Addressing a conference held on the sidelines of the 8th International Building and Construction Industry Show at the Expo Centre, Patel said housing costs in Pakistan range between $12 and $15 per square feet, which is the lowest in the region.
The World Bank estimated a shortfall of eight million housing units in Pakistan in 2009. The annual increase in demand is estimated at 600,000 units. With 600,000 demand and 500,000 units from the backlog, total annual housing needs comes to 1.1 million.
“Pakistan has a large construction industry, but it is dominated by the local housing sector. So there’s vast room for foreign investment,” he said.
Patel stated that foreign direct investment (FDI) in the construction sector increased five times during 2000-01 and 2006-07, reaching $156 million. He added per-capita consumption of cement is 72kg, which is far below the global average of 260kg.
“This shows that the construction industry has great growth potential and can benefit from cost advantages in labour and raw material.”
Speaking at the conference, State Bank of Pakistan Additional Director for Infrastructure, Housing and SME Finance Department Imran Ahmad said a significant part in the demand-and-supply gap in the housing market exists in the low-income segment.
At an average price of Rs3 million per unit, total funding requirements are estimated at Rs3.3 trillion per year ($35 billion). If only 10% housing needs are assumed as ‘effective demand,’ total funding needs will then be Rs330 billion ($3.5 billion), according to Ahmad.
Published in The Express Tribune, September 12th, 2012.
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