| KARACHI: There is a dire need to form a committee of experts from construction-allied sectors to make a feasibility study for the development of the building industry and voice their concern on the law and order issue. 1 million and the figure is increasing due to increasing trend of urbanisation and legal and illegal immigration.
Sindh sales tax on services by property developers or promoters will be unbearable and would increase inflation if passed on to the end users, mostly lower-middle class. 0 percent in Pakistan as against 86 percent in the United Kingdom.
The Karachi Electric Supply Company (KESC) has been facing power shortage and applications for new connections have been pending for a long duration. The unannounced and long duration load shedding affects the level of activity in the construction industry. This situation has also affected the delivery of housing units and the building industry is finding it difficult to hand over projects.
The housing needs for Karachi region based in conservative quotes are 126,000 housing units per annum.
Pakistan"s banking system is arguably one of the most under-leveraged in the world.
The steel consumption is less than 37 kgs per capita on average in contrast to the world average of 200 kgs per capita.
The disturbed supply and upward revision of power tariff has also added to the suffocation of the construction industry. Several other reasons including increasing trend towards urbanisation, unprecedented increase in population, mass scale legal and illegal immigration, etc exist behind this situation. These factors also result in rapid growth of social evils and criminal activities growing beyond the control including land grabbing, encroachment, kidnapping for ransom, threats etc.
Assuming an average cost of a housing unit equivalent to Rs 4 million and 55 percent CDR, 100,000 housing units costing Rs 400 billion at maximum could be financed over a three years period ending fiscal year 2012 spread over 100,000 borrowers.
Such a productive investment will in addition impact the immediate large-scale employment generation, production ramp up for about 38 industries, incremental sales tax, income tax growth throughout the housing related value chain, minimal negative impact on current account and securitisation of housing mortgage.
Instable law and order, non-availability of financing facilities, sales tax imposed on builders and rising building material prices is causing the survival of investors in construction sector.
Rising population of the country demands 800,000 housing units annually but only 300,000 houses are built per annum. The Katchi Abadi can get a connection for Rs 7,000 to Rs 8,000 but for a newly constructed apartment the charges are Rs 100,000 to Rs 150,000 for electric connection, which shows their apathetic attitude towards the building industry. |
Friday 6 April 2012
Construction sector
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