ISLAMABAD, June 27: The Saudi Pak Real Estate Development Company is being launched in the first quarter of 2008 aimed at meeting the growing housing requirements of Pakistan by having joint ventures with China, United Arab Emirates (UAE) and Malaysia.
Informed sources told Dawn on Wednesday that the board of directors of the Saudi Pak Agricultural and Investment Company — a 50:50 joint venture of Pakistan and Saudi Arabia - has decided to launch their new real estate company by March next year after having received a formal approval by the State Bank of Pakistan.
The company is being set up at an initial Rs500 million paid-up capital which is expected to be stretched to Rs1 billion during the second quarter of next year.
It will concentrate on low-cost housing besides catering to the requirements of commercial buildings, service apartments and hotels.
Sources said a number of international companies, especially from China, UAE and Malaysia, have expressed their willingness to enter into joint ventures with the Saudi Pak Real Estate Development Company by substantially investing in the real estate sector of the country.The new company will also finance infrastructure projects and housing schemes beside 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 Securities and Exchange Commission of Pakistan (SECP) as being the regulator.
The company will be fully operational in March next year for which Mr Javed Kalia has been appointed as its chief executive officer (CEO). The company will be based in Karachi, having offices in Lahore and Islamabad as well.
A long-term regulatory approval has been given by the central bank for the company, but rest of the matters will be regulated by the SECP.
Sources said this would be a first-ever any organised company to cater to the requirements of housing, infrastructure etc. by offering significant loaning to the interested people.
The objective is to fund top quality residential apartments and other office buildings. All the market segments will be adequately covered by the real estate company.
There will be a wide collaboration with foreign companies in the services and technical fields.
Sources said more funding for the real estate company would be raised from the banking sector and the capital market.
A world-wide modern concept will be utilised for building housing and other projects through the real estate company.
Sources said a regional office has been set up in Riyadh after having 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 the Saudi Pak Investment Company and its subsidiaries.
Sources also confirmed that the Saudi Pak Investment Bank would be sold soon due to experiencing financial constraints and particularly to meet Rs6 billion paid-up capital requirement by 2009. It has not earned a profit like other banks last year, a source said, adding that the parent Saudi Pak Investment Company has to increase its paid-up capital to Rs6 billion by 2009 and under these circumstances, it was becoming difficult to retain the investment bank. The Bank has created a good image due to its fine infrastructure, good branch network and IT and Human Resource departments.
It was stated that funds were spent on capacity-building as bank was preparing itself for future and that caused a lot of loss and that was why Saudi Pak company did not celebrate its silver jubilee in 2006.
Sources said a number of investors have approached the company to buy Saudi Pak Investment Bank.
“A lot of liquidity is roaming around in our part of the world to purchase banks and other companies which is why the Saudi Pak bank is likely to get a better price,” a source said. He added that the bank has a good network of branches and its share is currently being trading at Rs24 per share in the Karachi stock market.
A decision, sources said, has also been taken by the board of directors of Saudi Pak Agricultural and Investment Company to convert it into a “public limited” company within this year so that it could issue public securities.
The central bank has allowed the company to become a public limited company.
Sources also said that financial approval of the Saudi Pak Investment Company has significantly increased, as by May 2007 total approvals reached Rs3.683 billion as against Rs2.541 billion of last year, registering an increase of 44.9 per cent.
Similarly, disbursements in the first five months of 2007 were amounted to Rs2.116 billion against Rs2.019 billion of last year, having an increase of 4.8 per cent. Also, recoveries stood at Rs2.007 billion in the first five months of this year against Rs1.113 billion of last year registering an increase of 32 per cent.The new sectors which got major financing included steel, fertiliser, cement, power and constructions.
Similarly, the Saudi Pak Insurance Company has achieved a gross income of Rs236 million and is expected to wipe out its accumulated losses in 2007. The company is considered a robust entity having a potential to raise its business in profitability.
The Saudi-Pak Leasing Company is also doing fine as its assets have grown to over Rs6 billion as the year 2006 was good for it.
Overall, group assets of the Saudi Pak Company have reached Rs82 billion and were helping it to further improve its operations across the country.