Builders are set to initiate construction of 30-40 high-rise buildings in the port city among the expected over 1,000 housing projects this year under the recently announced construction relief package.
“Karachi, the hub of the country’s economic activities, will soon see the beginning of construction work on some 30-40 high-rise buildings (of 30-40 floors each),” Association of Builders and Developers of Pakistan (ABAD) former chairman Hasan Bakshi said while talking to The Express Tribune on Friday.
Pakistan is expected to initiate more than 1,000 low-cost and high-end housing projects this year as the government will not ask about the source of investment from builders and developers for the projects to be registered with the government by December 2020 under the new scheme.
Prime Minister Imran Khan said the other day about 13 builders had committed to investing Rs1.37 trillion in constructing 100,000 housing units under the Naya Pakistan initiative.
Construction work on the projects was expected to be kick-started over the next three to four months, Khan said.
Such projects are bound to see construction of at least a grey structure (skeleton) of building by September 2022 under the initiative. “They will be ready to live over the next couple of years as remaining construction work and finishing will require another two to three years,” Bakshi said.
“The Federal Board of Revenue (FBR) has registered 40-50 builders and developers so far under the scheme, allowing them not to disclose their source of investment till December 2020. Another 4,800-5,000 builders are in the queue to get registered with the FBR under the scheme,” Bakshi said.
Earlier, the FBR reported that it had registered 40 builders under the scheme. The FBR registers only those builders who want to take benefit of the construction relief and amnesty scheme.
Other builders were free to initiate their own projects under the Naya Pakistan housing scheme, the former ABAD chairman said.
“A 38% growth in cement sales in July reflects the underlying construction activities in the country,” he said.
The prime objective of the construction relief and amnesty scheme is to revive the coronavirus-hit national economy and create job opportunities, especially for daily-wage earners. The government announced the scheme in April.
Besides, the government has announced a subsidy of Rs30 billion for low-cost housing projects and a fixed tax regime for the builders and developers with substantially reduced tax rates.
The tax rates would be further cut by up to 90% on the purchase of housing units by people belonging to low-income groups. The government will approve a potential project within 45 days under the scheme.
Bakshi, who is a member of the Naya Pakistan Housing Programme, said foreign investors had also expressed interest in investing in such housing projects in the country.
“This will, however, depend on us as to how we sell such housing projects to foreign investors,” he said, adding, “The government’s resolve to address issues in such projects at weekly meetings is a good initiative. This should attract significant foreign investment.”
Besides, the government is also aiming to attract investment from Pakistani expatriates. Overseas Pakistanis, who sent record high remittances of $23.1 billion to Pakistan in FY20, are expected to invest about 40% of the remittances in the real estate and construction industry every year, it has been learnt.
The housing and construction industry has the potential to revive around 70 other industries, including cement, steel, paint, wood and carpenters.
The share of construction industry is nominal at 2-2.5% in the gross domestic product (GDP). “The construction relief package is expected to multiply the share of construction industry in GDP over the next couple of years,” he said.
An average project of 100 flats of two to four bedrooms each may cost Rs1.5-2 billion. Such projects can be constructed to be ready to live in three to four years, he said.
The new projects could be categorised in three sizes - low cost (Rs3-3.5 million), medium cost (Rs3.5-5 million) and high cost (above Rs5 million), he said.
Published in The Express Tribune, August 15th, 2020.
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