Monday April 22, 2024

Pakistan sells embassy building in US for $7.1m

Former chancery was put up for auction late last year, but govt canceled bidding process without giving any reason

By Wajid Ali Syed
July 13, 2023
Notice posted at the entrance of the building. — By reporter
Notice posted at the entrance of the building. — By reporter

WASHINGTON: Pakistan has finally sold a historic building in the US capital that has been vacant since 2003 for $7.1 million, it emerged Thursday.

A Pakistani businessman named Hafeez Khan took the property off the government's hands.

The property classification of the Pakistan Embassy-owned building, which was up for sale for the past few months, was recently downgraded by the District of Columbia — a move that inevitably increased taxes on its assessed value.

The local authorities had changed the class status of this old now-crumbling building formerly owned by the Pakistani government.

The famous R Street building, which used to be a chancery in the past, was put up for auction late last year, after which the government received three bids. However, the Pakistani authorities later canceled the complete bidding process without giving any reason.

The highest bidder at the time had offered $6.8 million for the property in the heart of the city, while pre-auction evaluation of the building on an "as is" basis was set for $4.5 million as a benchmark.

The building has been unoccupied for well over a decade. Its diplomatic status was also revoked in 2018, which made it liable to pay taxes to the local government.

Building status downgraded

The local authorities had further downgraded the property status earlier this year, putting more burden on the national kitty.

The real estate categorisation, according to building codes here, is listed as follows:

  • Class 1 - improved residential real property that is occupied and is used exclusively for non-transient residential dwelling purposes;
  • Class 2- Commercial property;
  • Class 3 - Vacant property;
  • Class 4 - Blighted property.

Official documents from the District of Columbia revealed that the Pakistani government did not get any tax relief on that property from 2018 onwards.

Subsequently, in 2018 and 2019, the building was first categorised as Class 2 because it was commercial and was then placed into Class 3 because it was vacant from 2020 to 2022.

In April 2023, the building's property classification was further downgraded, and it has now been designated Class 4 for its deteriorated condition.

The local government's Department of Buildings determines a building as blighted if it's unsafe, unsanitary, or otherwise determined to threaten the community's health, safety, or general welfare.

The building department determines this status based on the following factors:

  • Is the building boarded up?
  • Are doors, windows, and other openings weather-tight and secured?
  • Are exterior walls free of holes, graffiti, and rotting material?
  • Are all exposed metal and wood surfaces protected from decay by paint, or another weather-coating material?
  • Are all balconies, porches, signs, and similar features safe and sound?

It's also pertinent to mention that Class 3 is taxed at $5 per $100 of assessed value, and Class 4 is taxed at $10.00 per $100 of assessed value.

Since it was not looked after properly, the building deteriorated, even though then-prime minister Yousaf Raza Gillani approved the repairs through a $7 million loan from the National Bank of Pakistan in 2010.