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

Published: February 20, 2013

The overall occupancy rate in State Life’s real estate properties was 83% in 2012, which has increased to 85% in 2013, says Siddiqi. ILLUSTRATION: JAMAL KHURSHID

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 20th, 2013.

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Reader Comments (9)

  • Tariq
    Feb 20, 2013 - 3:26AM

    Makes sense in the absence of planned parking and public transport. Chundrigar Road is one of the worst places to have ur office at in Khi.

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  • Citizen
    Feb 20, 2013 - 11:16AM

    Chundrigar Road is in shambles, its embarrassing that it represents our financial district. Areas even around the State Bank are poorly maintained. Its a true reflection of the state of our country, no one cares that the financial district is like a slum and everyone should move their offices from there. The only facility of parking there is handing over your keys to bunch of unauthorised parking walas who will often take your car out for a joy ride if they feel like. Railways have ample land which is not being used to max potential and this should be used for multi-storey parking. What do you expect though in the land of the corrupt.

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  • Rational
    Feb 20, 2013 - 12:23PM

    Having office in the one of the State Life Buildings, one of the major concerns for having an office in these buildings is poor maintenace service, (let alone developments) being provided to tenants by SLIC. It won’t be wrong if one say that they provide almost zero maintenance. So in this case, a tenant has to care of it on his own, whatever he needs. So none of these builidings are suitable enough to have some ‘decent’ corporate office anymore. Keeping in view the same, occupancy rate of 85% in Karachi seems to be too ambitious.

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  • Grey
    Feb 20, 2013 - 2:27PM

    30b recorded at 2.9b?
    That is a serious understatement of fair value!
    How is this justified?
    Any one care to enlighten?

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  • Genius
    Feb 20, 2013 - 2:37PM

    Big and well known organisations simply do not need to be in any of the congested areas. Such organsations even have the resources to have ther own premises built according to their requirements. So what could be reason for any of such organisations to be located in any of the congested locations?

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  • Omer
    Feb 20, 2013 - 3:41PM

    Old buildings with no parking! Now Companies are moving to builings which have sufficient parking, I think State Bank is the only organization on I.I.C with parking with in its premises

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  • Maher
    Feb 20, 2013 - 4:30PM

    Just try to Park your car on I.I Chundrigar road at day time, no proper parking areas, only 1 small Shell pump on the road (from Nati Jethi pull till Shaheen complex). How can you expect corporates to stay in these stone age road??? Shahrah-e-Faisal, Clifton, Defence etc are good options for offices.

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  • Mystic
    Feb 20, 2013 - 5:46PM

    If they are not paying income tax, why should the ‘public sector’ help these businesses solve parking problems that THEY THEMSELVES created with illegal buildings?

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  • farhan
    Feb 20, 2013 - 11:33PM

    Thanks for highlighting the issue….I am seeing it through the years….I can guarantee that many companies left Saddar due to congestion and non availability of parking space…But the article does not mentions the Building control authorities who gave nod to build Commercial Plazas on every nook and corner disregarding of other amenities requirement…Who is to blame the builders and their approval giving authority…,

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