Stakeholders of the construction industry have said that even though activities in the sector are getting streamlined, there remain a lot of problems that need to be addressed by the government to gain the desired results.
The industry officials are of the view that is the only sector, which can help the country recover from the ongoing economic crisis. At the domestic level, investors are somewhat satisfied with the pace of developing regulatory frameworks but for foreign investors ease of doing business remains a daunting issue.
Eighteen CEO Tarek Hamdy believes that tax incentives, waivers and subsidies for builders, developers and property owners extended through the prime minister’s construction package would enhance investment in real estate sector.
“Real estate is the only sector that can guarantee rapid economic growth,” he added.
The Egyptian billionaire said, “Even in the midst of a pandemic, this sector witnessed expansion. People who had money to invest had no choice but to pour it in real estate projects as they are considered safer investment options with massive returns.”
Hamdy further added that many foreign players are willing to enter Pakistan to initiate state-of-the-art development projects and policy makers need to divert their focus towards ease of doing business for overseas investors.
He urged the Board of Investment (BOI) to transform itself into a one-stop shop for foreign developers so they could receive all required approvals from the authority instead of visiting every department separately which was a hassle.
Also elaborating on the issue, local contractors highlighted that after launch of the amnesty scheme by the present government, drafting and approval of bylaws of buildings and other related issues took many months.
In the first few months after the amnesty scheme was introduced, different development authorities engaged in drafting new laws, said Association of Builders and Developers former chairman Akbar Sheikh.
Sheikh told The Express Tribune that construction activities, planned primarily by private contractors, were on halt during that time because developers were waiting for announcement of new building bylaws.
Read: Construction amnesty scheme extended for six more months
“Once new rules were issued, builders re-planned their existing and upcoming projects followed by approvals from concerned authorities,” he said. “Currently, work on existing and new construction projects is going on in full swing and it is expected that activities in this sector will gain momentum in the coming months.” Talking about housing projects, Sheikh requested the government to enhance the unit price for low income group.
“In the past one year, inflation led to a hike in prices of land and other building material by around 30% and now it is becoming increasingly difficult for builders to offer a low-income unit at Rs3.5 million,” he said. “In this regard, the government should revise up the unit price.”
Meanwhile, real estate experts pointed out that in previous amnesty schemes, people legalised their money by investing it in land, which resulted in an abnormal increase in land prices at prime locations of urban areas.
However this time, both real estate and construction sector are reaping the benefits of the amnesty scheme.
“Real estate prices at prime locations of Lahore have spiked by 40% since the amnesty scheme came into effect,” said F1 properties CEO Waseem Malik.
Money is now in full circulation in real estate and construction sector and this is helping the industry as well as its allied sector, he added.
“The best thing happening at present is that many medium and large scale investors have initiated construction projects for the first time in their lives to legalise their money,” Malik said.
The government only provides affordable housing to a limited number of citizens and middle and upper class remain largely dependent on private builders.
“There is a need to draft a long-term strategy for such sectors which should be continued by successive governments because continuity is the only tool, which can turn this sector into a proper industry,” Malik added.
Published in The Express Tribune, February 7th, 2021.
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