There is something new to worry the economic managers of our country. Money is going out of the country while the government is making all efforts to attract foreign investment. International real estate groups are here to take capital out into foreign lands.

There were quite a few stalls of groups, which help people invest money in UK’s lands, at the recently held International Property Exhibition and Conference. Although few people were seen visiting their stalls on the first two days, they managed to attract people on the third and the last day of the exhibition.

Already Pakistanis have been investing heavily in Dubai’s real estate sector, which causes flight of huge amounts outside the country. Developers assure investors that they would earn family visa and residency rights in the Gulf, which adds to the attraction of the investment. Besides, these investments are thought secure in an economy free of political influences and uncertainties. There are a number of real estate agencies in Pakistan, which help people invest their money in housing projects in Dubai. The authorities were perturbed over this flight of capital out of the country.
And now another avenue has opened up.

Unlike Dubai there is no attraction of residency rights in buying land in UK because undeveloped land is offered to the investors. But usually the investors earn four to seven times the amount they had invested within a few years, the officials of these real estate groups claim. They say builders
buy land from investors at much higher prices when permission to develop is granted.

An official of one of the groups, which had set up their stalls at the IPEC, claimed they already had around 3,000 investors from Pakistan before they set up their office in the country.

There are very few options for investment in the country. Setting up and running an industry is thought to be a troublesome work. Stock exchanges of the country are always unreliable with wild fluctuations every day shattering the confidence of investors.

Commercial banks offer very low rate of return to depositors. In this situation they find real estate and particularly the real estate out of the country most attractive option.

This capital flight causes depreciation of rupee in both inter-bank and the open currency market. Already the huge trade deficit last year has put the local currency under pressure.

Decline in supply of foreign currency against rupee depreciates local currency which also impacts interest rates and inflation.

The depreciation of local currency increases external debt burden and results in increased cost of imported raw material and consumer items causing inflation besides reducing per capita income.

Although the price of real-estate may have dipped slightly across the country if one talks with reference to the boom it had experienced between 2002 and 2005, the cost of construction has already doubled during the last three years, compounding the worries of common man planning to construct a house now.

As the construction costs continue to surge at an alarming rate, the prices of newly-constructed houses in nearly every locality of the country are thus bound to escalate to the sheer dismay of the lower-middle class of the society.

This scenario has not only sent ripples down the spines of building contractors and the civil engineers, but has also affected the public/private sector development plans as more funds will be required to get the jobs executed.

Inflation in market rates of 15 major items involved in construction can be gauged from the fact that in just three years, the cost of bricks has risen from Rs1,700/1,800 per 1,000 to Rs3,600/3,700 per 1,000 pieces.

With 10 per cent up and down variation, the average prevalent cost of steel has increased from Rs18,000/19,000 per tonne three years ago to around Rs37,000 per tonne at present, the cost of crush has increased from Rs1,800 per 100 cubic feet to over Rs2,800 per 100 cubic feet, the rate of sand has gone up from Rs800 per 100 cubic feet to over Rs1,400 per 100 cubic feet, the cost of cement has moved up from Rs200 per bag to around Rs340 per bag.

It is pertinent to note that three years ago, a cement bag was also available at Rs185, its price has dipped of late from around Rs400 per bag to Rs340 per bag after the government imposed caps on this commodity’s export and following its decision to allow the import of this essential construction item from neighbouring countries.

Talking about the cement price, although the public has raised a genuine hue and cry over its steep escalation during these three years, the cement manufacturers have nothing to smile either because they assert they had just started to run into profits after having invested in billions and not millions and after having waited for years to see their balance sheets swinging in their favour.

If you ask Chairman All Pakistan Cement Manufacturers Association Tariq Sayeed Saigol, he is surely least amused over what the government has been trying to do in order to bring the cement prices down. Saigol is also in possession of a lot of statistical work that adds conviction to his argument that the manufacturers have wrongly been accused by the state and media to have formed a cartel in order to make hay at public’s cost.

He thinks the basic economic principle of demand and supply has determined the cement price. While Saigol continues to raise his voice against high input costs and taxes levied on the cement sector, a strong lobby of private housing developers has somehow made its viewpoint heard in policy-making circles.

While it may prove to be a futile exercise in unearthing the mala fide of the state quarters in this context against the cement manufacturers, if there is any, the public is not likely to get any smiles or relief, even if cement prices plunge below Rs300 per bag level - courtesy the ever-soaring costs of all other allied construction items ranging from electric wires, steel, crush, sand, aluminium and bricks to labour.

The rate of aluminium windows has gone up from Rs300 per square foot to Rs400 per square foot, the cost of erecting a false ceiling has increased from Rs120 per square foot to Rs200 per square foot, the rate of bracket fans has escalated from Rs1,000 each to Rs1,300 each and Dampa ceiling lights now cost Rs2,000 each instead of Rs1,200 each three years ago.

The most disturbing aspect is increase in the cost of electrification by over 200 per cent in just 36 months.

The cost of an electric wire (3-029 specification) has surged from Rs325 per coil to Rs1,125 per coil, cost of electric wire (7-029 specification) has risen steeply from Rs650 per coil to Rs1,750 per coil and cost of electric wire (6 MM2) has increased from Rs1,500 per coil to Rs4,500 per coil.

Earth boring will now cost Rs60,000 each instead of Rs25,000 three years ago, labour rates have escalated from Rs100 per square foot to Rs200 per square foot and rate of construction has gone up from Rs1,150 per square foot to Rs1,675 per square foot.

With construction/development season in full swing during hot and dry summer months all over the country, people with relatively minimal resources are gazing at the sky, having no idea what to do in the present circumstances.

Developers are not in a much comfortable position either as they are already finding it uphill to hunt prospective buyers.

Summing up, there is just a good news for people who have constructed their houses a couple of years ago, as their assets have not only gained value already but are bound to fetch higher returns for a few more years to come, even if a worse real-estate slump greets this sector due to one reason or the other.

Massive urbanization has left most cities of our country congested and pushed the prices of houses so high over the years that it has become almost impossible for the youngsters belonging to low or middle income groups to buy a house.

It is the result of this that a huge number of people have to live with their parents for years after they have got married. If their parents' house is not big enough to accommodate their family, they have to acquire a house on rent, which makes financial position of the new couples very tight.

When commercial banks had entered the housing finance business a few years back, many people thought they would be able to build a house of their own, get rid of landlordsí increasing demands and live in peace for the rest of their life.

But it was not to be. Even today, when more banks have started offering the housing finance product than in the previous years, most people are unable to get the facility only because they do not have a permanent job.

A random survey revealed that only a few banks offer housing finance to people who have contractual jobs. Furthermore all commercial banks offer loans to build houses at a very high mark up rate (mostly over ten percent).

National Bank of Pakistan claims to offer the lowest mark up rate on housing finance and its minimum salary requirement is also very low at Rs10,000, but it refuses clients having a contractual job.

This policy of commercial banks denies countless employed citizens of this country opportunity to build a shelter for their children.

A trend of offering contractual jobs has developed in the job market of our country. Most of our youngsters manage to find only a contractual job. Very few are lucky enough to get a permanent job.

Habib Bank Ltd, one of the largest banks of the country, also does not offer home financing to people with contractual jobs. Also, it offers financing only on a floating mark up rate, which most people would like to avoid because nobody can predict the course of interest rates for long term.

Minimum salary requirement is also very high in most of the banksí housing finance products. In middle class families if a youngster earns Rs10,000 to Rs15,000, he is thought to be earning a respectable salary. But that may not be enough to satisfy a bank that you would be able to pay back their loan with interest.

The largest private sector bank of the country, MCB Bank Ltd, extends housing loan at a very low rate, that is, 10.75 percent, but only to those citizens getting at least Rs18,000 as salary. United Bank Ltd, another leading private sector bank, extends home financing only to those people who draw a minimum of Rs15,000 salary.

Suppose, a young man earning Rs15,000 a month goes to a bank for a housing loan. At the most he will be offered Rs700,000, which only could purchase a small flat. Moreover, he would have to pay around Rs7,400 to the bank as monthly instalments, which is half his salary. He would have only Rs7,600 to provide his family with food, clothing and other necessities of life.

So, the woes and struggle of our young men will continue into the years ahead. They will have to put in some extra effort either by starting a small business or by doing two jobs. Only then, they might be able to earn enough to assure a bank that they would repay.

It is quite amazing that yesterday's small fishing village of Gwadar has rapidly emerged as an international deep-sea port of today. It is really important that the government has declared Gwadar a duty-free port and free-economic zone, keeping in view the significance of the region.

This has not only enhanced its commercial worth manifold but has also accelerated the pace of development to an incredible extent.

By virtue of its fine location, development projects, recreational programmes, the government's special attention will soon turn it into a city that can be comparable with the cities like Singapore, Hong Kong and Dubai.

Gwadar, the western port city, has already got the attention of economic planners. Gwadar has an immense strategic importance. It lies near the Straits of Hormuz, gateway to the Gulf through which 40% of the world's oil passes. The port also has a great commercial attraction. It lies 1,250 miles from Xinjiang, a landlocked western province and latecomer to China's economic boom.

Pakistan identified Gwadar as a port site in 1964. However, it was only in 2001 that significant steps were taken toward making this proposal a reality, when China agreed to participate in the construction and development of this sea port.

The development of Gwadar could bring economic gains to the backward Balochistan province. The infrastructural development of the province could make it an attractive investment place. Meanwhile, land prices around Gwadar are said to be shooting up. Keeping in view its utmost importance, the Government of Pakistan has declared Gwadar as duty-free port and a free-economic zone.

ECONOMIC BENEFITS OF GWADAR BESIDES ITS GEO-STRATEGIC IMPORTANCE ARE: Capitalizing the opportunities for trade with landlocked Central Asian States and Afghanistan, promotion of trade and transport with the Gulf States, trans-shipment essentially of containerised cargo, unlocking the development potential of hinterland, diversion of influx of human resources from upcountry to Gwadar, Socio-economic upliftment of Balochistan, establishment of shipping-related industries, oil storage, refinery and petro-chemicals, export processing industrial zones and many many more avenues.

Gwadar may emerge as a key shipping point, bringing Pakistan the much-needed income, and when combined with the surrounding areas could become a trade hub, once road and rail links connect it to the rest of Pakistan, Afghanistan and Central Asia. A road from Gwadar to Saindak said to be the shortest route between Central Asia and the sea, is under construction.

Gwadar would provide landlocked Afghanistan and the Central Asian republics with access to the sea. Goods, oil and gas reserves from these countries could be shipped to global markets through the Gwadar port.

Pakistan's business community seems to be in favour of Gwadar being designated free trade and export-processing zones. These all mega projects in Balochistan, especially in Gwadar, worth billions of dollars carry national and international dimensions.

The completion of these projects will not only usher in an era of prosperity for Balochistan it will also change the outlook of the region. Gwadar is Pakistan's largest infrastructural project since independence. After the completion of the first phase of Gwadar port billions of dollars have been invested in Gwadar and in the next one or two years the investment can cross the figure of trillions.

Now, China is a major investor in Gwadar and has spent 248 million dollars in the first phase of Gwadar. The total cost of the project may go up to 2.2 billion dollars.

China also plans to invest $12 billion in multiple projects in Pakistan, including the country's largest oil refinery at Gwadar, the Oriental Morning Post reported. The Gwadar oil refinery, which is being planned and designed, is expected to reach an oil output of 60,000 barrels per day when it goes into production.

China is also planning to foster its participation in Pakistan's long-term economic development by investing $500 million in a joint venture investment company.

Beijing is also investing billions of dollars in western China's 5-year plan to develop it and Gwadar is a necessarily part of that plan. Pakistan invests more than an amount of 2 billion dollars to upgrade Gwadar and completion of related development programmes in the last two years.

The provincial government is spending 4.5 billion rupees in Gwadar. Pakistan is an impoverished and underdeveloped country. Its economic record was not good in the past. After coming into power President General Pervez Musharraf focused on the economic sector.

There is no doubt that in the last 3 years Pakistan's economic growth is moving quickly towards a record-breaking achievement in the country's history.

Pakistan has attracted a sum of $1.6 billion as foreign investment during the first 7 months of this fiscal year, starting last July. It is expected to attract $1.4 billion more in the rest of the fiscal year. Pakistan also hopes to achieve 18 billion-dollar exports this year.

These all signs show the government efforts to make Pakistan economically strong. And the mega projects that government has started in Balochistan, including the Gwadar Port, are going to generate an estimated $60 billion every year and would provide a firm basis for socio-economic uplift of the province.

As soon as the Gwadar Port goes operational, a rapid socio-economic uplift of Balochistan will be witnessed and would change the living standards of the people dwelling in the backward areas.

The government, through Gwadar, would end an era of depreciation for Baloch people and encourage them to work on the road to progress and prosperity to contribute in nation-building activities.

Dreams of progress are materialising and clouds of desperation are shattering. Thus a better future for Balochistan is ahead in the form of a fully-developed Gwadar Port.

The prices of plots in Karachi’s Defence area have declined by 15 to 20 per cent in the last three to four months as people moved their investment from real estate to the steadily rising local bourse, say property dealers.

A 500-yard plot in Defence Phase VIII, which was priced at Rs18 million at the beginning of the current calendar year, is now available for Rs15 million. Similarly, the value of a commercial plot of 100 yards in the same phase has come down to Rs12 million from Rs15 million a few months ago.

"The prices of plots in Defence (Phase VIII) have declined because people who had purchased land here as an investment moved their money to the stock market for realising early gains," said Sharjeel Inam Memon of Marvi Property Network. "I expect the property prices to recover as soon as the stock prices start falling."

On the other hand, the prices of bungalows continue to move up because of rising rates of building material. A bungalow constructed over a land of 500 yards in Phase VI is attracting Rs28 million compared to Rs22.5 million six months ago. A bungalow spread over 300 yards in Phase IV is now valued at Rs20 million, rising from Rs15 million only half a year ago.

"Even those bungalows, which were completed before the current price hike of construction material including cement and steel, have become more expensive," said Memon, who is also the General Secretary of Defence Clifton Real Estate Dealers Association.

"The builders, who had constructed these houses, would need more money now for their next project. So they are asking for more money against their already constructed housing units."

Younis Rizvi of Shelter Group said the people who used to buy property in Defence for investment purpose were mostly inactive nowadays.

He also confirmed that prices in Defence Phase VIII had fallen because investors had disappeared from the market. "There are only genuine buyers in the market now," he said.

Zulfiqar Ali of AZ Estate said the prices had started falling since the start of the current calendar year, but only after rising near the end of last year.

"Actually there is no change if we compare prices of today with the prices of October last year. The prices increased and then decreased to the level from where they had shot up," he said.

Ali Reza of Real Estate Bank had the same view. He said the prices were falling but after having risen last year.

He said the prices had declined but not to that level from where they had started rising. "So the prices are still high compared to the levels six months ago," he said.