A Saudi Arabia company is set to sign the final agreement today (Thursday) that would see it become part of the 10-company Pakistani consortium for investment in a real estate project in Punjab – a development being seen as an extension of the relation-enhancing exercise that saw Prime Minister Imran Khan visit the kingdom last month.
Riyadh-based Sarh Attqnia Company (SAC), an engineering and construction company, will sign the agreement with the consortium – led by Javedan Corp that is part of the Arif Habib Group – to develop ‘Sapphire Bay’, a 2,000-acre parcel of land meant for commercial and residential units, said an official privy to the matter.
Meanwhile, the Rs100-billion Sapphire Bay project shall be built under developmental real estate investment trust (REIT), with its listing expected within the next three years, confirmed Arif Habib Dolmen REIT Management Limited CEO Muhammad Ejaz to Business Recorder.
Pakistan to see its first set of developmental REITs
An initial MoU was signed by SAC Chairman Khalid Abdulaziz AlMogbel who was in Karachi on Sunday. Pakistan’s Liberty Mills, Ghani Group Services, Fatima Fertilizer Company, Soorty Group, Din Group are among the consortium members.
The Sapphire Bay, which would include residential and commercial units, is being built as the first phase of the 102,000-acre ‘Ravi City’ plan to be implemented close to Lahore, and is being overseen in terms of implementation by the Ravi Urban Development Authority (RUDA).
Both parties are looking at “long-term cooperation and will join their efforts to develop and strengthen the business relationships between Pakistan and Saudi Arabia”, according to the initial agreement.
The development comes after Khan’s three-day visit to attend the Middle East Green Initiative (MGI) Summit last month, which was followed by Saudi Arabia’s announcement of a financial support package for Pakistan that included $3 billion in safe deposits, and another $1.2-1.5 billion through a deferred oil payment facility.
SGI, MGI events: PM to visit Saudi Arabia next week
However, Khan’s schedule in Saudi Arabia also featured an investment conference in Riyadh where he, along with a delegation, pitched the country’s housing and real estate sectors, an area of keen interest for the Pakistan Tehreek-e-Insaf (PTI) chief who sees it as top driver of economic growth.
“The prime minister had invited us to accompany him on his visit to Saudi Arabia,” Arif Habib, in his capacity as Javedan Corporation chairman, told Business Recorder.
“At the investors’ conference, we had the opportunity to meet with Khalid AlMogbel. During our discussion, we invited him to explore this opportunity. He came to Karachi, where he was presented the financial projections, and decided to enter into an MoU with us to become an equal partner in the structure of Sapphire Bay Islamic Developmental REIT.”
The partnership comes as Khan looks to boost the economy with a construction and housing stimulus.
In its endeavour to boost the housing sector, the government has already relaxed rates in the latest budget, bringing the dividend tax on REITs from 25% to 10%.
Apart from the incentive, revamped regulations around setting up REITs and amended capital adequacy requirements have also made the environment more favourable.
The favourable regulations come in tandem with the State Bank of Pakistan’s facilitation of housing finance including assigning mandatory targets to banks to increase financing for mortgages to builders and developers.