Sale of commercial property is the prime source of making money for the authority
ISLAMABAD: Successive failures in land auctions may be an indicator for city managers that solely relying on the authority’s land bank to generate revenue is not be a viable option for the future.
Gone are the days when the practice of selling commercial property against abnormal and exceptional rates and enthusiastic participation of real estate investors in the civic agency’s land auctions was in vogue.
The situation is much to the contrary now.
Even extending extra facilities and bowing before ‘unjust’ demands of investors, in terms of relaxation to approved land use plans and building by-laws governing the city, is not serving the purpose and city managers are unable to achieve the desired results from land auctions.
During the last two commercial land auctions this year — on June 15-16 and October 13-14 — the authority only managed to fetch bids worth Rs2.2 billion.
On Wednesday, the Capital Development Authority (CDA) only received a total of three bids amounting to Rs393.8 million against a total of 19 commercial plots it was supposed to offer on the day.
Investors’ extended lackluster response on the second day (October 14) of the latest land auction forced city managers to wrap up proceedings much before the announced time.
The main auditorium of Jinnah Convention Centre was almost empty at the second day’s proceedings as only nearly two dozen investors participated and majority of them preferred to stay silent by not offering a bid against any of the plots offered by CDA.
At the June auction, investors had completely boycotted proceedings owing to their reservations.
“If the CDA wants financial discipline, it needs to work out other income generation resources,” said a senior official of the authority’s estate management wing.
Investment in commercial real estate market of Islamabad was in full swing from year 2002 to year 2008, he said, adding afterwards it experienced an unprecedented slump, which is still ongoing albeit with some improvement.
A senior planning wing official of CDA said due to the present slump in the commercial real estate market, investors now want extra facilities which CDA is forced to extend, as sale of commercial property is the prime source of income generation for the authority.
According to CDA report released in January this year, during July 2008 to June 2014, the authority auctioned 2,315 plots — 2,171 residential and 144 commercial — for Rs52.23 billion.
Of that amount, Rs9.5 billion is stuck in litigation and other reasons.
Published in The Express Tribune, October 16th, 2015.