Low-cost housing needs $180b to meet Pakistan’s shortage

Property developers have shied away from providing units for low-income groups

KARACHI: As Pakistan experiences rapid population growth, the need for low-cost housing units is greater than ever before.

While official estimates put the shortage at 10 million units, which increases every year, funds required to finance the gap are a whopping $180 billion - almost half the size of Pakistan’s economy.

“A low-cost, but respectable unit would have a price tag of at least Rs2.1 million,” Mohsin Sheikhani, patron and former chairman of the Association of Builders and Developers (ABAD), told The Express Tribune. “There’s a desperate need to provide houses for low-income groups as it has multiple benefits including improving law and order.”

ABAD is currently hosting a three-day property expo at the Pak-China Friendship Centre in Islamabad, where it is pitching its affordable housing scheme. Sheikhani said land for the project has been finalised near Fateh Jhang road, 12 kilometers away from the new airport.



Sheikhani broke down the Rs 2.1 million figure, saying that Rs400,000 would be spent on land and development, while another Rs1,500 per square feet would be required for construction for each 120-square-yard plot. Another Rs200,000 would be spent on government fees and management cost.

“A 120-square-yard house can last 15 to 20 years. They can expand the house both vertically and horizontally as and when required.”

On the other hand, Pakistan Mortgage Refinance Company (PMRC) Managing Director and CEO N K Rupan said property development needs to be regulated in a bid to encourage housing units for low-income groups. Rupan cited the example Malaysia that regulated the sector in 1966.



“There is a huge demand for low-cost houses, but development only adds high-end units.

“Low interest rates on mortgage is the only way to address the crisis. Unfortunately, mortgages in Pakistan account for only 0.5 per cent of its GDP while India’s mortgage-to-GDP ratio stands at 10 per cent and Malaysia’s is at 30 per cent.”

According to a research reported by a section of the media, only 1 per cent of the housing units developed annually cater to 68 per cent of Pakistan’s total population, comprising of people who earn a maximum monthly income of Rs30,000. Meanwhile, it is also said that 56 per cent of the housing units constructed during the year caters to a market representing 12 per cent of Pakistan’s population that earns above Rs100,000.



Different governments in the past have announced low-cost housing schemes, but substantial progress on any front is yet to be seen.

It is said that 50 per cent of Pakistan’s population resides in shanty towns. Karachi alone has 562 such towns in the city.

Published in The Express Tribune, May 6^th, 2018.

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