KARACHI: A subsidiary of TPL REIT Management Company Ltd has received approval for a master plan to build a gated residential community on 40 acres in Korangi Creek at an estimated cost of “more than Rs200 billion”.

The project will be built under the country’s first infrastructure-based real estate investment trust (REIT), which operates like any other property-owning company but offers more transparency to investors.

Speaking to Dawn, TPL REIT Management Company CEO Ali Asgher said on Monday the project will offer up to 3,000 residential units in a number of mid- to high-rise creekside towers, some commercial space and a hotel along with amenities like hospitals and schools.

All assets under a REIT are controlled by a trustee instead of its majority shareholder. The entity must list on the stock exchange within three years of its financial close, thus letting small investors take exposure to an otherwise capital-intensive real estate market.

Engineering consultant SSH International has prepared the master plan, which has now been approved by the Cantonment Board Korangi Creek.

“It’s too soon to quote a final figure for the project cost. We’ll now submit detailed designs for each of the many towers that we’re building. I think the total cost will run into more than Rs200bn,” he said.

As for the funds required to develop the project, Mr Asgher said the company will arrange liquidity from three sources. The first stream of cash will be from the Rs18.35bn TPL REIT Fund-I, which achieved financial close in June.

TPL Properties contributed Rs7.1bn of the land value to the fund in the form of investment property called the initial asset portfolio. The remaining Rs11.25bn was raised through eight commercial banks that served as anchor investors.

However, the 40-acre project will receive only a part of the cash raised under the Rs18.35bn TPL REIT Fund-I. The company is using the rest of the financing to develop a technology park in Korangi and a 30-floor, high-end residential tower in Karachi’s financial district.

“Secondly, we’ll raise more equity and debt by holding further funding rounds. The third source of liquidity will be advance sales,” he said while referring to the cash generated from property buyers through instalment plans.

He said that giving a ballpark price of a typical housing unit on a per-square-feet basis isn’t possible at this stage as the project will take “eight to 10 years” to complete. The other two projects being carried out under the same REIT will be over in three years, he added.

Published in Dawn, November 8th, 2022