‘A shift of attitudes towards vertical living in Lahore’
Omer Ellahi Shaikh is a young entrepreneur from Lahore who has recently joined his family business. Nagina Group is primarily a textile group with three publicly listed companies called Prosperity Weaving Mills, Ellcot Spinning Mills and Nagina Cotton Mills. The group has over 100,000 modern spindles, 300 looms and capability to produce 30.57 MW of electricity.
Omer has taken the task of diversifying the group and has handed over a high-end apartments project in Gulberg, Lahore by the name of 19Q Luxury Residences. He has a bachelor’s degree in Managerial Economics from Bentley University, Massachusetts. Omer has been a member of the TEVTA Skills Force Committee which aims to develop specialized skills sets amongst the workforce and is currently on the Executive Committee of Association of Builders and Developers (ABAD).
BR Research had a virtual meeting with Omer to get his views on real estate and vertical living in Lahore. Following are the edited transcripts of the interview:
BR Research: Let us begin with a textile conglomerate’s venturing into real-estate sector. What made the group diversify?
Omer Ellahi Shaikh: A steady and well-thought-out growth strategy coupled with a solid commitment to quality has earned Nagina Group a family of satisfied customers, hardworking employees, appreciative shareholders, and the confidence of the banking community. The core businesses of Nagina Group generate an annual turnover in excess of $200 million.
I would say that Nagina Group has created a skilled and knowledgeable management fully capable of understanding and responding to customer needs in fields of spinning, weaving, power generation and now real estate development. Nagina Group was selected by Forbes Magazine as one of the best 200 international companies with an annual turnover of under a billion US dollar. This finesse and attention to detail remains our core value system, which has also been our guiding principle for launching our real estate development division.
Our decision to enter the real estate development sector is driven partly to cater to the requirement for the Pakistani diaspora for signature creme de la creme luxury apartments. 19Q Luxury Residences are a culmination of a well-executed development strategy. Our surveys also revealed a rise in expectations and acceptance of Lahore’s societal attitudes whereas a greater shift towards vertical living is now considered not just acceptable but perhaps niche and chic. These two drivers of opportunity influenced our decision to launch our first project and I am quite pleased to report a stellar response by the market. The reason for a healthy response is an intelligent design, quick implementation of project, a strong family name behind the project and above all a relentless commitment to being the best.
BRR: Tell us about your involvement TEVTA Skill Force?
OES: ABAD is a national level representative organization of real estate developers which has the aim and objective of unifying and streamlining the construction activities of the private sector. The principal objectives of ABAD are to promote the housing industry in the country, provide assistance to the government in formulating housing polices and plans and coordination between the public and private sector. Apart from this, ABAD conducts organized research in the real estate sector and raises awareness to promote the science and art of building. ABAD facilitates the public by liasoning with several government institutions like Lahore Development Authority, SNGPL, WASA, 1122 and the Environmental Protection Agency.
The TEVTA Skills Force was an initiative taken by ABAD and TEVTA through which we refined the skills sets of hundreds of electricians, plumbers, artisans, and carpenters. We then helped get these specialized workers better paying jobs. The objective of the force was to train a superior group of specialized workers so that they can earn a better living for themselves, give a better output, and increase the talent pool available in Pakistan.
BRR: The project is in Lahore. Do you think that Lahore is ready for vertical living? Why?
OES: As of a 2017 census, Lahore has a population of 11.13 million. Just 20 years ago, this population stood at 5 million. The phenomenon of urbanization has kicked into Lahore with 40 percent of our population living in urban city centers. Most of our jobs, businesses and lifestyle amenities/choices are located in these city centers. Coupled with the fact that 64 percent of our population is under the age of 30 years, apartment living will boom in Lahore. The population wants to move into the city, especially in centers near Gulberg where you have high quality cinemas, restaurants, job opportunities, security and livelihood. As a member of Association of Builders and Developers (ABAD), I can also vouch that the government has been extremely supportive of vertical living. There has been positive reinforcement in terms of by-laws and infrastructure development which will enable more developments.
BRR: How do you see Lahore versus Karachi in terms of infrastructure, housing needs and trends in urban living over the last decade?
OES: The comparison between Lahore and Karachi in terms of housing is particularly important. Karachi is our largest city with a land area of 3780 square miles and a population of 14.91 million, whereas Lahore is our second largest city with a land area of 1772 square miles and a population of 11.13 million. Karachi, even though having more land and more population, has mostly evolved around its coastal belt. Lahore, on the other hand, is growing in all directions. Apartment living has become a very popular lifestyle choice in Karachi. Developers have built numerous buildings which are fully populated for decades. An urban lifestyle which enables apartment goers to not worry about security, availability of domestic staff and general maintenance; apartment living has become a roaring success. Along with supply and demand of apartments, associated building services have become professional in Karachi.
Lahore, with better infrastructure than Karachi, is ripe for apartment living. I feel that as Lahore’s population realizes how comfortable it is to live in a serviced building and not worry about security, staff and general maintenance, apartment living in Lahore will become more popular.
BRR: Who is you target market? What services are you offering? And what is the price range of a regular apartment?
OES: 19Q Luxury Residences was our first real estate project. It is a seven story building with one basement. 19Q Residences is a collection of 25 three-bedroom corner apartments of approximately 2400 square feet each located on a corner plot in Gulberg. The building offers a swimming pool, steam room, gym, two function rooms and a reception lobby. Our project is designed by Wasif Ali and Associates and was planned to be a boutique development with a limited number of families. The apartments are quite large in size and are a home replacement solution. We have finished our apartments with high end specifications and are selling each apartment unit for approximately Rs23,000 per square foot. Our apartments come fully equipped with air conditioning, washing/drying machine, fully equipped kitchen including microwave, oven, refrigerator, hob, hood and basin.
BRR: Is the project complete?
OES: The project was fully completed in September 2019. The families living in the apartment complex are extremely happy with the living environment.
BRR: Housing and construction finance for builders and developers: How do you see the recent moves by the government including the construction package as well as SBP's call for banks to increase their exposure to at least 5 percent of the private sector credit by December 2020?
OES: The government has been extremely supportive of the requests of the real estate sector. I feel the recent package that they have announced will spur construction activity in the country. This is evident as you can see the sales of cement and steel have picked up and new cement/steel/construction projects are in the pipeline. The policy by the State Bank of Pakistan is a very encouraging sign. Banks now have to allocate 5 percent of their corporate lending portfolio to the construction sector. This move will help spur growth as Rs330 billion have become available for the sector.
BRR: What has been your mode of financing - debt or equity or both?
OES: This project has mostly been completed through self-finance though we did have a running finance line available. Being Nagina Groups first project in the real estate sector, we wanted this project to be debt free. We are hoping that families will take advantage of the bank real estate financing schemes to purchase our apartments. We are finalizing terms with some banks to make financing available for our customers.