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Karachi Office Market
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RESEARCH & FORECAST REPORTKARACHI OFFICE MARKET OVERVIEW - 2016
Accelerating success.
KARACHI OFFICE MARKET REVIEWRESEARCH & FORECAST REPORT
2016 | OFFICE MARKET
GRADE BASED DISTRIBUTION OF SPACE
Source: Colliers Research
PAKISTAN GDP GROWTH COMPARISON
For further details please contact Ahsan Zaheer +92 346 821 1039
0%
1%
1%
2%
2%
3%
3%
4%
4%
5%
2012 2013 2014 2015 2016
Pakistan GDP World GDP (Avg.) Linear (Pakistan GDP)Source: Federal Bureau of Statistics
PAKISTAN ECONOMIC OVERVIEW
Pakistan’s economic growth is showing signs of sustained recovery compared to the previous years. The factors contributing to this momentum in growth include reform initiatives from the government (improvement in corporate governance, restructuring of Public Sector Enterprises, strategic partnership through privatization, taxation and energy sector reforms), commitment to a calibrated fiscal and monetary management and an overall improvement in macroeconomic conditions.
The GDP growth rate in 2015 clocked in at 4.2% as compared to 4% in 2014. The GoP has envisaged GDP growth rate of 5.5% for 2016. The GDP growth forecast is dependent on the continued improvement of law and order situation in the country, which had previously restricted economic activity and reduced Foreign Direct Investment.
The initiation of new projects under the China-Pakistan Economic Corridor (CPEC) is also expected to significantly contribute to future economic and GDP growth. The CPEC agreement focuses on a portfolio of USD 45 billion, to be spent on building network of roads, railways and other infrastructure related developments. Managing Pakistan’s fiscal deficit, together with high government expenditure has been a daunting task. In 2015, the fiscal deficit of the country was 5.3% of GDP but is expected to reduce to 4.7% of GDP in 2016. Foreign exchange reserves have been on the rise and are expected to rise to USD 21 billion in 2016. The inflation rate, measured by changes in CPI, dropped to 4% in 2015 from previous year figures of 4.6%, and is expected to remain in single digits which will lead to continued positive real interest rates.
KARACHI CITY OFFICE MARKET
The traditional office CBD area for Karachi is predominantly located on I.I Chundrigar Road. It has reached saturation point. The offices in the area began linear expansion, encompassing the immediate surrounding areas, particularly along M.T. Khan Road and Shahrah-e-Faisal. The new and emerging business districts tend to be located closer to the high-income population areas, such as Clifton and DHA. Some notable office developments coming up in the Clifton area include Bahria Icon Tower, G4, Dolmen Tower ‘A’ and ‘B’ and Bakht Tower.
8%
21%
71%
A Grade
B Grade
C and Below
OYSTER COURT, LAHORE
Oyster Court, Gulberg II, Lahore is a fantastic new development in Lahore. The site is unique in its position and rises above, both literally and figuratively, all other high-end developments in the city. The elite location of the development and its high-tech underpinnings make for an enhanced experience of exclusivity, sophistication and security.
Apartment Features Include:• Luxury apartments • 24-hour security• Two seven story buildings connected through a central courtyard• Central Courtyard with water features • Fitness Gym, and Swimming Pool facility • 50% of plot area allocated as an open space for side gardens• 2 Floors reserved parking for residents• Separate parking for guests
P. 2 | COLLIERS INTERNATIONAL
DEMAND
The demand factors for office space in Karachi are dependent upon location, parking provisions and security. Lately, we have seen a vast improvement in the law and order situation of Karachi, owing to the rangers’ recent clean-up operation. With traditional CBD areas (Chundrigar Road and Shahra-e-Faisal) becoming congested there is a viable trend of multinational companies choosing to relocate from ‘B’ grade developments to those of a better stature. This is evident from the high occupancy rates of ‘A’ grade developments such as Trakker Tower and Harbor Front.
Source: Colliers Research
GRAND SQUARE MALL, LAHORE
Colliers International presents an opportunity to invest in prime retail/office space in a modern building that will showcase all that Lahore has to offer. The site is uniquely situated at Centre point with links to key parts of the city. Grand Square Mall will be home to exclusive brands and the finest fashion stores. Our offices will cater to the elite business segments of Lahore and will provide high-quality office space of different sizes.
Development Features include: • House of Brands • Play Zone• Food Court • Executive Offices• Spacious Car Parking • Full Back-up Generator and much more
For further details please contact Jehanzaib Akram +92 346 821 1041
LEGEND KEY - UPCOMING (HIGH END)
OFFICE DEVELOPMENTS
SR. NO. NAME EXPECTED YEAR1 Bahria’s Icon Tower 2017
2 G4 Mega Tower 2016
3 Dolmen’s Office Tower 2017
4 Bakht Tower 2016
OTHER
Karachi International Airport
Karachi City’s Outer Boundary
Karachi city’s Main CBD (I.I. Chundrigar Road)
Karachi City’s Secondary CBD (Shahrah e Faisal)
Karachi City’s Emerging CBD (Clifton & Defence)
ENVIRONMENTALLY SUSTAINABLE
DESIGN (ESD) DEVELOPMENT
ESD projects are a relatively new concept in Paki-stan and thus far the only office development project to incorporate ESD features is G-4 Tower located in Clifton. ESD adds tremendous value for not only the developer, but the end users (tenants) as well.
Energy usage savings;
Water and waste consumption and transportation;
Lowering of asset operating costs;
and lower green house carbon emission
SUPPLY
According to our estimates, Karachi’s office market accounts for a total supply of nearly 15 million sq. ft., located in commercial buildings of different grading scattered across the city. Clifton accounts for the major share of ‘A’ grade developments, whereas I.I. Chundrigar and Shahrah-e-Faisal have a majority of ‘B’ and ‘C’ grade developments. Clifton is fast emerging as the new business district due to less traffic congestion, better security measures, being closer to the high income residential suburbs and excellent linkage with the other parts of the city through the Mai Kolachi bypass. Prominent office developments in the Clifton area include Harbour Front, Executive Towers, Ocean Tower and Emerald Tower. The offices in these buildings are known for their quality and stand out from the rest of the office stock available in the city. Recently, Colliers has witnessed considerable demand from multinational companies requiring office space in the Clifton area largely attributed to the aforementioned reasons.
MARKET OUTLOOK
With several projects in the pipeline (Bahria’s Icon Tower, G-4, Bakht Tower, Dolmen’s Office Towers) it appears that the Karachi office market might see a slow take up rate due to the multiple options to be added to the current supply. Although we do feel that there is room for quality office space, this demand needs to be sustained by the overall economic climate of the country. If Pakistan remains economically stable, then we foresee many foreign companies will enter the market and in effect will procure quality office space. Moving towards ‘B’ Grade and ‘C’ Grade office developments again depends upon economic indicators – it will be difficult for these buildings to fill up in a timely manner but if the economy keeps growing at the pace it has been we can expect demand for these developments. Currently many small to mid-size companies are relocating from traditional areas such as M.A Jinnah Road to ‘B’ Grade and ‘C’ Grade developments located on Shahrah-e-Faisal due to ease of access, better office premises etc.
P. 3 | COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | 2016 | OFFICE MARKET | RESEARCH & ADVISORY
Muhammad Hussain KhanSenior Manager - Research & Advisory Services
Contact No. +92 346 821 1002
554 offices in 66 countries on 6 continentsUnited States: 153Canada: 34Latin America: 24Asia: 39ANZ: 192EMEA: 112
• $2.5 billion in annual revenue
• 2 billion square feet under management
• Over 16,000 professionals
This document has been prepared by Colliers International for advertising. It
may not be reproduced, either in whole or in part, nor altered in any way,
without the prior written consent of Colliers International. The information
and analysis contained in this report has been obtained from or based on
information from a variety of sources generally regarded to be reliable and
assumptions which are considered reasonable, and which was current at the
time of undertaking market research. However, no representation is made,
or responsibility accepted by Colliers International, in respect of the accuracy
or currency of this information. Potential investors or developers are
encouraged to carry out their own assessment of market potential and
development feasibility.
www.colliers.com/en-gb/Pakistan
Accelerating success.
• Research focus on key urban cities including Karachi, Lahore, Islamabad, Faisalabad & Gujranwala• Comprehensive market reports• Up to date and extensive research database• In-depth analysis of supply and demand position• Critical watch on pricing trends
• Highest & Best Use Study of large plots• Comprehensive project feasibility reports• Development Appraisal and Due diligence • Coordination with master planners and architects in project planning stages• Investment appraisal using sophisticated Estate Master
• Property valuation based on market evidences and residual land value method• Registered with Pakistan Bankers Association • Registered with Pakistan Engineering Council • Registered with Pakistan Council of Architects and Town Planners
• Preparation of title deeds and sales documents• Assisting and management of transactional process• Client & Tenant representations • Preparation of marketing documents including brochures, flyers,pressads• Assessment of lease terms
WHY COLLIERS INTERNATIONAL PAKISTAN?
MARKET LEADERS IN PAKISTAN REAL ESTATE
Amongst the “Big Four” Property Advisory Firms, Colliers International is the only global firm with operational offices in Pakistan. We specifically deal and specialize in real estate sector including mixed use development, residential, commercial, hospitality, retail and industrial projects.
IN-DEPTH KNOWLEDGE OF LOCAL REAL ESTATE MARKET
Our experience in Pakistan for many years has enabled us to establish strong relationship with key stakeholders of the real estate market. This has led us to acquire unmatched market intelligence which assists us in providing systematic recommendations to our clients in order to take key investment decisions.
HIGHLY EXPERIENCED TEAM
We have a highly qualified and competent team with extensive experience and knowledge of the local real estate sector gained over the course of our operation in Pakistan. Our team comprises of:
- Market Research Analysts- Property Valuers- Sales & Lease Executives
ACCESS TO GLOBAL COLLIERS EXPERTISE
Colliers International Pakistan is a part of and linked with Colliers global network. On specific requirements of the project and scope of work, we liaise and draw expertise from Colliers offices around the world.
CREATIVE THINKING & RECOMMENDATIONS
We have a methodological approach for carrying out our projects in which experts from research, valuation and sales divisions brainstorm to provide creative solutions to the real estate needs of the client. We pride ourself in providing factual recommendations based on realistic market conditions
EXCEPTIONAL PROJECT TRACK RECORD
During our operations in Pakistan, we have worked on most of the high-profile projects announced in major cities of Pakistan.
HIGH PROFILE CLIENTELE
We take pride for having worked with all the major developers whether foreign or local currently working in Pakistan. Some of our local clients include Dolmen Group, MCB, K Electric, Nishat Group, Dawood Group, Orange Group, Dhabi Group, Avari Group, DHA Karachi, Lahore and Islamabad. Our foreign clients include Emaar, Etisalat, Pfizer, Siemens, Urbis, Johnson & Johnson, Sanofi Aventis, Standard Chartered Bank, US Dept. of State, Foreign and Commonwealth Office UK.
PROPERTY VALUATION INVESTMENT SERVICES (SALES & LEASING)
Colliers International Statistics 2015
Colliers International Pakistan (Pvt) Ltd.Suite 1/A, Level 1, Harbour Houseoff M.T. Khan Road, Lalazar Avenue, Karachi Pakistan
Tel +92 21 3561 2550-2 Fax +92 21 3563 6382Email: [email protected]
OUR SERVICES
REAL ESTATE MARKET RESEARCH DEVELOPMENT ADVISORY
Kamil NooraniManager - Research & Advisory
+92 346 821 1003
Hammad RanaSenior Manager -Corporate Solutions & Investment Advisory
+92 346 821 1000
RESEARCH & FORECAST REPORT | 2016 | OFFICE MARKET | RESEARCH & ADVISORY
www.colliers.com/en-gb/Pakistan