Pakistan's Housing Boom and Economic Growth

Housing construction is one of the largest sectors of most major economies in the world. In the United States, for example, housing is a significant contributor to the American economy, providing millions of Americans with jobs and generating hundreds of billions of dollars of economic output each year. It is also an important source of wealth building. Beyond economic measures, homeownership and adequate rental housing also contributes to society.

The construction and sale of new homes make direct contribution to GDP, based on the value of the housing built. However, the sales of existing homes do not enter into the calculation of the nation’s domestic output, just as a used car sales do not get entered because the transaction does not represent a new production. However, purchases related to the transaction of existing home sale do get included in the GDP. For example, all payments for services rendered, such as real estate agent commissions, home inspection, attorney, and loan origination fees, are included.

Currently, Pakistan has a serious housing crisis and needs about 7 million additional housing units now, according to the data presented at the World Bank Regional Conference on Housing last year.

According to BMI research, the country’s real estate sector continues to be dominated by the two major issues of a chronic shortage of housing against a backdrop of rapid urbanization and rising population and the impact of security factors on the risk appetite of investors and developers.

The first of these factors remains as intractable as ever, with the most recent estimates identifying shortfall of 7.9mn houses. By contrast, the current government is committed to building just 1 million houses. Other estimates paint a similar picture with the Punjab province, with a population of 82 million, said to be facing a shortage of 5 million houses. By some accounts, nationally there is an incremental demand for 700,000 units a year against the annual construction of just 150,000 units.

As to the second factor, the major projects currently moving forward are being executed by risk-tolerant developers from regions such as the Gulf Cooperation Council(GCC) and government or government-linked landowners in Pakistan. This has significantly reduced the scope to provide housing at the level required to supply the backlog. Recently, however, there are reports that Malaysian developers are coming to Pakistan, according to Malaysian news agency Bernama in August 2009. The Malaysian developers are negotiating to build some 500,000 low-cost houses annually in various parts of Pakistan.

The recent Dubai debt crisis will likely hurt some Pakistani workers in the Gulf region. However, the flip side of Dubai troubles is that many of these Gulf developers will look at Pakistan where real estate investments have always been winners, regardless of the political or economic environment. The supply has continued to lag demand for housing, retail and office properties.

The Gulf and Malaysian investments in housing can potentially help resuscitate Pakistan's currently moribund economy by creating millions of new jobs directly and indirectly. Construction is one of the most labor intensive economic activity requiring large numbers of workers, creating hundreds of thousands of jobs. And when the buyers move in, they will demand all kinds of products and services to furnish their homes, thereby creating further employment opportunities. All of this is offers a great recipe for reigniting economic growth and renewed prosperity in Pakistan.

A new wave of housing construction offers an opportunity to the PPP leadership to live up to at least one of their election promises included in their "roti, kapda and makaan" platform. Looking back at the history of the political platforms that have succeeded, what comes to mind is the name of President Franklin Roosevelt and his "New Deal" , as well as the successive US Presidents' policies on "The American Dream" of home ownership for all. These policies helped reduce poverty and enhanced education and housing for a large number of people in the US. New housing construction can also help reduce poverty in Pakistan.

Related Links:

Food, Clothing and Shelter in India, Pakistan

Pakistan Real Estate Report Q4 2009

Dubai Debt Crisis

Food, Clothing and Shelter For All

What Does Pakistani Democracy Deliver?

Urbanization in Pakistan Highest in South Asia

Housing: Global and Local Perspectives

Uncle Sam Saves Fannie and Freddie

Pakistan Attracts FDI Despite Security Concerns

Witness a Failed State: Try Pakistan's M2

Doing Business Rankings of Countries


I think that the construction sector has been the major sector for the economic growth of most of the countries.It can be seen that the residential construction has been one of the construction secotr which is been recovering fast from the economic downturn and I hope that it provides a good back up for the economic growth.

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Ashfaq Ali said…
I don't know why Sement price increasing day by day. Even we have big sement industry.
Riaz Haq said…
Here's a blogger' view Pakistan's cement industry:

Cement is one of the most important industries of Pakistan. Limestone and gypsum are the main raw materials for manufacturing of cement and they are present in abundance in Pakistan along with good supply of Natural gas. This great potential makes the country capable of producing cement not only for local use but also for export as well. Pakistan cement industry has exporting cement to the neighbouring countries like U.A.E, Afghanistan, India, Iraq and Russia.

At present there are 22 cement plants are operating in Pakistan with the production of approximately 9.403 million tonnes. Out of these 22 cement plants, 17 are private and 5 are publicr. 11 new plants are also in planning stage and the capacity of these plants is estimated around 12.988 million tonnes. The industry has achieved a growth of 32% with the domestic demand increasing by around 24.95% and the exports by nearly 111.86% according to the financial year end June 30, 2007 ratings. Recently the country has been able to export to some of the African countries as well.

Cement industry is divided into two main regions; the northern and the southern region. Northern region is producing 35.18 million tonnes and southern region is producing 8.89 million tonnes of cement per year.

Per capita consumption of cement is an indicator of rate with which any country is developing. Unfortunately per capita consumption of cement in Pakistan is less if we compare it with other developing countries. It is about 131 kg per person annually; whereas world average is about 270 kg. This less consumption is due to the negligence given to the construction sector. However in last few years consumption of cement showed some rise due to increased commercial activities, infrastructural development and increasing demand of constructing houses.

Local demand for the year 2007-2008 was 20 million tonnes. Pakistan has started exporting cement few years back and has earned repute as a premium quality cement producer in the global market in this short period. Pakistan exported around 7.716 million tonnes of cement in 2007-2008 and earned a foreign exchange of 459 million dollars. There is surely a great potential of growth in this industry in Pakistan.
Riaz Haq said…
Here's an excerpt of a report in The Nation on shares market rise on the news of increasing cement sales:

The local bourse broke the 14,000 level on an intraday basis for the first time since 16th May 2008. The positive sentiment was on the back of expectations of the issuance of the much awaited SRO on capital gain tax rules. Additional impetus also came after the release of the robust cement dispatches data and easing of Consumer Price Index (CPI) to 10.8 per cent in March-12. As a result, the KSE 100 Index gained 113 points (up 0.8 per cent WoW) to close at 13,875 level. Volumes improved by 5 per cent WoW to 387mn shares indicating the upbeat investor sentiments. Foreigners, on the other hand, offloaded shares worth $1.6 million. Pakistan Bureau of Statistics (PBS) released CPI figure for the month of March-12 during the week. CPI clocked in at 10.8 per cent YoY in March-12, down from 11.0 per cent in February-12. The marginal improvement in the headline inflation came on the back of ease in food prices.
Release of robust cement dispatches numbers kept the cement stocks in the limelight once again. Consequently, LUCK and DGKC both outperformed the market by 11.6 per cent and 6.9 per cent respectively. Conversely, HUBC underperformed the market by 2.4 per cent on news that the company’s dividend payments may get delayed after FBR froze the company accounts.

Though the market increased by 0.8 per cent during the week but it managed to cross 14,000 points level on intraday basis during the week. Cement stocks remained in the limelight on the back of increase in export price to Afghanistan and expectations of healthy earnings. Restoration of gas supply to Engro Corp new plant also kept the stock in investors’ radar. While lower than expected inflation numbers for March did not have any impact on the market sentiments.
As per monthly data released by All Pakistan Cement Manufacturers Association (APCMA) total dispatches witnessed a modest rise of 4 per cent YoY to 23.63m tons in 9MFY12 as against the total dispatches of 22.81m tons in the corresponding period last year. During the 9MFY12 growth in overall industry dispatches was primarily on account of 8 per cent YoY rise in local dispatches to 17.39m tons in comparison of the local dispatches of 16.04m tons in the same period last year. Local dispatches were higher in north zone by 7 per cent YoY to 14.09m tons and in south zone by a sharp 13 per cent YoY to 3.30m tons. On MoM basis, local dispatches were seen substantially higher by 32 per cent MoM mainly because of the reconstruction activities in flood affected areas, normal construction and on going work on mega projects.
Riaz Haq said…
Here's a Nation story on awards for Bahria Town developments in Pakistan:

Bahria Town has won five highly prestigious awards under various categories in Kuala Lumpur, Malaysia at the award ceremony for “Asia Pacific International Property Awards 2012-13”, the world’s most prestigious competition recognised as the highest standard of excellence throughout the global industry. Bahria Town was the only property developer from Pakistan to win the prestigious property awards. Out of the five accolades two received were in the “Five Star” category whilst the other three were ranked as “Highly Commended”, another great achievement and proud moment Bahria Town earns for Pakistan. The awards are a sure proof that Bahria Town standards are at par with the global standards, says a press release. Speaking on the achievement, Malik Riaz Hussain, Chairman Bahria Town, said “This is an extremely proud moment for not only Bahria Town but the entire nation. We are honored to be a part of a historical moment in real estate sector of Pakistan. The accolades are a testament of the exceptional standards maintained in all our developments. We will Inshallah continue to deliver world class projects exceeding everyone’s expectations.”

Bahria Golf City Islamabad triumphed with two Five Star honors. It won the “Best Five Star Golf Development” award for the master planning and provision of complete international standard facilities and amenities along with the 18-hole USGA standard golf course. While the Sheraton Golf & Country Club in Bahria Golf City won for “Best Five Star Leisure Architecture”. Bahria Golf City Islamabad is a branded golf resort community with Sheraton Hotel, villas, apartments and plots to be launched soon.

Bahria Town’s first project in Karachi, Bahria Town Icon, also to be Pakistan’s tallest high-rise building was ranked ”Highly Commended High-rise Architecture”. Green Valley, Pakistan’s first Premium Supermarket, also a project of Bahria Town with its flagship store at the Mall of Lahore, won a “Highly Commended Retail Interior” award for its outstanding retail environment.
Riaz Haq said…
Here's an ET report on housing market in Pakistan:

In Pakistan, average monthly expenditure on rent per household has increased at an annual rate of over 13% for the last nine years, according to the Pakistan Bureau of Statistics (PBS).

A look at the Household Integrated Economic Survey (HIES) released by the PBS reveals that an average Pakistani family spent Rs888 every month on house rent in 2001-02; which rose to Rs2,693 in 2010-11; signifying an annualised increase of 13.12% over a period of nine years.

Interestingly, in the same period, annual rise in average house rent in rural areas was 2.7% higher than the corresponding increase in urban areas – even though 85.63% of the populace of rural areas lives in owner-occupied houses. In contrast, 75.79% of the urban population lives in houses that they own.

Urban housing

The highest number of people living in rented houses in urban areas belongs to the third quintile of the population in terms of income distribution at 22.38%. The third quintile in income distribution is representative of the middle class in a society.

The lowest number of people living in rented houses in urban areas – 15.93% – belongs to the fifth quintile of the income distribution. This suggests that the richest people in urban areas are most likely to own the house they live in.

The HIES figures also reveal that the poorest people, belonging to the first quintile in urban areas, end up spending 83% more on house rent as compared to a comparable group living in rural areas. Similarly, the richest people belonging to the fifth quintile living in urban areas tend to spend 220% more on average house rent per household, as compared to a comparable segment of the population living in rural areas.

Home ownership and per-capita incomes

“Rise in per-capita income does not seem to display any correlation with the percentage of owner-occupied houses in Pakistan,” economist Kaiser Bengali said, while talking to The Express Tribune. “In many cases, someone who works as a peon and earns a low monthly income can still own a house in Pakistan. This is so because people belonging to certain professions – such as the civil service, military, police, government teachers, journalists etc – receive free or subsidised land from the government or other trusts.”

Data supports Bengali’s view. Pakistan’s Gross National Income (GNI) per capita, formerly known as the Gross National Product per capita, increased by 9.62% annually between 2002 and 2011; but the number of persons living in owner-occupied houses over the same period remained almost stagnant at around 79% of the population.

Bengali says an overwhelming majority of Pakistanis can afford to live in their own houses because the free-market mechanism does not actually operate in the country’s real estate sector. Many people receive land on subsidised rates, he informs us, because of professional affiliations. “The government announces housing schemes regularly for its employees in different ministries and departments. That enables people to acquire land at negligible costs,” he says; adding that land is the primary expense in real estate, because physical structures can be built gradually over an extended period of time.
Riaz Haq said…
Here's an Express Tribune report on extraordinary customer interest in Bahria Town projects in Karachi:

People from all over Pakistan gave an overwhelming response to Bahria Town Karachi Project, according to the registration process which concluded on Friday.
According to a press release, people swarmed the Bahria Town offices, branches and customer support centres as soon as it announced the registration process. However, the registration process reached its peak as the deadline approached.
The BT has announced three projects – Bahria Town Icon, Bahria Town Tower and Bahria Town Karachi – in the megacity with the aim to contribute to the economic activity in the country and lay foundation of a prosperous Pakistan.
“The Bahria Town commits to complete and hand over the projects on the stipulated time,” says the press release. All projects will have 100% power backup, a foolproof security system, spacious parking and complete maintenance.
Riaz Haq said…
Here's an Express Tribune story on real estate sector in Pakistan:

After passing through a correction phase of nearly five months, the real estate market in Lahore is once again on the path of growth. However, there are a number of reasons why the extent of the growth may not meet investors’ expectations.
For the past few years, developers, after failing to find a suitable place in Lahore, have tended to focus on neglected but other populous cities of Punjab including Multan, Faisalabad, Gujranwala and Sialkot.
Hashu Group is one of them, Bahria town, city housing schemes (once a part of Bahria town) are the others. The latest name is the Defence Housing Authority (DHA). Since DHA is the most trusted name for any investor – in Pakistan and overseas – people find a reasonable alternate to invest.
Gujranwala, Multan and Bahawalpur are three cities where DHA has planned to establish housing societies, among which the sale and purchase for DHA Gujranwala has already kicked off. Such developments are observed as a positive for the long-term growth of the real estate sector.
“This spread out is good for the market in general,” said Mian Talat, chief executive officer at Talat Enterprisers, a real estate firm. “People now have more choices to invest and live according to their convenience.
The correction in the Karachi Stock Exchange is also a factor behind the recovery of the real estate market recovery.
Common investors of both markets believe that the KSE may crash any time. Given the situation, investors tend to switch to the real estate market. When stock index starts declining, many investors switch over to the real estate market and this is what is happening exactly now”, Talat added.
Few years back, Lahore, Karachi and Islamabad/Rawalpindi were the only places where investors found some room to put their money in for some profits. However, these cities are now pushing their limits — Lahore’s boundaries are now merging with some of its districts due to various factors.
Property prices in Lahore, despite almost a 20% correction in these five months, are quite abnormal. It is hard to find a piece of one kanal of land in a decent housing scheme below Rs10 million. If the same amount of land is located in a prime location inside a housing schemes then the price exceeds Rs20 million.
“Since Lahore is one of the major beneficiaries of the real estate boom, it is unlikely that real estate activities are stalled in the future. This is due to developments of housing schemes in other cities”, said Waseem Tariq, Chief Executive Officer of F-1 Properties. “The price fluctuation mechanism for real estate, as per our expectations, will be solid now.”
Riaz Haq said…
Sheikh Arshad took round of the Expo hall and discussed the matters related to construction activities with the stall holders. In the end, he distributed souvenirs among the participants and the organisers of the Dream Home Expo 2015.

The visitors also appreciated the Jang Media Group efforts for creation of awareness and consultancy for the general public regarding the purchase of land or house of their dream through Dream Home Expo. They enjoyed food at food courts, children enjoyed puppet show and entertainment games there. The representatives of the companies who established their stalls provided consultancy and guideline to the visitors about their future land purchase and investment. The stall holders of big builders, real estate, home appliances, paint, and furniture brands told the visitors that how they can amicably utilise their budget. They vowed to participate in future Expo of Jang Media Group too.

The participants of the Expo were Izhar Monnoo Developers, Athar Marketing Network, Eden Housing Ltd, Paradise Holdings, Bahria Town, Start Marketing, Fast Marketing, Green Land Housing, Orient Group of Companies, Super Asia, SA Garden, Royal Residencia, NM estate, Athar Associates, Ali Saqlain Real Estate & Builders, Haroon Estate, LDA City, Brighto Paints, Hapilac Paints, Master City Gujranwala, Honesty Estate, Boss Furniture, Hayat Lahore, Sheranwala Heights, Sonica-Chawla Group, Venus, G M Cable, City Estate, Alfa Estate, Value Group, Royal Estate and others. It is pertinent to mention here that the Dream Home Expo 2015 was opened by the Punjab Minister for Excise & Taxation Mian Mujtaba Shuja-ur-Rehman.
Riaz Haq said…
Pakistan's property boom is here, but is it here forever?

KARACHI: Everyone in Karachi believes that the safest and most lucrative investment is in the real estate sector these days since it provides the best returns with much less risk and effort.

That is why, every other day, housing schemes are being launched. It means that the property boom is here. But is it here forever? That’s the million-dollar question.


It is true that per square metre prices in Karachi ($760.78) are much lower than average per square metre prices ($8,824.60) in the metropolitans.

However, we must realise that the fundamental value of a real estate investment is largely influenced by its rental value. Rent-to-price ratio in Karachi (0.54) is lower than the ratio of Dubai (0.83) only. Shanghai, Mumbai and Singapore have much lower rent-to-price ratios than Karachi.

This means that, on average, rents in Karachi have already peaked as a return on investment relative to other big cities. Furthermore, people in Karachi are already paying much more rent in comparison to their salaries.

Rent-to-salary ratio of Karachi (1.30) is only lower than the ratio of Mumbai (2.07) and Shanghai (1.88). Dubai and Singapore have lower rent-to-salary ratios.

This means that, on average, people in Karachi are paying too much rent in comparison to their income when compared with other big cities.

From Dubai back to Pakistan: the real estate investors’ journey

The only plausible reason for such high prices in Karachi is the burial of illicit money in the property market. Furthermore, tax avoidance also makes property investment a lucrative strategy.

A few changes in regulations (filer/non-filer issue) have been tried to curb the above two avenues. Otherwise, as per the rental yield analysis, fundamentals of property investment in Karachi seem very weak.
Riaz Haq said…
#Egyptian billionaire Naguib Sawiris offers to build 100,000 housing units in #Pakistan as part of #PMImranKhan’s Naya Pakistan #housing initiative.

Pakistan expects to attract more than $40 billion foreign direct investment in the next five years in oil refining, petrochemical, mining, renewable energy, and real estate sectors. “We estimate that roughly around $40 billion investment will be made by three countries (Saudi Arabia, the UAE, and China) during the next three to five years,” Pakistan Board of Investment BoI chief, Haroon Sharif had told Arab News earlier, adding that “the investment would start materializing within the next two years”.
Riaz Haq said…
#NayaPakistan #Housing to build five million new houses kick-started in #Quetta, #Islamabad, and #Faisalabad. The project is underway at seven locations in #Pakistan, says #ImranKhanPrimeMinister's adviser Anil Mussrrat. shortly. Private investors to join.

Pakistan suffered at the hands of corruption and irregularities over the span of last ten years and it will require time to set it right, said Chaudhry Aneel Musarrat, Prime Minister Imran Khan's adviser and friend.

“The last ten years witnessed high incidence of mismanagement, poor decisions and wastage of national money,” he told Geo News. “It will require time to repair such a massive backlog. Had the PTI-led government not aggressively controlled over such malpractices, the situation would have gone far worse.”

The PM’s adviser also informed that Prime Minister Imran’s Naya Pakistan Housing scheme for five million houses has already been kick-started in different cities of Pakistan, including Quetta, Islamabad, and Faisalabad. The project is underway on seven locations in Pakistan, he pointed out, adding private developers also are going to contribute shortly.

He said the government’s foremost responsibility is to follow through the process of eliminating corruption and keeping up the accountability. “Khan Sahib said he will abolish corruption from Pakistan. Now, the corrupt people are being subjected to accountability,” he said.

The pilferage and robbery of the national coffers will come to an end, he added.

Musarrat also lauded the services rendered by the Pakistan’s armed forces. Services of the armed forces are highly commendable, as they have laid down their lives to fortify the country’s defence, he remarked.

The Pakistan Army is one of the best institutions in the world and we should thank God that they have curbed extremism and terrorism in the country, he pointed out.

Riaz Haq said…
Housing & Construction Industry of Pakistan
Housing & Construction Sector is among the identified sectors by the Government of Pakistan as the driver of economical growth. A spurt in activity in this sector unleashes a chain reaction in other allied industries. It is also said that no less than 60 industries are linked to construction & housing sector.

Investment Potential in Housing Sector

There is an annual shortfall of 270,000 housing units at present while the backlog of around 7.0 million units is in addition. The Prime Minister has issued a number of policy guidelines under “HOUSING FOR ALL” program for launching housing schemes for Government employees & provision of infrastructure to the housing development schemes. The Government has identified housing and construction as one of the major drivers of growth and has undertaken a number of measures to give impetus to this Sector which have helped reviving construction activities in the Country. Some of these include:

â–ª Significant reduction in duties and taxes on import of building materials including steel & its products, Construction Machinery & Equipment

â–ª Removing uncertainties from the real estate market by computerizing ownership documents

â–ª Free Trade Agreement between Pakistan & China.

Huge investments are pouring in from international investors from UAE, Singapore, Malaysia, China etc. who have committed for US$ 43 billion on two islands of Bin Qasim, US$68 billion on a New City Project in Hawksbay, Karachi and are also executing mega housing projects in Lahore, Gwadar, Mangla & DHA Karachi and Islamabad. The new home financing schemes by local and foreign leasing and financial institutions, through aggressive marketing, are playing an important role for the growth in this sector. Also, there are numerous infrastructure development projects in progress in the Country that include a large number of flyovers, underpasses, highways, tunnels, dams, roads and industrial projects which have lead this industry to surpass its past status and glory.

Ideal Investment Opportunities for Overseas Entrepreneurs to develop infrastructure

Every big city of Pakistan solicits Mass Transit System. The roads, highways and motorways all over the Country, specifically from Gwadar to Central Asian Republic Countries is another sector for investment on BOT basis. The Government is looking forward for investors to build these on BOT, BLT, BOOT basis. Overseas Entrepreneurs have ideal opportunities to make joint ventures with Pakistani entrepreneurs to invest in these projects on turnkey basis for very lucrative returns.

Furniture Industry - another potential sector for investment
Government plans to set up a Sector Development Company on the recommendations of the Furniture Strategy Working Group “SWOG” to boost furniture industry. At present, quality furniture is being produced mainly at Chiniot, Gujrat, Peshawar, Rawalpindi and Karachi. Pakistan has the potential to export US$1 billion worth of furniture annually in the international market. Pakistan’s furniture industry can be transformed from cottage to a modern industry through training, upgrading supplies and imports, setting up a woodworking institute including testing labs of international standards in Pakistan.

Riaz Haq said…
Bamboo farming — a potential source of poverty alleviation

Bamboo is not only used domestically but it is also exported to other countries and if the government patronises its production and business, it can be a big source of poverty alleviation and strengthening of the economy.

Bamboo used to be cultivated in certain areas and sandy places in the past but now it is cultivated with proper care like other crops to get the maximum possible produce. High quality bamboo is cultivated at more than 85 places in district Narowal, including villages of Thillay Kalan, Wazirpur, Kandhala and Porokey. It is also cultivated in districts of Kasur, Sheikhupura, Gujranwala, Mandi Bahauddin and Sargodha.

The bamboo crop is ready within a year while the annual cost of cultivation of one acre of bamboo is just Rs15,000 to Rs20,000. As is the case with sugarcane, bamboo roots are sown in the land at certain distance, the crop is manured only once a year and watered thrice a year. It does not need medicines or chemicals spray and it can bear severe weather conditions.

One acre of bamboo crop is sold at the rate of Rs200,000 to Rs400,000. Three to five thousand bamboos are produced on one acre of land. Labourers are paid Rs17 per bamboo for cutting and cleaning before they are shifted to the factories where bamboos are cut in different sizes and straightened with the help of furnace and machines. Wages are fixed with labourers for straightening and painting the bamboos and the rates range from Rs5 to Rs18 per bamboo. Each labourer can earn Rs1,000 to 3,000 per day. The bamboos are sold to shopkeepers on the wholesale rate of Rs4 to Rs9 per foot while a bamboo ladder of 10 feet is sold in the market at the price ranging from Rs500 to Rs600.

Besides production of ladders, bamboos are used in scaffoldings, construction of buildings, animal shelters and poultry farms. The villagers use bamboos to fix mosquito nets around their cots in the fields. Bamboo furniture is also used in houses for its beauty.

“My 10-member family has been working in the bamboo factory for the last 15 years. Some years ago, there was no business activity and I was living from hand to mouth. Now Pakistan has started exporting bamboo, so I earn Rs1,000 to Rs3,000 per day. Now I am happy and I save some money also,” labourer Muhammad Akram says.

Shaikh Ansar Ali, the owner of a bamboo factory, says the bamboo of Pakistan is of good quality and it is in big demand in the UAE, Afghanistan, Iran, Iraq, Malaysia, Indonesia and other countries, therefore, it’s produce is increasing day by day.
Riaz Haq said…
#Pakistan PM #ImranKhan unveils Rs. 330 billion for low-cost #housing incentives, including down payment assistance, low-cost #mortgage financing and Sharia-compliant loans. Banks to set aside 5% of portfolios for mortgage lending. #NayaPakistanHousing

Prime Minister Imran Khan has made another move to revive the coronavirus-hit economy with an initiative to promote the housing and construction sector with Rs330 billion of mortgage financing by the commercial banks in just 18 months.

The prime minister himself unveiled the plan for the revival of the construction sector after a maiden meeting of the newly formed National Coordination Committee on Housing and Construction on Friday.

Commenting on the government's initiative, a leading property developer and businessman Ejaz Gohar said that it was the first plan, which would make it affordable for the low and middle income people to build houses with mortgage financing of as low as 5 to 7% mark-up.

The commercial banks would allocate 5% of their portfolio amounting to Rs330 billion for the construction activities.

He noted that around Rs20 trillion was circulating in the informal unregistered economy and now was the opportunity for the people to get the huge amount of money declared by investing in the real estate sector by December 31, 2020.

Now a person with an income of Rs30,000 to Rs100,000 can build a house of 5-marla with the mortgage financing at 5% and that of 10-marla at 7% mark-up.

Gohar observed that mortgage financing started in the United States 82 years back to kick-start its economy. The government will give a subsidy of Rs30 billion for the construction of houses.

The prime minister has planned to hold meetings of the housing coordination committee every week to remove hurdles that come in the way as the country is far behind in terms of home mortgage financing as compared to the developed world.

As Covid-19 had hit hard the global economy, Pakistan too suffered a great deal due to the pandemic with rise in unemployment and shutting down of businesses, the government's measures for the construction sector would be a much needed timely relief.

Many economically strong countries like China, the United Kingdom, Italy and Spain were forced to impose strict lockdowns spread over months to contain the cases of Covid-19. However, economically fragile countries like Pakistan were caught in a dilemma as the option of complete lockdown was a recipe for disaster, especially for the vulnerable section of the society which comprised a significant portion of the country’s population.

Prime Minister Imran Khan – known for his leadership qualities since his cricketing days – went for a policy of smart lockdown, balancing the need to halt the spread of coronavirus and keep different sectors of the economy functional simultaneously.

The strategy largely worked and the primary sectors of economy are now open with the number of coronavirus cases after hitting the peak are lowering on a daily basis.

In order to deal with the adverse effects of Covid-19, the government had announced a relief package worth Rs1.2 trillion on March 24.

An important component of Pakistan's economic revival plan was the second phase of China Pakistan Economic Corridor (CPEC).

Despite hurdles, Pakistan and China went ahead with the second phase of the mega project during the last two years. After undertaking of the infrastructure, road and energy projects across Pakistan in the first phase, the focus was shifted to the building of eight special economic zones and socioeconomic and human development with the Chinese financial assistance of $1 billion.

The Pakistan Tehreek-e-Insaf government established the CPEC Authority and appointed Lt General (retd) Asim Saleem Bajwa as it head.

Bajwa set his sights on executing vital projects, including M8 motorway from Gwadar (Balochistan) to Ratodero (Sindh) and $230 million Gwadar international airport.
Riaz Haq said…
Two new #REITs launched in #Pakistan after unveiling of #ImranKhan's #NayaPakistan #construction program. One REIT is focused on building villas and the other on building apartments in #Karachi. Dividend payment tax on REITs cut to 15% from 25%. #economy

Pakistan is set for its first real estate investment trust in more than six years as Prime Minister Imran Khan seeks to stimulate the economy through a construction boom.

Arif Habib Dolmen REIT Management Pvt. plans to raise 8 billion rupees ($51 million) via private placements in two REITs for a housing project in Karachi, Muhammad Ejaz, the firm’s chief executive officer, said in an interview Tuesday. It plans to purchase the land in about two months, partly from Silkbank Ltd., he said.

Arif Habib Dolmen had created Pakistan’s only REITin 2015 and the industry, which had gone silent since then, is reviving now on Khan’s incentives and regulatory changes. Pakistan is willing to forgive tax evaders if they invest in construction projects, while banks have been asked to increase their outstanding mortgages by at least 5% by December.

One of the new REITs will focus on villas and the other on apartment buildings and commercial developments. This is a developmental REIT with an expected internal rate of return of more than 30%, according to Ejaz. The older REIT, which holds rental assets including Karachi’s most prominent mall and an office tower, offers a dividend yield of around 12% a year, he said.

Pakistan has been revising rules to make REITs more attractive for investors and developers. Finance Minister Shaukat Tarin in his budget this month lowered the dividend payment tax on REITs to 15% from 25%.

“The government has chosen the right sector for growth,” Ejaz said.

Silk Islamic Development REIT is scheduled to be launched next week for the commercial and apartment building section. Its five equal shareholders are Yunus Brothers Group that owns Lucky Cement Ltd., Fatima Group, Arif Habib Corp., Liberty Group and Arif Habib Dolmen. The second Silk World Development REIT includes real estate developer World Group, which will develop the villas.

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