After several months of persistent efforts, Pakistan has successfully sold a historic building in the United States capital for $7.1 million. The vacant property, which had remained unoccupied since 2003, was recently acquired by a Pakistani entrepreneur named Hafeez Khan.
The government of the District of Columbia had reclassified the building owned by the Pakistan Embassy, resulting in an increased tax assessment on its value. This decision was taken as the building had significantly deteriorated over time.
Known as the R Street building, this establishment once served as a chancery. It was put up for auction in late 2022, and the Pakistani government received three bids. However, the entire bidding process was later canceled by the Pakistani authorities without providing any explanation. The highest bid received for the property was $6.8 million, and its prime location in the heart of the city added to its desirability. Prior to the auction, the building had been evaluated at $4.5 million on an “as is” basis, serving as a benchmark.
The building has remained unoccupied for well over a decade, and its diplomatic status was revoked in 2018, subjecting it to local government taxes. Furthermore, the local authorities downgraded the property’s status earlier this year, which placed additional financial burdens on the national treasury.
In accordance with building codes, the real estate classification system consists of four categories: Class 1 denotes improved residential real property used exclusively for non-transient residential dwelling purposes, Class 2 signifies commercial property, Class 3 represents vacant property, and Class 4 designates blighted property.
According to The News, official documents from the District of Columbia indicate that the Pakistani government did not receive any tax relief for the property starting from 2018. Consequently, the building was initially categorised as Class 2 in 2018 and 2019 due to its commercial nature. However, it was later reclassified as Class 3 between 2020 and 2022 due to its vacancy. In April 2023, the property’s classification was further downgraded, designating it as Class 4 due to its deteriorated condition.
The Department of Buildings of the local government determines a building as blighted if it poses a threat to the community’s health, safety, or general welfare, such as being unsafe, unsanitary, or otherwise hazardous. This determination is based on several factors, including whether the building is boarded up, if its doors, windows, and other openings are weather-tight and secure, if its exterior walls are free of holes, graffiti, and decay, if all exposed metal and wood surfaces are protected against deterioration, and if balconies, porches, signs, and similar features are safe and well-maintained.
It is also worth noting that Class 3 properties are taxed at a rate of $5 per $100 of assessed value, while Class 4 properties are taxed at a rate of $10 per $100 of assessed value. Unfortunately, due to insufficient maintenance, the building experienced significant deterioration, despite the approval of repair works by former Prime Minister Yousaf Raza Gillani through a $7 million loan from the National Bank of Pakistan in 2010.