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Monday June 17, 2024

2015 IN REVIEW Agri exports fail to bear fruit

By Salman Siddiqui
January 03, 2016

KARACHI: Despite the offer of huge subsidies on exports, the sale of surplus wheat and sugar in overseas markets remained low in the first eleven months of the calendar year ended December 31 due to oversupplies of the commodities in world markets, and some local issues. Exports of basmati rice, mango, cotton, and cotton-yarn also remained low, according to Pakistan Bureau of Statistics (PBS) and industry officials.

However, exports of onion, potato, and kinnow improved from last year after the crops in competitor countries, including India, were damaged, they added.

Pakistan exported a mere 375,000 tons of wheat and wheat-flour from January-September 2015 despite the offer of export subsidy at $90/ton (over Rs9/kg), reported Pakistan Flour Mills Association (PFMA).

The Economic Coordination Committee (ECC) of the Cabinet has allowed traders to export 1.2 million tons wheat and wheat flour in January 2015. It extended the deadline for exports by three times in the year. Last deadline expired on September 30. The association has recently demanded the government to extend the deadline further to export the remaining 825,000 tons grain and its powder ahead of the harvest of the new crop in March 2016. "The country was carrying stock of around eight million tons wheat by November-end which is huge, while size of the next crop is estimated higher at 26 million tons this year," reported an office-bearer at the association.

The country exported little amount of the grain, as US, Russia, Ukraine, and Australia have dumped huge quantities in the world markets.

Mehmood Molvi, an exporter of wheat/flour and other commodities, said the country failed to export the allowed quantity of wheat after the State Bank of Pakistan changed rules for award of the allocated subsidy on exports. "The central bank has asked traders to export wheat, while payment of the allocated subsidy would be made later on...the rule discouraged traders, as there are examples that the government has taken around seven years to pay subsidy amount on exports. The bank should have ensured the release of the subsidy amount within one-week after the receipt of export proceeds," he said.

The export of sugar dropped by over 18 percent to 524,374 tons in the eleven months from 643,268 tons exported in the eleven months last year (2014), according to the PBS.

The export of the sweetener, however, remained largely fair keeping in view decisions taken by ECC time-to-time. The committee has allowed export of 500,000 tons sugar, with available export subsidy of Rs10/kg, in November 2014. In the second-week of December 2015, it allowed export of another 500,000 ton sugar, with export subsidy at Rs13/kg, by March 31, 2016.

The increased subsidy is awarded this time to cope with the higher cost of production.

By November-end, the country had a carry-over stock of around one million tons. And it is to produce another 5.7-6.2 million tons sugar by April 2016. According to industry estimates, the country produces around one million ton surplus sugar almost every year. Local consumption for the next calendar year (2016) is estimated at 4.7 to five million tons.

Export of basmati rice declined by almost 33 percent to 415,438 tons in the eleven months from 616,531 tons exported in the same months in 2014, PBS said.

Molvi added exports of basmati failed to improve after India slashed its export price exorbitantly. "India offered export of basmati at $650-700/ton, in comparison Pakistan offered $1,000-1,100/ton," he said.

The export of non-basmati rice (mainly Irri-6/9), however, helped Pakistan increase overall rice exports by almost nine percent to 3.57 million tons in the eleven months from 3.28 million tons in January-November 2014, PBS said. "Thanks to China which buys non-basmati rice mainly from Pakistan. It does not buy the rice from India," he said.

The export of cotton and cotton-yarn remained low at 67,723 tons and 529,095 tons, respectively, in the eleven months from 96,332 tons and 596,922 tons in the same months in 2014, PBS said.

The low exports may be attributed to 32 percent decline in cotton production at 9.03 million bales (of 155 kilogram each) in the country in current fiscal year to date (July-December 15, 2015).

Waheed Ahmed, an exporter of fruits and vegetables, said export of mango declined by 23 percent to 70,000 tons this year from 91,000 tons in 2014. "Pest attacks and climate change have damaged over 50 percent crop of mango in Punjab - the major producer. This did not allow export of the fruit to increase this year," he said.

Export of kinnow, however, remained robust at 350,000 tons against less than 300,000 tons in 2014, he said.

He said export of kinoow for new season started on December 1, 2015 and may end in February 2016. "The 2016 export is estimated to decline by huge 43 percent to 200,000 tons after the crop was damaged in Pubjab due to pest attack and climate change. Punjab is the only one province in the country which produces kinnow/citrus," he said.

Haji Shah Jahan, another exporter of fruits and vegetables added, the demand for Pakistani kinnow declined in overseas markets after India, Turkey and Egypt started producing seedless kinnow/citrus. "The demand for seedless kinnow remains high, especially in the West, and world across...unfortunately, Pakistan does not produce seedless kinnow," he said.

He estimated export of onion surged to 550,000 tons this year against 400,000-450,000 tons last year. "Export of onion surged from Pakistan after the crop in India damaged on a larger scale," he said.

 He estimated export of potato at around 200,000-250,000 tons this year. He rated the export ok, but not excellent. "This is, however, 100 percent better than last year when Pakistan imported 200,000-250,000 tons potato after its crop was damaged," he said.

Traders said exports may remain low next year as well due to downward trend amid oversupplies in world markets and problems in major world economies, including China. 

 

Bullish on real estate sector 

By Hina Mahgul Rind

KARACHI: Pakistan’s real estate sector received a noticeable boost during the last year with improving security situation triggering construction activities across the country, while experts are bullish on the future scenario, foreseeing an attention shift to smaller cities and mega projects-led boom in Gwadar.    

Chairman Hanif Gohar at the Association of Builders and Developers of Pakistan (Abad) said improving law and order situation in the country’s largest city has created investment-conducive environment and accelerated the construction activities. 

Gohar said the improvement in security situation jacked up value of lands in the troubled areas, such as North Karachi, Surjani Town, Scheme 33, 41 and 42, Gulshan-e-Maymar, Gulistan-e-Johar and Gulshan-e-Iqbal by 35 percent during the last year. 

“At least 25-30 new projects worth Rs100 billion have been announced in those areas within the last six to eight months,” he said. ”Builders are launching new residential and commercial projects in the port city.”

Country Director Saad Arshed at Lamudi.pk, a real estate online classified, agreed that 2015 was fruitful for the country’s real estate sector. 

“We saw a lot of developments in the major cities as well as in smaller cities, such as Multan, Gujranwala, Sialkot and Gwadar,” Arshed said.

“The commercial property sector saw a great boost, especially after the launch of REIT (real estate investment trust) on Dolmen Mall.”  He said more hi-rise buildings will be constructed in the city in 2016.

Chief Executive Officer Zeeshan Ali Khan at Zameen.com, another digital marketplace, said last year was much better in terms of market activities. 

“Karachi’s stellar performance, propelled by the improved law and order, truly has us at the edge of our seats,” Khan said.

“However, the imposition of withholding tax on bank transactions, during the second half of 2015, did disrupt the market to a certain extent.” 

He urged the government to facilitate the property sector. 

Director General Sajjad Baloch at Gwadar Development Authority said Gwadar property witnessed a boom in 2015. 

“Property prices got three times higher after Gwadar port’s operation was handed over to China,” Baloch said.

Real estate sector in the Balochistan’s port city received a major boost this year after the initiation of work on the China-Pakistan Economic Corridor (CPEC) projects. 

The $46-billion-CPEC projects will include much-needed highways, railways and pipelines between Gwadar and China’s autonomous Xinjiang region.

In Gwadar, prices of 600-square yard plot at Singhar phase-II have increased to Rs1.8 to 2 million. The price plunged to Rs.0.5 million.

Similarly, prices of 1,000sqyrd plot at Singhar phase-I, near Pearl Continental hotel, have reached to Rs6 to 8 million from Rs2 million earlier.

Baloch added that the prices of industrial area in Surbandar, Gwadar were also seen robust growth and one acre plot price has shot up to Rs3 million from Rs0.5 million.

“The groundbreaking of the Turkmenistan-Afghanistan-Pakistan-India pipeline, also known as the Trans-Afghanistan pipeline, will bring property values in Gwadar to unprecedented heights,” he said. “The TAPI project will have a compounding effect on the real estate’s value. It will be the third such international infrastructure deal for Pakistan after the CPEC and the Russia-backed “North-South” pipeline, which will connect Lahore to Karachi.”

Demand for Gwadar properties is going up, while the supply is going down. 

Market observers said investors should see these figures and realise that Gwadar is a safe and lucrative place to put their funds.

A Zameen.com report said Karachi’s property market performed brilliantly and saw meteoric growth in 2015.

“While most localities in the city of lights flaunted impressive numbers, BTK (Bahria Town Karachi) marched in the other direction by registering a 9.74 percent plunge for the 500-yard 2 plot category,” the report said.

“At the end of the year, the average price stood at Rs5.789 million. It is possible that investors did not show overwhelming interest in this locality because they are waiting for the expected launch of Bahria Town Peshawar. However, genuine buyers maintained their interest.” The report further said both DHA Karachi and Gulshan-e-Iqbal performed remarkably well. 

“Compared to 2014, these societies saw noteworthy growth and managed to increase investor interest,” it said. 

DHA posted a 15.87 percent rise, bringing the average rate of 500-yard 2 plots up to Rs37.011 million, while Gulshan-e-Iqbal registered a whopping 19.56 percent rise, pushing the average price up to Rs24.572 million.

The average price of 500-yard 2 plots at DHA City Karachi came up to Rs4.383 million, which is an incredible 66.71pc increase from last year. In terms of price rise, it is approximately Rs2 million increase. The report said property prices at DHA Lahore remained stable in 2015. The average price of 1-kanal plots stood at Rs14.881 million, a meagre 0.29 percent decrease from the last year. 

Prices for 1-kanal plots in Bahria Town Lahore increased an impressive 13.91 percent, bringing the average up to a solid Rs11.291 million. 

The prices of 1-kanal plots at Lahore Development Authority’s Avenue shot up 9.06 percent, pushing the average price up to Rs9.632 million.

Wapda Town exhibited a 7.25 percent in the rates of 1-kanal plots. The average price for these plots was Rs15.564 million, indicating that 2015 was a good, but not phenomenal, year for this society.

The Zameen.com report further said the federal capital’s sector F-11 posted noteworthy numbers in 2015, as average rate of 1-kanal plot rose 15.99 percent to Rs52.346 million over the last year.

While DHA Islamabad posted a moderate growth of 9.39 percent, pushing the average price of 1-kanal plot to Rs12.515 million, Bahria Town remained stagnant. 

The report said the locality managed to post a 2.63 percent rise and the average price of plots stayed almost the same at Rs11.868 million. 

Sector E-11, a locality that saw moderate growth in 2014, registered a 5.52 percent increase in property prices during the last year, bringing the average price of 1-kanal plots to Rs37.717 million.

Real estate experts are hopeful that 2016 will shape up to be even more exciting. 

Industry experts foresee growth in property sector across the country. They termed Gwadar as an investment goldmine.  They said there has already been a growth in real estates in second- and third-tier cities, such as Gujranwala, Faisalabad, Multan and Hyderabad. 

“As the bigger cities such as Lahore, Islamabad and Karachi are slowly becoming saturated, real estate developers and investors alike are turning their attention to smaller cities,” Arshed of Lamudi.pk said.

“In these second- and third-tier cities, property is significantly cheaper.”

In 2016, they said there will be development of smaller cities in Pakistan, as they will spend funds to improve transport, water and electricity supplies, and develop their infrastructure. 

“This is essential if these cities want to compete with bigger markets, both locally and internationally,” Arshed said.

“By shifting focus from bigger cities to smaller areas, investors get more for their money due to lower costs of land, resources and building materials, and developers have more space for construction. This makes these second tier cities a very attractive option for real estate professionals.”

The experts said migration from capital cities, infrastructure improvements and growing foreign investors’ interest are some of the expected developments for Pakistan’s real estate market.