FinanceNews

Housing provides Rs 150 billion investment opportunities

KARACHI (December 15 2002) : The housing sector in Pakistan provides opportunity to invest Rs 150 billion annually for the next 20 years, just to meet the housing requirements of the growing population.

This calculation has been made by housing analysts believing that to make-up the backlog and meet the shortfall in the next 20 years overall housing construction has to be raised to 500,000 housing units per annum.

“If one unit costs Rs 300,000 (average), the total requirement of 500,000 housing units annually will be Rs 150 billion per annum,” said an analyst.

According to Population and Housing census, due to negligence in the past, the housing backlog had reached up to over 4.3 million units by 1998.

The annual additional requirement of housing is estimated at 270,000 units which makes the figure of backlog as 5.38 million housing units today.

The government has been emphasising that it's a great opportunities for the banks to come forward and invest.

However, banks have their own reservations and are not ready to take risk, despite improved recovery law which made it possible for the banks to take possession of the house of the defaulters.

Some of the banks said they successfully recovered their money through possession of house of defaulters in Lahore.

But in some cases defaulters succeeded to get stay order from the court which again kept haunting banks to invest in the housing sector.

“The government has been targeting for the revival of housing and construction at least for two years but significant result is yet to come,” said a contractor who was dealing in low cost housing projects initiated by the Sharif government.

National Housing Policy has been launched by the government but the housing finance is less than 1 percent of GDP, which is even lower than Bangladesh, he said.

The Advisor to the Prime Minister on Housing and Finance, Shaukat Aziz said that the revival of housing and construction would boost the economic activities in 40 allied industries and can absorb huge number of skilled and unskilled labours.

This had also been a dream of the Nawaz Sharif government but it failed miserably to revive the “labour intensive” housing and construction sector.

“The major obstacle in the way of housing project is the public participation as both saving and buying capabilities have been declining for more than a decade,” said an expert.

“How a middle class earning person can initiate to borrow when it's hard for him to meet the day to day requirement?” he said.

Banks have their own view as they argue that they can not go for long term loans, which is a basic requirement of housing projects, because most of their deposits are of short term.

Some banks have shown their intention that they would raise long term money through issuing of Term Finance Certificates that could make their deposits long term and enabling them to offer credit for housing.

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