An exodus of suits: Pakistan’s Wall Street losing its lustre

By Kazim Alam, The Express Tribune

KARACHI: A lack of proper parking spaces in the business district of Karachi has forced companies to pull out, leading to lower occupancy rates in prime real estate properties, real estate brokers working in the area say.

“Many companies have moved out of areas that have traditionally been the centre of business activity in Karachi,” said Naushad Ali, a Saddar-based real estate agent, while speaking to The Express Tribune. “Many big companies, which were once headquartered in Saddar, have shifted to buildings around MT Khan Road that have ample parking space,” he added.

According to State Life Insurance Corporation of Pakistan Chairman Shahid Aziz Siddiqi, whose company owns as much as 2.4 million square feet of rentable office space across the country, the occupancy rate of his company’s properties in downtown Karachi is lower than that in other major cities of Pakistan.

“One, there’s the issue of parking in downtown areas. Second, companies are also trying to cut costs by moving their offices out of commercial areas,” Siddiqi said. The overall occupancy rate in State Life’s real estate properties was 83% in 2012, which has increased to 85% in 2013, he added.

“Our occupancy rates are close to 100% in Multan, Faisalabad, Lahore and Islamabad,” he said, adding Karachi’s lower than nationwide average of occupancy rate was attributable to traffic congestion in the business district, where most of State Life’s buildings are located.

State Life owns 61 buildings and 39 plots all over Pakistan. It owns well over a dozen multi-storeyed buildings in Karachi at the priciest locations, such as II Chundrigar Road, Abdullah Haroon Road, Zaibunnissa Street, Shahrae Liaquat, MA Jinnah Road, Dr Ziauddin Road and Shahrae Faisal.

In 2011, the latest year for which State Life has made its audited data available, the life insurance company earned Rs314 million – or 1% of its total Rs31.1 billion investment income – from properties. Although State Life recorded its “investment properties” at book value of Rs2.9 billion in 2011, their market value is estimated to be in the vicinity of Rs30 billion.

Siddiqi said while State Life is already constructing new buildings in Rahimyar Khan, Sialkot and Sargodha, a proposal to establish a parking plaza in Karachi a few years down the line is also on the cards.

“We’re looking at the cost-benefit ratio of building parking plazas in Karachi. It’s not yet final, but I strongly believe that such an initiative will lead to a swift increase in our property prices in downtown Karachi,” he said, adding the public sector should help solve parking issues in Karachi’s business district.

Published in The Express Tribune, February 20, 2013.

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