PM Imran announces only 2.8pc of 5m homes promised by him

LAHORE: According to the federal government’s Naya Pakistan Housing Scheme, formally launched Wednesday by Pakistani Premier Imran Khan, only 1, 41,000 houses would be built in the first phase, which thereby means that the Pakistan Tehreek-e-Insaaf (PTI) regime would be building only 2.82 per cent of the five million homes it had often pledged.

Imran Khan said while 110,000 housing units would be constructed in Balochistan for the fishermen of Gwadar, another 25,000 units would be built in Islamabad for government employees and 6,000 housing facilities would be available for residents of Azad Kashmir.

The Pakistani Prime Minister said that a revolving fund worth Rs 5 billion had been approved for the poor classes in this context, adding that the sum would be used to grant up to Rs20 billion in loans to aspiring house owners.

The Funding plan is certainly not bad, but Pakistan needs a whopping $180 billion was needed to address and finance the gap of 10 million housing units in the country, which was almost half the size of Pakistan’s economy, according to the Association of Builders and Developers (ABAD) estimates of May 2018.

In May 2018, some key ABAD functionaries were quoted by a section of national media as saying that a low-cost unit would have a price tag of at least Rs2.1 million.

Giving break-up of this Rs2.1 million, office-bearers of ABAD had asserted that while Rs400,000 would be spent on land and development, another Rs1,500 per square feet would be required for construction for each 120-square-yard plot.

In addition, another Rs200,000 would be spent on government fees and management cost, ABAD top brass had maintained.

On the other hand, Pakistan Mortgage Refinance Company (PMRC)’s Managing Director and CEO, N K Rupan, had stated in the same May 2018 function held at Karachi that only low interest rates on mortgages held the key to addressing the crisis.

Rupan had held that, unfortunately, mortgages in Pakistan accounted for only 0.5 per cent of its GDP while India’s mortgage-to-GDP ratio stood at 10 per cent and Malaysia’s mortgage-to-GDP ratio had rested at 30 per cent.

Research conducted by the “Jang Group and Geo Television Network” on this subject shows that while Pakistan suffers from a housing backlog of almost 10 million units, the demand is growing at a rate of 0.7 million new units per year.

In its November 27, 2017 report, “Lamudi”, a Berlin-based online real estate marketplace with operations in 34 countries, had viewed: “By 2016, Pakistan’s housing shortage had reached around 10 million units and is expected to grow every year by 0.7 million units. This is an alarming situation and needs to be dealt with immediately. Most of this shortage is due to lack of housing available for the lower income strata and an underdeveloped mortgage finance market.”

Housing situation in neighbouring India:

Imran Khan’s Indian counterpart, Narendra Modi, had announced his ambitious plan to construct 20 million homes across the country in June 2015.

According to the “Business Insider”, Premier Modi’s plan had the potential to set the stage for investment worth $1.3 trillion in the Indian housing sector.

According to the “India Brand Equity Foundation”, a trust established by the Department of Commerce, Indian Ministry of Commerce and Industry, the real estate sector in India was expected to reach a market size of US $1 trillion by 2030 from US $120 billion in 2017 and contribute 13 per cent of the country’s GDP by 2025.

Remember, the Securities and Exchange Board of India has already given its approval for the Real Estate Investment Trust platform, which would help in allowing all kinds of investors to invest in the Indian real estate market. It would create an opportunity worth Indian Rs 1.25 trillion (over US $19.65 billion) in the Indian market over the years.

The “India Brand Equity Foundation” had added last year: “It is expected that by 2025, India will be adding 11.5 million new homes each year. Thus, making the construction market in India $1 trillion a year market. It is estimated that by 2025, India, the USA, and China will contribute 60% of all the global growth in the construction sector.”