A Riyadh-based construction and engineering company has partnered with a Pakistani corporate consortium to invest in a $12 billion real estate project in the eastern city of Lahore. Sarh Attqnia Company (SAC), a Riyadh-based engineering and construction firm, will sign a deal with a consortium led by Javedan Corp, a subsidiary of the Arif Habib Group, to build ‘Sapphire Bay,’ a 2,000-acre tract of land intended for commercial and residential development.
Meanwhile, the Rs100 billion Sapphire Bay project would be constructed as a developing real estate investment trust (REIT), with a listing likely within three years. Pakistan will get its first batch of development real estate investment trusts (REITs).
SAC Chairman Khalid Abdulaziz AlMogbel, signed the first MoU. Members of the partnership include Pakistan’s Liberty Mills, Ghani Group Services, Fatima Fertilizer Company, Soorty Group, and Din Group.
The Sapphire Bay, which will feature both residential and commercial buildings, is the first stage of the 102,000-acre ‘Ravi City’ project to be executed near Lahore and is being monitored by the Ravi Urban Development Authority in terms of implementation (RUDA).
As per the initial agreement, both parties are hoping for “long-term cooperation” and will “join their efforts to build and expand the business partnerships between Pakistan and Saudi Arabia.” Prime Minister’s three-day visit to the Middle East Green Initiative (MGI) Summit last month was accompanied by Saudi Arabia’s announcement of a financial aid package for Pakistan that comprised $3 billion in safe deposits and another $1.2-1.5 billion through a deferred oil payment facility.
SGI and MGI events
Prime Minister Imran Khan’s visit to Saudi Arabia also included an investment conference in Riyadh, where he and a group promoted the country’s housing and real estate sectors, which Khan regards as a key engine of economic growth.
Arif Habib, chairman of the Javedan Corporation, said, “The prime minister had invited us to accompany him on his tour to Saudi Arabia.”
“At the investors’ conference, we had the opportunity to meet with Khalid AlMogbel. During our discussion, we invited him to explore this opportunity. He came to Karachi, where he presented the financial projections, and decided to enter into an MoU with us to become an equal partner in the structure of Sapphire Bay Islamic Developmental REIT.” The partnership comes as Imran Khan looks to boost the economy with a construction and housing stimulus.
In its endeavor to boost the housing sector, the government has already relaxed rates in the latest
budget, bringing the dividend tax on REITs from 25% to 10%. Apart from the incentive revamped regulations around setting up REITs and amended capital adequacy requirements have also made the environment more favorable.
The favorable regulations come in tandem with the State Bank of Pakistan’s facilitation of housing finance including assigning mandatory targets to banks to increase financing for mortgages to builders and developers.