Pakistan Railways

Real Estate Projects – Karachi Division

Viability Assessment, Transaction Advisory & Structuring of Prime Real Estate owned by Pakistan Railways

PROJECT DESCRIPTION

While facing financial challenges as an organization, Pakistan Railways (PR) remains one of the largest land stock owners, in the country. Much of this land is strategically located in the prime areas of urban centres, which have grown around the major north-south rail link of the country and its train stations. It was realized that developing selected parcels from PR’s property portfolio through transparent Public Private Partnership (PPP) based structures could become a vital source of both fixed and perpetual income streams for PR. Such income could be utilized to assist PR in both their much-needed capital expenditure for infrastructure upgradation as well as requisite subsidies for the O&M function.

The Advisory consortium, which was led by Promag and included financial consultants KPMG Taseer Hadi & Co. and legal consultants Mandviwalla & Zafar, was assigned to assist PR in their Real Estate Development Program for the utilization of its property stock, initially in the Karachi Railway Operations Division. The assignment included assistance in Formulation of Strategy & Policy Frameworks, Land-use Allocation, Master Planning, Feasibility Studies, and Transaction Structuring leading to developers’ selection for the Program.

The assignment was a part of an overall policy initiative of PR targeted toward revamping its operations and infrastructure across the country. Three model transactions of Residential Developments were prepared for development under private sector participation arrangement. Strategic level advice included;

High-level analysis of Pakistan Railways’ land banks for identification of development/ commercialization potential
Formulation of policy framework and real estate development strategy
Prioritization of properties for an overall implementation program
Master planning, feasibility study and transaction advisory of properties based on assessed potential
Structuring of packages for private developers
Assistance in transaction execution/evaluation leading to selection of developers

The consortium carefully suggested a well-conceived approach/policy framework for PR to pursue development projects with private sector participation. The scope of work for the consortium included the following;

Formulation of Policy Framework & Development Strategy

Review of Existing Land Banks of Karachi RO Division
Assessment of Commercial/Development Potential of Land Assets
Assistance in Formulation of a Policy Framework for Development
Assistance in Formulation of Real Estate Development Strategy
Basic Land-use/Development Plan
Overall Phasing Plan/ Implementation Program
Assistance in Selection of Properties for Priority Development

Project Planning & Feasibility Study

Compilation of Available Data for Selected Properties
Master Planning/Conceptual Design
Preliminary Cost Estimation
Stakeholder Identification
Technical Viability Assessment
Financial/Commercial Viability Assessment (including cost & revenue estimation, project cash flows, financing/funding requirements)
Potential Investor/Developer Interest Report
Feasibility Study Report

Transaction Structuring & Execution