May 17 - 23, 2010

The slump in construction activity and real estate sector, which started during the ending months of the year 2008, continues unabated.

Both the numbers of borrowers as well as number of housing loans declined during this period after witnessing a constant rise during the earlier about 4/5 years. This is despite the fact that the country is confronted with a severe housing shortage of an estimated over 6 million units.

As this sector alone carries a great scope for generating fairly large and diversified employment opportunities experts believe that slump in this sector has largely contributed to the growing unemployment.

This slump is visible throughout the country but Islamabad seems to be worst affected. While it was difficult to find out a residence in posh areas because of non-availability or exorbitant rents demanded by the owners a few years backs, now hundred of residential houses and commercial areas are lying vacant since months.

For diplomats, Islamabad has been declared a non-family station because of security reasons. As a result, thousands of houses were vacated during the last about 2 years. While rents are falling, the construction cost is constantly raising thereby the construction activities has come to almost a halt in the capital. The situation is not much different in other parts of the country.

According to a survey conducted two years ago, there was a deficiency of 6 million houses in Pakistan. If the average number of houses constructed per annum is scrutinized then it can be easily seen that present work capacity of the construction industry is far from being enough to satisfy the present demand for homes.

Statistics reveal that presently the capacity of construction industry even in normal circumstances is not enough to meet this demand. Unfortunately, this problem is not very easy to resolve since there are quite a large numbers of hurdles that are faced by real estate industry especially in the execution of developers' schemes. The biggest hurdle is the constant rise in the cost of construction material like iron, cement, and labour wages. Among other obstacles is electricity and water crisis. The cost of construction has almost doubled during the 5/6 years. The price of a ton of steel bars - an integral element of construction has gone up to Rs80,000 from Rs20,000 a few years back.

On the other hand, due to soaring inflation there is now a decline in the purchasing power of the middle class families. Their savings have almost disappeared because of alarming rise in their kitchen, health, and education expenses. There appears no hope for any significant relief in the near future for them.

Prime Minister, Syed Yousuf Raza Gillani in his first address to the National Assembly on March 29, 2008 announced his government 100 days programme. Among other steps, he also announced (1) setting up of a national employment commission to create and/or facilitate creation of jobs in public and private sectors (2) a national employment scheme to provide employment to one member of every poor family and (3) construction of one million housing units a year together with (a) five marlas scheme for homeless in rural areas (b) scheme for residential facilities to government employees as well as general public and (c) policy to recognize kachi abadies in urban areas.

Now almost 800 days have passed to that 100 days programme. Can anybody ask the Prime Minister what he has done so far to fulfill his first promise made to nation? There is not only a need to meet the houses' shortfall, but also to revive construction sector to generate employment opportunities. This sector has a very strong linkage with other industries and trade and provides a significant boost to economic conditions.