Aurora Magazine

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The CPEC opportunity

Published in Jan-Feb 2017
How CPEC can boost Pakistan's real estate sector.
Illustration by Creative Unit.
Illustration by Creative Unit.

China, buoyed by its rise as an economic power, is planning to revive the old Silk Route under the new concept of ‘One Belt, One Road’, an initiative that will eventually connect 26 countries. China’s Foreign Ministry shared the objectives of this initiative in March 2015, stating that: “One Belt, One Road is aimed at (i) promoting orderly and free flow of economic factors, highly efficient allocation of resources and deep integration of markets; (ii) encouraging the countries along the Belt and Road to achieve economic policy coordination and carry out broader and more in-depth regional cooperation of higher standards; and, (iii) jointly creating an open, inclusive and balanced regional economic cooperation architecture that benefits all.”

The China-Pakistan Economic Corridor (CPEC) is the most important component of this three-pronged initiative. CPEC runs from Kashgar in China to Gwadar via Karachi, and extends to Turkey through Iran. CPEC is a mix of projects that includes road networks, railway lines (connecting Kashgar with Gwadar), an optic fibre cable project, a dry port and energy-producing units.

The value of CPEC has been jacked up from $46 billion to 59 billion, because of the inclusion of new projects by the Joint Coordination Committee (JCC), in a meeting held in Beijing in December last year. These new projects include the development of Diamer-Bhasha Dam, Peshawar-Karachi Railway Line, Karachi Circular Railways, Orange Line trains for all provincial capitals, the Keti Bander Port, Special Economic Zones (SEZs) and three energy projects in Sindh.

As a result, CPEC is perceived as a harbinger of transformational change in the economic profile of Pakistan and other regional countries. Conceptually, the characterisation of CPEC as a game changer, a catalyst of economic revolution in Pakistan and an engine to propel regional economic prosperity is beyond reproach. The connectivity that CPEC will provide to the Central Asian states, and the likely inclusion of Iran, Turkey, Russia and some European countries will make Pakistan a hub of economic activity, with Gwadar facilitating trade with neighbouring countries, including China.

For a resource-constrained Pakistan, an investment of $59 billion in the projects under the umbrella of CPEC, presents the ideal platform to nullify the effects of past missed opportunities and embark on a path of sustained economic growth. For China, connectivity with Gwadar will provide easy access to the Arabian Sea and the expansion of its commercial interests globally. It promises a win-win situation for the region, specifically for Pakistan; a naturally endowed country with a unique geo-strategic location.

It is estimated that the cash inflow under CPEC will more than equal the Foreign Direct Investment (FDI) that has come into Pakistan since 1970, an amount that is forecast to equal nearly 17% of the GDP. Furthermore, CPEC projects are likely to create more than one million jobs in various sectors of Pakistan by 2030.

In addition to the direct economic impact of CPEC, economists believe that there will be a ‘multiplier effect’ and the volume of investments will increase manifold, as a result of the emergence of downstream projects and their spill-over effect into other sectors of the economy, specifically in real estate.

CPEC projects are likely to create more than one million jobs in various sectors of Pakistan by 2030.

Sources in the Planning Division of Pakistan, which is handling the CPEC initiative, believe that it will trigger a boom in real estate and that the property market is likely to experience a four-fold increase in the existing volume of commercial and residential projects in forthcoming years.

Although, due to the unregulated nature of the sector, official figures are hard to come by, real estate experts estimate the existing monetary value of real estate assets to be anywhere between $300 and 700 billion. In the last five years alone, there has been a growth of almost 118%, thanks to projects of key players such as Bahria Town, DHA, Paragon Constructors and Rafi Group, to name a few.

Industry stakeholders are unanimous in their opinion that the immediate outcome of CPEC has been a rapid rise in property values along the arteries of movement in suburban and rural areas. This has been particularly true for Havelian (the second largest municipality in Abbottabad District) where a dry port is being built and substantial FDI has been reported in the acquisition of residential and commercial plots in the adjoining areas. Properties that were considered worthless a decade ago have suddenly become the most sought-after pieces of land in Pakistan.

Real estate experts estimate the existing monetary value of real estate assets to be anywhere between $300 and 700 billion.

In Gwadar, a number of housing schemes and commercial buildings are under construction. As a result, land prices have almost tripled and the port city is expected to soon become one of the most in-demand real estate investment destinations in Asia. The Government of Balochistan, as well as private builders, have also launched housing schemes with modern facilities and amenities, as well as recreational projects to cater to the demand for well-equipped residential community projects by Chinese expatriates.

The Gwadar-Kashgar route will pass through Turbat, Panjgur, Besima, Surab, Kalat, Mastung, Quetta, Qilla Saifullah, Zhob, D.I. Khan, Mianwali, Balkasar, Hasan Abdal, Abbottabad and Gilgit. The acquisition of land for constructing road networks in these areas is underway and mainly supervised by the Government of Pakistan. The development of this extensive road network will ensure that previously isolated areas in Gwadar will be easily accessible, further contributing to an increase in prices. Several railway line projects are also planned along the route.

As a result of all this, there has been a corresponding increase in investment and development of retail projects. Furthermore, builders and developers in Faisalabad, Lahore and Multan have reported increased investor interest in properties there, due to which they expect prices to experience a further boost as more CPEC projects are announced and approved.

Another crucial avenue for CPEC-driven real estate business and investment is the planned development of SEZs. Eight such Zones are to be built, with one each in the four provinces, as well as in AJK, FATA, Gilgit-Baltistan and Islamabad capital territory. The exact location of these zones has not been finalised and consultations with provincial governments are underway. These Zones will serve as primary hubs of industrial activity in the country. The vision for CPEC is to establish a complete ecosystem that includes generating employment through manufacturing, a convenient commute via a well-connected transportation network, residential schemes for people who relocate there and commercial enterprises to cater to the daily requirements of residents. However, the lack of verified data makes it difficult to estimate the impact in the value of the real estate assets in these areas.

CPEC is poised to give tremendous boost to the real estate industry in Pakistan, which even otherwise, has a promising outlook, given that a 2.8% annual population growth rate (source: Federal Bureau of Statistics, 2016) entails that more housing projects will need to be established.

The writer is an academic and a freelance journalist.


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Comments (28) Closed

Abdul Raheem Feb 13, 2017 12:11pm

Provincial and Federal govts must build completely new cities at new long term sustainable locations. The current urban population of Pakistan are highly accumulated in top 7-8 big cities. It is problematic from multiple point of views, some of them are 1. Difficult to own a home for middle class due to overhyped land prices which are the result of demand/supply gap in big cities 2. In case of war, enemy can easily target big cities and paralyze the whole country 3. Overly big cities have their own traffic issues which even developed countries have failed to sort out 4. Quality of life becomes miserable when the population of city becomes more than what it was designed for 5. Last but not the least, small multiple cities are very easy to manage instead of places like Karachi and Lahore. etc etc Govt must build at least 10 new fully planned cities along the route of CPEC

Falcon1 Feb 13, 2017 12:30pm

@Abdul Raheem - "build completely new cities" ... You must be living thousands of miles away from Pakistan.! Otherwise you would know the pathetic state of the existing cities, towns and villages in the country.

If the municipality or the Provincial government cannot even organize and coordinate garbage collection around Karachi, or the Federal government take responsibility to supply clean drinking water, or steady power, or security for citizens, do you expect them to build new cities and maintain them? With what, and who's going to do it??

Is there even a single decent government managed school or hospital anywhere in the country - much less a whole city that anyone of the 180 million souls could be proud of??

ABE Feb 13, 2017 12:37pm

@Abdul Raheem = Nice Fantasy and wishful thinking!

We are talking about Pakistan, not China. where cities are rapidly build on a weekly basis because they have the resources, zeal and expertise to accomplish it.

There has not been a new city in Pakistan since the 1960s when Islamabad was expanded. Then Ayub Khan was incharge. Does anyone expect the present leadership to accomplish anything except Metros and Motorways? Not in a million years!

atif khan Feb 13, 2017 12:41pm

theres a need to build new cities so that load can be shifted..But problem is does gov owns much land, because as far as i know most of the land in pakistan belongs to people not gov and then one they have they give it to people on reitrement. and by the way cpec will boost real estate market means we the pvt sector people working literally round the clock will find it more difficult to get a 5 marla plot for house .

ali asghar Feb 13, 2017 12:52pm

@Abdul Raheem sir your all suggestions are welocomed ,but it is very difficult to afford the cost of new mega projects.

Mohajir Feb 13, 2017 01:22pm

All money under CPEC is a Chinese loan that has to be repaid with 17% Guaranteed return in dollar terms.

Who will repay this loan ?

Monsieur Feb 13, 2017 02:28pm

strange .... boost real estate??? but if the common Pakistani doesn't have the funds required who will be investing in Pakistani real estate ??? The Chinese??? very frightening concequences can be percieved

MSD Feb 13, 2017 02:42pm

@Mohajir You do not need to worry about it.

zeeshan Feb 13, 2017 02:43pm

@Mohajir ofcourse karachiites

atif Feb 13, 2017 02:55pm

@Mohajir Agreed...Yae ghalat baat hy ..Chinese will be eating into our money for our people...I dont like it at all :( ..we dont see the big picture ..we will get benefits but at extreme costs to us. I have no trust in China!

Saleem Feb 13, 2017 02:59pm

The state of our cities is absolutely atrocious. There is pollution all around, footpaths and parking bays are virtually non-existent, and traffic is a total mess. Due to a lack of low cost housing, there has been a mushroom growth of slums everywhere. Google Earth gives a good view of the sorry state of out cities. The govt must build new cities like Islamabad everywhere and demolish the old unlivable mess we have made just lie the Chinese have done in China.

kanwarch Feb 13, 2017 03:00pm

@Mohajir How about you Sir? For God sake please show some optimism and enthusiasm when you hear good news. I know it is difficult to believe.

Sam Feb 13, 2017 03:11pm

First of all you don't need to build new cities. Just expand the current ones, secondly the property prices are silly and over inflated, Asian countries the UK and some states in the US are already cheaper. That needs to be regulated or controlled. Last but not least build up not wide...sadly none of this can happen until these crooked realtors/politicians adjust the actual values of this land

Jamal Feb 13, 2017 03:24pm

Most of the jobs created in CPEC will go to the Chinese. We will get few of the blue collar ones only.

Pulak Feb 13, 2017 03:33pm

One country must not depend so much upon another. Looks like Pakistan has surrendered it's future to China. CPEC is heard everywhere like a lifeline to Pakistan.

A shah Feb 13, 2017 03:58pm

Please no more CPEC. Sick of hearing about it.

Schon Feb 13, 2017 04:16pm

I see a lot of comments from my indian friends regarding repayment of cpec loans,economic colonization of pak an etc.Let me clear a few things.cpec is merely not a road network ,it is a kind a marshall plan.Only 14 billion is for roads rest are energy related projects.somebody is talking abt 17% is joke of the century .34 billion is direct foreign investment by chinese commercial banks like any commercial venture offcourse guarded by sovergien guarantees is loan and by the way rate of interest ranges between 0.5 % to 1.5 %. Whoso ever is talking about 17 ,15 or figures like dat please quote any refrence.Actually what is agonoising for them is ;;failed state;; is going to be gateway to cars and a financial hub.please stop worrying about our debt and concentrate on your own issues.

Fried Chillies Feb 13, 2017 04:19pm

@Falcon1 China MUST do it. Rather it can easily do it even with the construction material that will be "wasted" during CPEC project. China should be held responsible for the wellbeing of Pakistan.

bryan Feb 13, 2017 05:13pm

@Schon The loan part is just a structuring matter, though an important one. They do not understand what goes into a project like this. I have worked close to 2 decades on Industrial Parks, Special Economic Zones, Ports, Free Trade Zones, Corridor projects. There are only 2 types of initiatives- bottom up or a top down. Top down and successful projects are those which have brought in few key aspects to ensure its sustainability- a. requisite infrastructure and phasing, b. backward linkages- utilities and market linkages, c. pricing d. social aspects. If not for the last one what we can get is at best is an Industrial Park- Yes it will be functional and create employment but its growth and metamorphosis gets stunted. It depends what you desire from CPEC- employment, exports or something beyond. If the above aspects are taken care- employment and exports will happen, but beyond that needs a cultural relaxation. This is not possible by banning stuff as happened today by SC.

Khwarizmi Feb 13, 2017 05:35pm

Please include a couple of science universities, especially in Baluchistan, which will help us on higher education as well as qualified workforce for the CPEC.

OMPRAKASH VARMA Feb 14, 2017 03:59am


Pakistan will become a market. Whatever industry Pakistan has today will disappear in view of cheap imported products from China. It will ruin Pakistan.

Muhammed Feb 14, 2017 09:19pm

@Khwarizmi Yes. China should build some technology related universities and technical know how center along the Baluchistan CPEC routes. I think they will do it eventually as they already made beautiful highways. Good schools will be followed by good and modern cities. It's natural

First let the people work and love their own land, other people and those friends who is helping to create such an wonderful prospect for all Pakistanis and others as well.

Sarwat Feb 14, 2017 10:17pm

We have to have certain things in place first as this is an opportunity we simply can't afford to miss. Corruption has to go out the window. Education level needs to rise for every individual if we are to succeed in this endeavor or else we will end up as minions in the whole picture and the few opportunists will rule the rest. Not just a few highways would do this job we need a massive network of highways whose life span has to be 100 years at least. Time to start thinking as the big boys think, future planning.

Sarwat Feb 14, 2017 10:20pm

@Falcon1 PAKISTAN came into being, by dreaming about it, today it's a reality. Stop being a pessimist or unless you are our neighbor to the East.

Sarwat Feb 14, 2017 10:41pm

@Mohajir Then, stop voting for thugs, who only fill up their bank accounts. :-)

Shahzeb ABbasi Feb 15, 2017 03:52am

True benefits will only trickle down when the poor people living on these lands will be entitled for a fair price and not be harassed into selling their land for peanuts to politically backed developers or middle men. Also secondary cities in all provinces will need to strategically align themselves from these projects.

MSH NATH Feb 18, 2017 05:10am

Someone need to also do the maths along with noble wishful thinking. Where is the money going to come?

Pakistan has an opportunity to learn to be rational from an economical perspective and treat real estate too as a resource or economical commodity. The cost should be pegged at what the returns are going to be, else the country will only be creating economic bubbles going up and away from common people and eventually bursting.

Of course some may suggest leasing land to China, but at what cost? Temporary gain for some in power but long term uncertainties?

hasnain ali Mar 17, 2017 12:03am

I 'm thinking what benefits Do the people of Gilgit Baltistan will procure for this Gigantic project? We Gbians, better know what the people and rulers of Pakistan especially those from the region of Punjab had done with GB? They not only engulfed basic rights of Gbians but made us slaves. In the CPEC our role is nothing just to watch, because we are not capable enough to serve in high profile designation. What would be the role for a person with metric level of education? Most people of the region fell in this category. It happened due to lack of institutions. Infect some students acquire education from various cities of Pakistan? But they are not enough to lead the region? Gbians students had to lose everything, either it can be the Happiness of being with family, marriages of siblings cousins and in crucial moments of the family because they can't afford such transportation expenses and time form education, Still Gbians are keen towards knowledge and education. why with Gb?