KARACHI: Pakistan is set to see exponential growth in housing and construction industry, as builders and developers are poised to initiate around 1,000 new projects worth over Rs1 trillion over the nine-months ending December 2020.
Last week, Prime Minister Imran Khan announced an industry specific historical relief package cum amnesty scheme – subsidy and tax holidays for investors and purchasers – aimed at creating employment opportunities for daily wage earners and turning around the coronavirus pandemic hit domestic economy.
“The housing and construction industry would not only attract local investment, but also huge foreign investment under the historical package,” Association of Builders and Developers of Pakistan (Abad) former chairman Hasan Bakshi said while talking to The Express Tribune.
“Delegations comprising of investors and constructors from countries including Singapore, China and UK have visited Pakistan before the pandemic outbreak (in China in December 2019),” he said.
It is very difficult to estimate the volume of foreign investment at this crucial point of time when the world is fully engaged in the fighting war against the pandemic. “The foreign investment will be huge, which in addition to the local investment, is expected to carry potential to get rid of IMF loan programme over the next two years,” he claimed.
The government was working on the package for quite a long time in an attempt to fulfil its pre- elections 2018 promises of constructing five million housing units and creating 10 million job opportunity during its elected five-year tenure ending in mid of 2023.
Contrary to the Pakistan Tehreek-e-Insaf (PTI) government’s promises, hundreds of thousands people have lost jobs and investment remained stagnant due to tough economic policies, which were partly imposed under the latest 39-month long International Monetary Fund (IMF) loan programme worth $6 billion began May 2019.
The current fiscal year was seen as the year of economic revival after three years of economic distress. However, the COVID-19 has prolonged the recovery phase.
“The share of housing and construction industry stands at 2-2.5% in gross domestic product (GDP),” said Bakshi who is also a member of the prime minister’s taskforce on housing.
“GDP from construction in Pakistan increased to Rs343.19 billion in 2018 from Rs320.77 billion in 2017,” according to tradingeconomics.com.
The city of ports would alone see over 500 new construction projects till end-December, as major construction activities had come to standstill due to the moratorium. “Now the court of law has lifted moratorium on multi-storey buildings,” said Abad former chairman.
“This (construction) is the only sector which can revive the economy after we successfully overcome the health crisis (in weeks and months to come). It would activate over 70 construction and allied industries. Besides, there are investors and buyers of housing units. Housing sector remains a safe-haven for long-term investors since the stock market has lost the feet and ground,” he said.
The relief package offers provisions like asking no questions over the source of income on investment. The government would approve potential project within 45-day. The projects need to acquire NOCs from some 18 departments.
“It usually takes 1.5-2 years to get a project design approved,” he said.
An average project of 100 flats of 2-4 bedrooms each may cost Rs1.5-2 billion. Such projects can be constructed to be ready to live in 3-4 years.
The new projects could be categorised in three size; low cost (Rs3.3.5 million), medium cost (Rs3.5-5 million) and high cost (starting from Rs5 million), he said.
The construction activities are expected to kick-start after Eidul Fitr (falling late in May) and pick up momentum after monsoon rains (June-July).
Published in The Express Tribune, April 7th, 2020.