Real estate business has received a boost in the provincial metropolis mainly on account of investment by the overseas Pakistanis, decline in the rate of interest on deposits in the banks and National Saving Schemes, end of the "hundi" system and huge remittances from abroad through legal channels.
Renowned businessman and Chairman Rafi Group Imtiaz Rafi Butt made this observation while talking to Business Recorder here on Tuesday.
"Investment in real estate particularly in commercial plazas has become profitable business and those investing in these ventures are earning huge profits," he remarked.
Giving background of the Rafi Group as well as real estate business, he said that his group was established in 1978.
Since then real estate business has seen many ups and downs. It was, in fact, at its peak in the 80s. This was chiefly because of the remittances sent home by expatriate Pakistanis.
Houses, shops and offices were quickly snapped up. It was a time when, compared with other enterprise, real estate was paying the highest dividends. But then in the late 80s there came the huge co-operative scandal.
This gave a serious blow to real estate business. Billions of rupees got blocked. It hit the confidence of the people who turned away from this sector. Secondly, banks started offering higher rates of interest on deposits.
Moreover, the rise in the value of the dollar also induced people to convert their rupees into dollar and place them in banks. Consequently, real estate business came to a standstill.
The exodus of Pakistanis to other countries and the erratic policies of the Nawaz government and the resulting uncertainty also played their role. When General Pervez Musharraf assumed power, the first step that he took was to set up the NAB to eliminate corruption. At the same time, he announced the imposition of sales tax. As a consequence, investors withdrew their money and real estate suffered a further setback, he added.
After 9/11, Rafi Butt, who is Chairman of the Jinnah Rafi Foundation and Honorary Consul for Malaysia in Lahore, said that real estate business received a sudden boost.
There were several reasons for it. Firstly, disillusioned with the ill treatment meted out to them in the US. Pakistanis started investing to return to their country. A major part of these investments were made in Lahore.
The second factor was decline in the value of the dollar and in the rate of interest on deposits in the bank. People withdrew their money from the banks and reinvested it in property.
Thirdly, with the end of the "hundi" system, remittances were now being sent through banks. Moreover, Pakistan also began to receive massive aid from Europe and the US, people thought less about going abroad and considered real the best avenue for investment, he said and added that these factors boosted property business. Now everyone rushed to invest in property.
"To my mind, the sharp rise in real estate was unrealistic. Thrilled by the "prospects", some of my friends became too optimistic. They advised me to invest in defence and the new airport area. But, the prices they quoted, what I had forecast happened. After a short while the purchasers disappeared. Now my wide-eyed friends are sitting on their costly investments and waiting.
It may take a long time before a buyer turns up to offer them their fancy price," he said.
To a question, he said that rise in property did not affect the plazas at all. Our own plazas are a case in point. There is the central plaza, which is now complete, and two others - Empress Towers and Defence Shopping Mall - are near to completion.
There was no increase whatsoever in these units. He added that Defence Shopping Mall is located in the heart of Defence Boulevard of Defence Housing Authority. It is the flagship of Rafi Group's range of projects.
It is the largest single-purpose shopping complex in this part of the city. No such facility exists there at present. It is located at the entrance of Defence Housing Authority - the largest, the latest and the most organised housing complex in Lahore. It would cater for the folk in Defence, Cavalry Ground, Cantonment and Gulberg.
The Defence Shopping Mall, as I have said earlier, has been conceived as a "one use only" shopping mall with a large number of shops under one roof - a bazaar of the 21st century. A spacious, six-storey atrium integrates all the floors including that for parking.
Secondly, a big capsule lift and escalators have been provided to bridge the height.
Thirdly, void spaces and skylights provide natural light and ventilation to the upper floors and thus make shopping convenient and enjoyable, he said.
To a query, he said, Defence Shopping Mall is ready for business. It has 580 shops, 400 of these have already been sold. I would advise investors and buyers to benefit from this offer and buy shops.
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