Foreign real estate projects in Pakistan feel the heat of the UAE market downfall
Thursday, January 08, 2009
By Faryal Najeeb
KARACHI: The super-luxurious residential and commercial projects that had been initiated by foreign developers of United Arab Emirates (UAE) are rumored to be under a cloud as the construction work on some such projects had to be rescheduled following the impact on the real estate crises in the region. But the Gulf builders contend that everything is on track and their project will proceed as per plan.
While the local real estate market is booming with the popularity of small housing projects initiated by local developers, investors in projects by property giants like Emaar Pakistan Pvt Ltd and Al Ghurair Giga Pakistan Pvt Ltd are worried about the status of their investments in both Islamabad and Karachi.
One investor, requesting to remain anonymous shared that he had repeatedly visited the project site, only to see “barren land with a lot of machinery and work force carrying out tasks at a snail’s pace. I have repeatedly inquired on the status of the venture and I am always assured that it would be completed on time. But I fail to understand how they would manage when my eyes tell me otherwise,” he expressed.
On the other hand, an insider of the real estate industry informed that the UAE market is predicted to slump further and this will impact local projects taken up by these Gulf-based giants. He said “more projects would be cancelled and abandoned in the months to come and these are directly going to affect the projects in Pakistan too.”
Referring to the UAE market, the source further stated that Emaar requires billions of Dirhams to complete their existing projects which they had planned to borrow from Abu Dhabi who have in turn asked for shares in the Emaar projects instead.
“Similarly, other big developers such as Nakheel, Damac and Ruwad have laid off staff in massive numbers while shares of the real estate sector of UAE have plunged from as high as Dhs11 per share to a mere Dhs3 per share,” he informed.
“The UAE developers that are here have been rumored to be planning to also lay off people or worse abandon projects and flee with the investors’ money” he continued. “The best bet in these times is caution, as the market is highly speculative right now.”
When The News contacted Chief Executive Officer of Emaar Pakistan, Dr Dia Malaeb, he denied any such news and said that they continue to believe in the Pakistani real estate market’s potential as the global financial meltdown had not affected this country as severely as the UAE market. He said that the projects that had already been launched would go ahead as planned and Emaar Pakistan would ensure that they are delivered to their investors on time and according to their agenda.
Malaeb informed that their project Canyon Views in Islamabad is all set to be handed over to its investors in a few months’ time, whereas the work on The Highlands, also in Islamabad and Crescent Bay in Karachi continues to be completed as per the schedule.
However, the CEO did say that their sales were affected slightly and some new projects that they had been planning to introduce in Pakistan in Karachi, Lahore and Islamabad have been put on hold for the time being.
Malaeb expressed that these new projects may now be launched by the 2nd quarter of this year and have in no way been abandoned. “We are studying the market for our other projects and would launch them when the time is right,” he said.
Al Ghurair Giga Pakistan Pvt Ltd, on the other hand, when contacted, commented that they were an independent private limited company and therefore they were not answerable to their parent company in the UAE, and hence, did not have to follow any orders from them either.
They said that some rescheduling had been done as they had indeed been affected by the Gulf situation. However, they said that they were in no way abandoning their projects as they were “in earnest” over their projects in Pakistan.
The representative of Al Ghurair Giga further stated that since they had been officially granted the license for the World Trade Center to be constructed in Islamabad, they “had to deliver as there was much at stake.”
“Adjustments are made according to the economic situation, be it increasing
prices or the global recession but we take everything in our stride optimistically. In fact, we actually benefited from the real estate recession in the UAE as local investors came back into the country and invested in our local ventures and therefore we gained more than we lost,” the representative said.