Housing and Construction Sector

Housing and Construction Sector

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Housing and Construction Sector

38.83% of Pakistan’s population is based in urban cities whereas the remaining 61.17% live in rural areas. China Pakistan Economic Corridor (CPEC) has given a boost to the construction sector through the influx of infrastructural projects including highways, power plants and dams. 

Key stats:

  • 23.32 million urban housing units 

  • 15.01 million rural housing units.

  • construction industry accounts for 2.4% of GDP

  • In FY22, real estate accounted for approximately 4.9% of the GDP

  • Real estate GFCF accounted for approximately 17.6% during FY22

  • Sector employs 7.61% of the employed Pakistani labor force

  • Construction Gross Fixed Capital Formation (GFCF) stood at Rs 10,093.5 billion. GFCF grew by 8% YoY in 2023. 

  • The Total Factor Productivity (TFP) for the Real Estate Market in Pakistan stands at 2.3% . 

  • FDI was $28.8 million in 2023

Building/Housing: The country's annual demand of housing is estimated to be about 700,000 units. Overall the housing deficit is estimated at ten million units, which is growing  every year.

Highways/Roads/Bridges: Pakistan ranks at 25th position worldwide for 263,775 Km length of its overall road network. This is expected to grow further due to CPEC infrastructure projects. 

Airports: 7 international airports and 35 domestic airports. 

The construction sector is traditionally split between large scale players engaged in heavy construction and a large number of specialized trades such as mechanical, electrical, plumbing etc. that act as subcontractors or work on smaller projects.

Allied industries:

Cement:  Pakistan’s North-based cement mills achieved 2.473 million tpa dispatches during July 2023, registering a remarkable 46.54% YoY.

Pakistan’s South-based mills experienced a notable YoY growth of 109.61%, dispatching 739,376 tons of cement in July 2023.

During FY23, production capacity stood at 3.80 million tpa.

Pakistan’s FDI in cement industry stood at $17.4 million during July-June 2023

Steel:

CPEC and infrastructure projects have increased the demand for steel.

Pakistan is 28th in steel production as stated in a Pakistan Business Council Report.

According to the Pakistan Business Council, steel consumption grew at a rate of 19% between the years 2013- 2018

Steel industry has a thoroughly interwoven value chain starting from pig iron furnaces to downstream sectors and end user finished steel industries.

Pakistan iron reserves is estimated at 1.4 billion MT

Mechanical Machinery/Automobiles:

Machinery includes:Asphalt plant, Excavator, PTRs, Bitumen Distributor, Loader, Pavers,  Tractors, Cement Rollers, Tandem Roller, Tower Cranes, Gantry crane, Milling Machine, Transit mixer, Power Cruiser and Straddle Carrier

Incentives

1 Construction Sector Granted Status of Industry

2 New Fixed Tax Regime from Tax Year 2020 and Onwards for Eligible Builders and Developers

3 Exemption of Withholding Tax on Purchase of Building Materials

4 Reduced Advance Tax on Auction Sale

5 Reduction in Tax Liability for Low-Cost Housing

6 Banks to increase credit for financing the housing & construction sector

7 100 % exemption on customs duties for construction and operation (Gwadar Zone)

8 Availability of land/plots with lease period of 99 years (Gwadar Zone)