ISLAMABAD, Feb 8: The State Bank of Pakistan (SBP) has allowed the Saudi Pak Agricultural and Investment Company to set up its Real Estate Development Company to help meet Pakistan's growing housing and office building requirements.

Informed sources told Dawn on Thursday that a number of international companies from China, United Arab Emirates (UAE) and Malaysia have expressed their willingness to enter into joint ventures with the Saudi Pak Real Estate Development Company by substantially investing in property sector of the country.

The new company will finance infrastructure projects and housing schemes, besides providing funds for development of new tourist resorts, shopping malls, hotels and office blocks.

"It will have a complete corporate and management structure for promoting long-term investment horizon for which it will follow draft rules of the Security and Exchange Commission of Pakistan (SECP) as being the regulator", said Chief Executive Officer (CEO) of Saudi Pak Agricultural and Investment Company, Mr Rashid Zahir.

When contacted, he confirmed that the central bank had approved establishment of Saudi Pak Real Estate Development Company at an initial capital of Rs500 million which will soon be stretched to Rs1 billion.

"The company will be fully operational in March for which its separate CEO has also been appointed," he said, adding the company will be based in Karachi, having offices in Lahore and Islamabad as well.

A long-term regulatory approval has been sought from the central bank, but the rest of the matters would be regulated by the SECP, he added.

He said this would be the first- ever organised company to cater to requirements of housing, infrastructure etc. by offering significant loaning to interested people.

The objective is to fund top quality residential apartments and other office buildings.

All market segments, he said, would be adequately covered by the real estate company.

There will be a wide collaboration with foreign companies in the services and technical fields.

More funding for the real estate company, Mr Zahir, said would be raised from the banking sector and the capital market.

He said world-wide modern concepts would be utilised for building housing and other projects through the real estate company.

Responding to a question, he said that a regional office of Saudi-Pak investment company, which is 50:50 joint venture of Pakistan and Saudi Arabia, has been set up in Riyadh after having got a formal approval of the Saudi government.

It will be a liaison office the purpose of which will be to study the raising of funds for Saudi Pak company and its subsidiaries.

Asked about the Saudi-Pak Bank, he said it had created a good image due to its fine infrastructure, good branch network and IT and human resource departments.

Similarly, he said Saudi Pak insurance and leasing companies were also doing good business and the year 2006 was good for them.

Mr Zahir also informed that there were 25 per cent more loan approvals in 2006 (Rs6.160 billion) compared to Rs4.928 billion of 2005.

Similarly, disbursement was up by six per cent from Rs4.587 billion of 2005 to Rs4.587 billion in 2006.

The recovery position, he said, had improved but it was not that good due to weaknesses in the textile sector.

Since the company's inception, Mr Zahir said, the company has offered over Rs41 billion loaning to its 830 clients which included over Rs32bn advances and Rs8.9 billion provided for capital market underwriting of public issues.