Road, Double Road and 5th and 6th Road on Monday, Daily Times found that there’re long lines of vehicles parked bumped to bumper, with traffic wardens manually controlling the traffic at some places where the traffic filters were out of order.

Several motorists and cabbies complained that closure of crossings at Chandni Chowk, 5th and 6th Road and Double Road was causing long snarl-ups. They were of the view that the link roads of Benazir Bhutto Shaheed Road were not so wide and spacious to absorb a sea of vehicles.

Muhammad Saeed, a cabbie, said that the CTP’s experiment did not match the ground realities. He said Islamabad Highway or other roads of the capital city of Islamabad could be declared signal-free because the roads there had been built keeping in mind the future requirements.

Younus Afsar, a motorist, said that the CTP’s plan had come a cropper because traffic coming from the link roads could not get directly onto Benazir Bhutto Shaheed Road. He said the experiment had benefited the motorists bound for Islamabad, but it was creating problems for the residents of Rawalpindi.

Ejaz Bashir, a motorist, said that less attention of traffic wardens to inner city roads was causing traffic jams. He said most of the roads including Saidpur Road, Asghar Mall Road, Banni Road and Jamia Masjid Road could not absorb traffic flow unless all the crossings on Benazir Bhutto Shaheed Road were reopened.

He further said that majority of the inner city roads were dilapidated and urged the CTP bosses to prepare another plan to regulate traffic.

Muhammad Yasir, a driver, said that during school hours it was hard to drive on Saidpur Road. He said Benazir Bhutto Shaheed Road could be signal-free if the CTP gave more attention to the inner city roads.

Chief Traffic Officer (CTO) Raja Riffat Mukhtar said that over 1,000 vehicles crossed each signal on Benazir Bhutto Shaheed Road in one minute and making the road signal free had proved a success.

He said lack of parking lots, congested roads, untrained drivers, slow-moving vehicles and other problems were hindering the flow of traffic on different roads of the city.

Foreign buyers poke around Dallas for commercial property

Last month, an Israeli-backed firm bought a Rowlett shopping center. German investors recently purchased property in Frisco and Plano. And Middle Eastern investors looked at the Galleria and Millennium towers in Dallas.

What going on?

A weak dollar, oil-rich Middle East nations and growing Asian exports are spurring foreign investments in Dallas and across the country.

Foreign investors provide a source of capital for U.S. deals as other options have dried up during the credit crunch.

"Oil prices are very high, and oil companies are making extra profits," said Ilhan Geckil, a senior analyst for Anderson Economic Group in Chicago. "Oil companies want to diversify their investments, and because of the housing and credit crisis, they can buy property in the U.S. at low prices."

Foreign direct investment in the United States has soared – topping $2.4 trillion in 2007 from just over $1 trillion in 2005, according to Anderson Economic Group. Much of that money came from sovereign wealth funds, which control about $3 trillion in surplus savings of developing countries.

So far, most foreign buyers have snapped up trophy towers on the coasts. In New York recently, the Abu Dhabi Investment Council bought the landmark Chrysler Building and an investor group including Kuwait and Qatar sovereign wealth funds paid $2.9 billion for the GM Building.

That's changing.

"We're certainly seeing a lot more looks than ever before," said John Alvarado, managing director of capital markets for Jones Lang LaSalle in Dallas. "It's gotten expensive in the coastal markets, and [investors] are seeking diversification."

The Galleria office towers attracted investor interest from Brunei, the United Arab Emirates, Germany and Sweden, said Mr. Alvarado, who sold the property in May to a Los Angeles company.

German-owned KanAm Group has been one of the busiest foreign buyers in the Dallas area and nationwide. In June, it bought Denbury Park II, an office building in Plano, after purchasing Denbury Park I and Frisco's Duke Bridges office building last year.

"Denbury II is something we did because we already owned the building next door, so we considered it a strategic investment," said Manish Bhatia, acquisitions officer for KanAm in Atlanta. "We really like the Dallas tollway corridor."

Foreign buyers are attracted to lower prices and higher capitalization rates, said Russell Ingrum, an executive vice president for CB Richard Ellis in Dallas. Foreign investors often have debt sources in their country, giving them an advantage.

For example, KanAm's German lenders provide financing at more favorable terms than U.S. lenders, Mr. Bhatia said.

Challenges exist. Foreign buyers are risk-averse and prefer deals of $100 million or more.

"The big challenge with marketing to foreign investors is that they have a big learning curve in these second-tier markets," Mr. Alvarado said. Some foreign investors who looked at the Galleria towers said they didn't understand Dallas and needed to do more market research.

Still, industry insiders think more foreign investors will find their way to Dallas, driven by currency values and growth of developing countries such as China.

Dubai Real-estate official faces $816 m bribery charge

DUBAI: A senior official working with one of the leading real estate developers in Dubai is under scanner for allegedly taking $816.8 million as bribe, the latest trade scandal to crop up in the Gulf business hub.

Walid Al Jaziri, General Manager of sales at Nakheel, the state-owned company behind Dubai's iconic projects such as Palm Islands and The World, has been accused of committing financial fraud to the tune of $816.8 million.

The company has denied the charges, saying, “no embezzlement has taken place within Nakheel and the figure of $816.8 million quoted is categorically incorrect.”

However, a Nakheel spokesperson has told the Gulf News that the company regularly conducts internal audits as part of its commitment to a transparent corporate governance. “As a result of this internal audit process, the company can confirm that a member of staff is being interviewed by the authorities.”

It insisted the allegations of financial irregularities are “in relation to the acceptance of sums paid to an employee by third parties”.

This is the latest case in a series of graft probes in Dubai in recent weeks. There have been reports of an investigation into an alleged financial fraud at real estate finance company Tamweel. - PTI

CDA to Hold Property Exhibition, road Show in Dubai

ISLAMABAD (October 20 2008): The Capital Development Authority (CDA) is planning to hold property exhibition and road show in Dubai with the objective to attract foreign investment in the real estate sector in Islamabad. These events aim to generate funds for development projects planned by CDA and to bring the scarce foreign exchange into the country.

This was stated by the newly appointed Chairman of CDA, Tariq Mehmood, in an exclusive interview with Business Recorder.

He said that these events in Dubai would take place in March or April next year, and the Privatisation Commission, the Planning Commission and other relevant departments would also be involved in this programme.

"We are facing acute financial crunch, which could mar the ongoing development projects of the Authority", Mehmood said, adding that the projected budget of the CDA for last fiscal year was Rs 25 billion, out of which Rs 20 billion was targeted to be generated through land auction. However, no auction took place during the last one and a half years. He lamented the fact that the major issue of water shortage had been put on backburner because of government focus on developing other infrastructure. This had forced the CDA to ration water in the capital.

"We need 125 million gallons water a day to supply drinking water to the inhabitants of the capital, while availability is just 51 million gallons a day. Thus, we are facing acute shortage of over 60 percent", he said, and added that besides water shortage 30 percent of available water is being wasted through leakage from outdated pipelines.

With the underground water table going down, several tube-wells have become useless, he said, adding that a survey was being conducted to dig the existing tube-wells deeper. He said that issue of water shortage was taken on war footing basis and it is expected that six small dams will be constructed in Islamabad.

Chief of metropolis admitted that most of the water in Islamabad is contaminated due to rusty pipelines and, in many places, water supply lines are mixed with sewerage lines. There is a problem in filtration plants, and a task force was formed to look into the matter thoroughly, he added. "We are looking to construct small dams on the pattern of the study conducted by Japan International Cooperation Agency (Jica) for construction of small dams in 1987", he said, adding that the task force on water was asked to review this study to meet the water shortage.

CDA, he said, had plans to bring a pipeline from Ghazi Barotha, at a cost Rs 47 billion, but this project is still to be implemented. Mehmood vowed that he would remove all procedural bottlenecks in this regard and work will be started on the project soon.

Talking of procedural and political bottlenecks of the Ghazi Barotha pipeline, he said that provinces have their share in this project while the capital was totally ignored. "We have 4000 to 5000 families from NWFP residing in Islamabad, 500 to 700 families from Balochistan and over 1500 from Sindh, while all provinces have their houses and fixed quota in federal government jobs and they have to accept the water share of the capital", he said. He said a special committee of senior and influential citizens from all four provinces was formed and merged to form a water task force to resolve the water issue of Ghazi Barotha pipeline.

Talking of his vision for the future, he stated that CDA would construct one 'Cineplex' at Murree Road, for which land has already been procured. A second Cineplex will also be constructed as soon as land is identified for it. He said that two international standard ladies' parks in F-7 and F-10 sectors would be developed besides ladies clubs in G and I sectors. He said that the park constructed for disabled persons had been completed and within a week or two it would be opened after formal inauguration.

About roads infrastructure he said that the Authority would give priority to all the on-going projects and would try to complete them on schedule. This includes expansion of Rawal Lake Park, up-gradation of Saidpur Village, Shakarparin Park, construction of important Avenues, roads, underpasses, overhead bridges, widening of Islamabad Highway, and so on.

He said in the past priority was given to road infrastructure leading from North to South in Islamabad while 9th and 7th Avenues have been constructed which have proved helpful in dealing with increasing traffic pressure. "But my focus would be on establishment of road infrastructure from east to west", he maintained.

He said that 11th and 10 Avenues will be built soon while Kashmir highways will be expanded to 5 lanes from existing 3 lanes. He said that Margalla Avenue will be constructed starting from Nicolson Monument at G T Road to Murree Road which will facilitate people coming from NWFP and Northern Areas. Regarding establishment of new residential and industrial sectors, Tariq said that ten new sectors, including 8 residential, one industrial and one institutional, are in the works.

He said that CDA is acquiring about 4500 acres land in Kurri, Jhaba Teli and Pindori; and the current residents of these areas would be settled in 'Model Villages' in these areas. "We have resolved the decades-long issue of E-11, F-11/4, I-11, I-12", he said. He said that his main focus would remain on beautification of Islamabad to make it a capital of international standard and an attraction for foreigners.

Al Mazaya buys back shares to boost its value

Dubai: Real estate company Al Mazaya Holding on Sunday announced it has bought back six per cent of its shares from the market in a bid to benefit its revenues.

Due to correctional movements in the financial markets, senior officials at Al Mazaya believe that by buying back shares it can boost the market value of the company's equities.

This decision follows the recent introduction of a law allowing companies to buy back a maximum of 10 per cent of their total shares.

"Al Mazaya will target the full 10 per cent and this will be among the coming days since it has now reached 6 per cent (directly and indirectly)," Khalid Esbaitah, chief executive officer of Al Mazaya Holding told Gulf News.

The total value of this already purchased six per cent of shares equals around Dh254 million, Esbaitah said. Esbaitah also said there was a "strategic plan to release these shares (back) in the market at the right time".

Al Mazaya's projects and investments have been rolled out over a five year plan. DIFC-based Sky Gardens residential project has contributed "significantly" to the firm's success, having been sold to Amlak at a profit of Dh999 million. Around Dh653 million went straight to Al Mazaya.

The company intends to include Dh361 million of this amount to this year's budget, while the remaining Dh291 million will be allocated to next year's budget, Esbaitah said.

Commercial tower

Al Mazaya also has projects underway, including Queue Point at Al Liwan, Business Avenue Towers and Icon Towers in Jumeirah, a commercial tower on Shaikh Zayed Road and another project in Downtown Jebel Ali. Also on the card, are several projects in Kuwait.

Officials at Al Mazaya believe that by buying back the shares, it can boost the market value of the company's shares. This decision follows the recent introduction of a law allowing companies to buy back a maximum of 10 per cent of their total shares.

Al Futtaim Real Estate Plans Expansion

Dubai- Showcasing its flagship project, the Dubai Festival city at the Cityscape 2008, the Al-Futtaim Group Real Estate (AFGRE) the emerging real estate giant of the UAE, is more confident than ever as the group the expanding its horizon towards the other Middle Eastern countries starting with Cairo Festival City after the smash hit of Dubai festival city. Al-Futtaim Group Real Estate (AFGRE) is the real estate development and operations arm of Al-Futtaim group. AFGRE is responsible for the origination, conception, development, procurement and construction of mega projects and the leasing and operation of these projects after completion.

Brett Schafer, Senior managing director of AFGRE, said: “At the moment we are not launching any new projects, we here to promote Dubai Festival city our flagship project. AFGRE develops and operates an extensive multimillion dollar portfolio of individual corporate real estate and investment assets across the MENA region. The two current flagship mixed use urban communities under the Festival City brand are Dubai Festival City (5.2 million square metres) and Cairo Festival City (3 million square metres). Brett added: “In addition, AFGRE develops and operates an extensive multimillion dollar portfolio of individual corporate real estate and investment assets across the MENA region.

Emaar to Launch Sale of Premium Commercial Space

Emaar Properties would officially launch sale of premium commercial space within the Downtown Burj Dubai and Dubai Marina today, it was learnt.

These commercial spaces offer modern infrastructure and connectivity with Dubai’s business centers. Burj Dubai Square is a special commercial space and is more commonly being described as ‘new heart of Dubai’. It comprises of 6 modern office buildings with many tenants already starting their operations.

Marina Plaza is another important development within the Dubai Marina and comprises of a modern shopping mall, a hotel and serviced residences. It is one of the largest manmade marina real estate developments in the region.

Illegal Housing Societies Still Prevailing

Lahore: The Lahore Development Authority (LDA) has failed to take any action against illegal housing societies despite being given complete rights to look into their matters in 2005, it was learnt.

Illegal housing schemes established are continuing their development works without any hindrance. They are located in the areas of Shalimar Town, Aziz Bhatti Town and Wahga Town. Upon contacting the LDA officials, they told that they lacked any force to deal with such societies and action can be taken only after they are provided with the necessary resources.

Dubai Properties To Showcase New Projects

Dubai properties, leading master developer and a subsidiary of Dubai Properties Group (DPG), will release details on its new projects and showcase existing developments at Cityscape Dubai 2008, one of the largest business-to-business real estate investment and development events in the world. The master developer is also an exclusive sponsor of the annual ITP Architecture Awards, the Media Centre at the trade centre and the Cultural Evening organised by Cityscape, to be held on October 8.

The exhibition scheduled to be held from today to October at the Dubai International Exhibition Centre (DIEC) is the 7th edition of Cityscape Dubai and will bring together industry professionals including property developers, investors, government and property development authorities, architects, designers and consultants from over 130 countries. The Dh40 billion Mudon master development will be showcased at the Dubai Properties stand. Dubai Properties will launch the first aspect of Mudon, with 348 of the Cairo Townhouses made available for sale. Mudon Cairo Townhouses comprises of a 1.4 million square foot cluster of 2-storey, 4 bedroom villas, within the Cairo section of the project. Expected to be completed in 2010, each villa within the cluster will include a garage for two cars, patio and garden and a first floor terrace.

Yaqoob Al Zarooni, Deputy CEO, Dubai Properties, said: As with every year, Dubai Properties looks forward to a fruitful participation at this edition of Cityscape Dubai. Over the past four years, the event has proven to be a key industry platform for spotlighting our offerings to a well-informed audience of investors and buyers. Based on the response received at previous participations, we are confident of garnering heightened interest in our stable of landmark projects and replicating our success.” “Cairo Townhouses, the first aspect of Mudon to be released, is an exciting project that we are confident will attract major investor interest, and Cityscape is the appropriate time and place to put them on the market,