World's Tallest Building Proposed in Karachi

Bahria Town and Abu Dhabi Group agreed to invest $45 billion in real estate in Pakistan. After signing the investment deal, Malik Riaz and Shaikh al-Nahyan announced that Karachi, not Dubai nor Shanghai, will soon boast having the world's tallest building.

Representing the largest foreign investment to date in Pakistan, there will be $35 billion invested in several  large commercial and residential real estate projects in  Karachi, and another $10 billion in Lahore and Islamabad. It's expected to create 2.5 million new jobs in the country.

His Highness Sheikh Nahyan bin Mubarak al Nahyan, Chairman of Abu Dhabi Group, was quoted by Express Tribune as saying, “I am genuinely happy that in this historic project of Pakistan we are working with the visionary Malik Riaz Hussain, this guarantees that not only the project will be delivered beyond our expectations but also before time. We will Inshallah be welcoming first residents in next 3-4 years.”

Why is Abu Dhabi Group interested in investing in Pakistan?  Why not put all or most of these $45 billion in GCC or other Middle East nations?  Answering a reporter's question about the growth prospects of GCC (oil-rich nations of Gulf Cooperation Council) at a recent investment conference in Dubai, Golman Sachs' Jim O'Neill said: "Some GCC countries are well placed to be hubs for the BRIC and N-11-influenced world. I often think of Dubai as a kind of N-11 center, even the capital of the N-11 world, given its business adjacency to Egypt, Pakistan, Iran, Turkey, and, of course, India and Russia."

Pakistan is already experiencing a renewed construction boom with cement sales rising by double digits. Domestic cement consumption surged 10.10% in Pakistan in January 2013, according to All Pakistan Cement Manufacturers Association. On top of 8% increase in Fiscal Year 2011-12, it jumped another 8% for the first seven months of Fiscal Year 2012-13.

There is a lot of privately funded real estate development activity visible in all major cities of the country. Big real estate developers like Bahria Town and Habib Construction are developing both commercial and housing projects in Islamabad, Karachi and Lahore. Other cities like Faisalabad, Hyderabad, Larkana, Multan, Mirpur, Peshawar and Quetta are also seeing new housing communities, golf courses, hotels, office complexes, restaurants, shopping malls, etc.

Cement consumption is an important barometer of national economic activity,  according to a research report compiled by a Credit Suisse analyst.  Last year, CS analyst Farhan Rizvi said in his report that "higher PSDP (Public Sector Development Program) spending has led to a resurgence in domestic cement demand in FY12 (+8%) and with increased PSDP allocation for FY13 (+19%) and General Elections due in 2013, domestic demand is likely to remain robust over the next six-nine months".  This latest investment will add to it. It will give a big boost to the national economy.

The Abu Dhabi Group is a major investor in Al-Falah Bank and United Bank in Pakistan. It recently announced acquisition of all of SingTel’s shares in Warid Telecom, a mobile telephone service operator in Pakistan. With the agreement, the group has become the sole owner with equity holding of 100% in the Pakistani telecom company. Abu Dhabi Group said it plans to improve Warid Telecom’s operations in Pakistan by introducing new technologies, services and packages.

Back in 2008, there was a lot of excitement in Pakistan when  Dubai developer Emaar announced a massive real estate project valued at $43b to develop two island resorts near Karachi. That investment never materialized. Let's hope this time will be different. Let's hope Abu Dhabi Group and Bahria Town will follow through on their commitments.

Here's a video of Malik Riaz speaking with Dunya News:



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