Monthly Blog- August 2024
Alex Law
I recently travelled to Lahore in Pakistan. Lahore is a city I am becoming very familiar with, having visited a few times in the past eighteen months. It is a fascinating city, packed with culture and splendid architectural gems in the Old City. The ancient fort, with its winding alleys and mosques, is exquisite to see. Pakistani food is on another level and varies widely from region to region, and I spared no time to savor it. However, what sets Pakistan apart is its people who are some of the most hospitable I have had the good fortune to meet.
The assignment was to appraise and value a sixteen-acre site for potential acquisition. The property comprises land on what used to be Walton Airport, located near Model Town, approximately 10 kilometers from the city centre of Lahore. The airport was decommissioned due to safety hazards posed by its proximity to residential areas in the city. The Punjab government allocated the land of Walton Airport for a 99-year lease to the Lahore Central Business District Development Authority (LCBDDA), also known as the Central Business District Punjab (CBD Punjab). This is the first masterplanned central business district in Lahore.
Batches of commercial land plots have been sold off in Punjab CBD at auction since 2021. Despite a deterioration in the economy for the past few years, the market has seen significant demand from investors and developers for the said land plots. The average land price sold at auction in May 2024 was USD 1,766 per square metre.
Originally the site was zoned for commercial use which permits high-density building allowances with towers up to 50 stories. However several years ago the government intervened and rezoned it as a diplomatic quarter for consulates and embassies only. Severe development restrictions included a maximum building height of 2-3 stories which significantly reduces the value of the land within the diplomatic zone, a bitter pill to swallow for CBD Punjab.
Despite this, the zone benefits from high security and good access and is located in an affluent area of Lahore. Investors potentially stand to reap the rewards of significant capital appreciation in the future which is why the auctions have been so successful – investors perceive high-end real estate to be a haven and hedge against a devaluing currency amid political and economic turmoil.
