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Boston, MA -- (SBWire) -- 12/10/2013 --The security situation in Pakistan will continue to have an impact on the commercial real estate sector. Continued risks including urban violence, and a significant Islamist insurgency in western Pakistan, dwindling currency reserves and increasing materials costs will significantly complicate the real estate industry outlook. However, on the bright side the 2013 general elections were an historic milestone for Pakistan, as for the first time in its history, political power was transferred peacefully, at least by Pakistani standards, from one democratically elected government to another, and this potentially more stable political environment should have a knock-on positive impact on the real estate sector.

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The commercial real estate market in Pakistan continues to be complex, with economic shocks, increasing security risks and the danger of political instability all impacting the extent of construction, development and foreign investment. Despite these risks, there have been notable improvements in 2013, and we have a fairly positive view of the sector's development over the next five years.

According to our in-country sources, a rise in retail rental rates is expected in Islamabad as a range of new, modern retail facilities open their doors and the trend for organised retail in modern shopping malls continues apace. In Lahore a similar tale of rising disposable incomes and a growing population, combined with international retail interest in a city that is widely seen as Pakistan's cultural centre, is boosting demand for retail space.

Meanwhile, a similar trend of high-quality modern retail outlets can be seen. We expect that rental rates in the city will increase over the short term, and although the rise will not be as steep as for Islamabad and Lahore, it will still be significant, given the fact that Lahore's maximum retail rental rates are the highest of the cities we survey.

Pakistan has risen from 10th place to eighth in our latest Real Estate Risk/Reward ratings. It scores 65.7 out of 100, a rise from 62.7 in our previous quarter's ratings, mainly on the back of strength in the retail commercial real estate sector.

Recent developments include:

- Progress continues on the World Trade Center (WTC) component of the Defence Housing Authority (DHA) Islamabad Phase II, an expansion of the initial housing society which has experienced significant delays since construction began in 2005. The centre is to include four shopping floors, a corporate office section for local and national businesses consisting of five office thours, and a five-star hotel with over 250 suites. The delegation was impressed with the progress being made at the site and expressed an interest in further investment in value-added developments in Pakistan.

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