First Dawood completes first building

After three decades on the Pakistan Stock Exchange, First Dawood Properties Ltd (FDPL) has finally put bricks-and-mortar to its name. In a regulatory notice on 22 July 2025 the company confirmed that it has “successfully completed construction of its first property project in Ayubia Commercial, Phase VII (Ext.), DHA, Karachi” and is now courting tenants for Shariah-compliant rental income.

Standing on a 100-square-yard corner plot bought for roughly Rs35 million six months earlier, the five-storey mixed-use block adds around 4,500 sq ft of lettable space to one of the Defence Housing Authority’s tightest commercial grids. Similar plots on the same strip have recently fetched Rs3.5–5 crore, according to Zameen.com listings, with grey-structure construction in DHA Karachi now costing between Rs3,500 and 5,500 per square foot. On that basis, estate advisers interviewed for this article place FDPL’s all-in investment at roughly Rs80-90 million (US $280-310 k), excluding fit-outs – a manageable outlay for a balance-sheet that now exceeds Rs1 billion.

Management is marketing the property as a “riba-free” income stream, emphasising fixed rentals and an avoidance of interest-based escalation clauses. Sources close to the company say two national retail chains and a regional micro-finance bank have separately expressed interest, with opening rents guided around Rs450-500 per square foot per month – enough to deliver a gross yield of 25-30 percent on cost once the building is fully occupied.

For FDPL, the hand-over is more than a ribbon-cutting: it is proof-of-concept for a long-promised pivot from dusty investment banking licences to bricks, leases and NAV re-ratings. [restrict level=1]

A wider re-rating of property on the PSX

The Karachi tower surfaces at a moment of re-awakening for listed property vehicles. After years in which developers preferred unlisted Special Purpose Vehicles (SPVs), the PSX is again seeing real-estate capital raisings:

Together these counters have added Rs72 billion to market capitalisation over the past twelve months – a 37 percent sector rerating that analysts attribute to falling interest-rates, the first successful REIT exits and a government amnesty on construction income. FDPL’s micro-project is minute beside Dolmen’s Clifton mall, yet its timing taps straight into this sentiment.

FDPL’s management has already flagged a small-but-scalable strategy: replicate the Ayubia build-and-rent model on multiple 100–200 sq yd plots in DHA, and seed the resulting rental cash flows into a Shariah-compliant development REIT within three years. If the yields on its maiden block hold, that plan could find backers.

How a leasing house became a landlord

To understand the significance of a single building, one must rewind to June 1994 when Dawood Leasing Company Ltd listed in Karachi with a Rs 250 million floatation that was oversubscribed by 47 per cent. Re-named First Dawood Investment Bank Ltd (FDIBL) two years later, the firm rode Pakistan’s credit boom to a Rs 12 billion balance-sheet and regular dividends.

The 2008 global liquidity crunch abruptly punctured that trajectory. With local banks refusing to roll money-market lines, FDIBL faced a creditor run and spent 2009–13 liquidating assets to reduce liabilities “from Rs 10 billion to well under Rs 400 million”. Equity survived – mainly in the form of deferred tax assets – but the investment-bank licence expired, and what remained of management began scavenging for a new business model.

Real estate, long a sideline for the Dawood Group, provided the answer. In March 2024 shareholders voted to rename the company First Dawood Properties Ltd and rewrite its objects clause to include property development, management and trustee services. A 1-for-20 rights issue in June 2024 raised modest fresh capital, but – as insiders concede – the real aim was to unlock a market rerating by dragging legacy NBFC equity into the higher-multiple property peer group.

The completed Ayubia block is therefore both a revenue test and a branding exercise: proof that the ticker FDPL now stands for towers, not term-finance certificates.

What the balance-sheet says about expansion headroom

A glance at FDPL’s latest balance sheet (period ended 31 March 2025) shows why management chose a compact first project.

Two points leap out. First, cash is negligible – barely Rs190,000 – because FDPL deploys every rupee it raises or recovers. Second, more than Rs560 million sits in a liquid, mark-to-market portfolio, half of it quoted shares in group vehicle 786 Investments Ltd and Dawood-managed mutual funds. Management has already sold 2.25 million 786 shares since March, generating an estimated Rs40 million cash inflow, and confirms further stake sales are “on the table” to fund new plots.

On the liability side, total debt is Rs278 million – a modest 27 percent of assets – and chiefly legacy settlement paper. With NAV per share at Rs4.82 against a market price of Rs6.30, the company still trades at a 31 percent premium to book, implying equity markets expect those investments to crystallise at higher values or to be recycled into higher-yielding property assets.

Assuming each Ayubia-scale project requires Rs85 million and 30 percent equity, FDPL could, without new borrowings, finance roughly three similar builds from investment sales alone. Should rental cash flows arrive on schedule, the company could in theory lever them at 50 percent loan-to-value via Islamic diminishing-musharaka structures, doubling the rollout pace to six buildings over the next 24 months.

Yet risk abounds. Deferred tax assets – 13 percent of the balance sheet – only crystallise if the company generates taxable profits; long-term investments remain vulnerable to Pakistan’s famously volatile equity market; and the loan-book, while shrinking, continues to carry legacy disputes.

Sector context: lessons from the majors

What FDPL lacks in scale, it hopes to offset with agility and financial conservatism. It observes three cautionary tales on the same exchange:

• TPL Properties turned its 2013 Centrepoint tower into a bank head-office sale, then parlayed the proceeds into a 13 million sq ft REIT pipeline – but only after raising equity, partnering with IFC, and adopting LEED standards for premium rents.
• Dolmen City REIT enjoys near-full occupancy because it ring-fenced assets, instituted professional management and distributes 90 percent of rents as dividends.
• Pace (Pakistan) Ltd illustrates the cost of over-extension: fire damage, stalled malls and a June-2025 emergency asset sale to cut debt.

The company’s objective is not to create Pakistan’s next mega-mall overnight but to compound stable, halal rental income – one plot at a time – and package that yield for institutional investors.

Karachi’s DHA sub-market remains undersupplied in new-build Class-B commercial inventory, and rents have risen in the past twelve months.

But execution will be everything. FDPL’s five-person staff must juggle land acquisition, contractor management, tenant onboarding and asset recycling while still chasing non-performing loan recoveries that fund the programme. Investors will want to see more detail on pipeline, funding sources and a clear dividend policy before according the stock a REIT-style valuation.

For now, though, a modest five-storey tower in Ayubia Commercial serves its purpose: it tells the market that First Dawood’s long-trailed reinvention is no longer theoretical. In bricks, mortar and a freshly painted façade, the company has literally raised its flag. The next 24 months will show whether those foundations are strong enough – and scalable enough – to support a genuine property franchise. [/restrict]