Chinese eye Pakistan's real
estate By Syed Fazl-e-Haider
QUETTA, Pakistan - Pakistan and China have
already entered a five-year economic and trade
cooperation framework to increase Chinese
investment in the South Asian country. Some
important sectors, including real estate, have
also been identified for Chinese investors so that
the country's industrial production can be
enhanced.
Some 20 Chinese companies have
committed to investing in the recently proposed
Pak-China Industrial Zone, near Kala Shah Kako in
the province of Punjab.This would be the first Chinese
industrial zone outside China
in which leading Chinese groups would make
investments and establish various projects. At a
recent meeting with Pakistani Prime Minister
Shaukat Aziz, a Ruba Haier Group delegation from
China requested that the government of Punjab
allocate land to the Chinese Industrial Zone on a
deferred-payment basis and also proposed that the
cost of the land could be recovered from the
developers within 15 years.
Some other
major Chinese groups have also visited Pakistan
recently and discussed their investment plans with
top officials in Islamabad. The government has
already set up a steering committee to complete
the exercise and come up with a final incentive
package, as well as utility agencies to provide
the required infrastructure so that work can start
as soon as the land has been allocated. The
incentive package would help the Chinese investors
to finalize their investment plans in the proposed
Pak-China Industrial Zone.
The real-estate
business has seen a boom in Pakistan in recent
years. The property market in the country has
benefited from the present government's commitment
to promote Pakistan as an investment choice. New
real-estate projects in Karachi, Lahore, Islamabad
and the future port city of Gwadar have built-in
infrastructure to support the rapid development of
housing schemes. On the other hand, the
real-estate business has also developed rapidly in
recent years in China, which has more than 20,000
property-development companies. The Chinese
government has worked out policies and measures
for the reform of the urban housing system to
promote comprehensive development of the
real-estate business.
China International
Industry and Commerce Co Ltd (CIIC) has shown keen
interest in constructing 10,000-15,000 houses for
low-income groups and other development projects.
The CIIC is currently planning the construction of
housing units in the capital, Islamabad, which is
considered a relatively safe city because of the
presence of international diplomatic missions and
government offices. Surrounded by green hills and
beautiful landmarks, most housing schemes in the
city and in the surrounding areas sell out quickly
and have always been considered a good long-term
investment.
In Punjab, about 200 hectares
of land at M-III Industrial Estate in Faisalabad
has been allocated for Chinese investors. The
Rs4.25 billion (US$95 million) M-III, which will
be the biggest industrial estate in the country,
is being established on about 1,820 hectares.
The Xiao Changfu, dean of Chongqing Social
Science Academy and deputy director general of the
Chongqing government's Development Research
Center, recently led a nine-member Chinese
delegation to Pakistan to assess the country's
investment climate. Xiao said China is keen to
invest in real estate in Pakistan and that the
delegation would present its report to Chinese
chambers of commerce and industries.
Gwadar is another area where China's stake
in real estate will prove strategic. After the
completion of the deepsea port project, Gwadar is
likely to emerge as a South Asian business hub and
modern investment center. Property in Gwadar is
considered a good investment and the speculative
trade in real estate is booming there.
Islamabad has plans to establish hotels,
motels, playgrounds, boating clubs, theme parks,
marinas and other recreation projects in Gwadar.
The future port city will be connected to the rest
of the country by land, sea and air links. The
government has decided to set up a tax-free
industrial zone of international standard in
Gwadar and it has acquired about 4,050 hectares of
land for this purpose. Housing schemes and
highrise construction on commercial plots are
planned and will be up to international standards.
Officials in Islamabad claim that leading
international investors have shown keen interest
in Gwadar because of its strategic location and
potential for becoming a major transshipment trade
center in the region. Chinese companies are likely
to invest in real-estate projects in the second
phase of the Gwadar seaport project.
There
certainly exists vast potential for Chinese
companies to invest in Pakistan's real estate. The
free-trade agreement (FTA) recently signed between
the two countries also provides a level playing
field for Chinese investors in Pakistan. Chinese
products are penetrating deeply into the Pakistani
market and, as a result, people regard China with
suspicion, as these cheap products have driven
many local manufacturers out of the domestic
market.
Islamabad has welcomed Chinese
investment in Pakistan and allowed Chinese
companies to exploit the country's real-estate
potential. During a visit by Pakistani President
General Pervez Musharraf last February, the
private sectors of Pakistan and China signed 19
agreements and memoranda of understanding worth
$500 million to undertake joint ventures in
various sectors of bilateral interest. The
projects, mostly related to real-estate
development, are to be implemented within the next
four to five years.
Besides liberalization
of trade in goods, the FTA covers investments,
including investment promotion and protection,
treatment of investment, expropriation,
compensation for damages and losses, and dispute
settlement. The deal will enhance economic
cooperation between China and Pakistan.
Syed Fazl-e-Haider,
sfazlehaider05@yahoo.com, is a Quetta-based
development analyst. He is the author of six
books, including The Economic Development of
Balochistan, published in May 2004.
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