An insight into Robust Construction Boom in Pakistan



With majority of people shifting from rural areas to bigger cities in search of better living and earning opportunities, there come a few issues: shortage of housing units, increasing prices of real estate and development of housing schemes. According to official reports, there was a shortage of over 7 million housing units in the urban areas. Keeping in view the population growth rate i.e. 3% per annum, we can say that the gap between demand and supply of the new housing units to cater to the needs of general public is also expanding.

These both factors i.e. the rapid growth and the shortage of housing units has made housing and construction the most thriving business. And in spite of law and order situation, the business is booming. Excluding the exceptional growth of 2016 and 2017, the average growth in the construction sector up to 2015, since FY12, was just 4%. Government and construction industry officials believe that the recent surge in real estate industry and construction sector is encouraging for the economy because this will create new jobs not just in construction sector but all construction related sectors.

According to officials and government estimates, construction related activities will experience further growth due to increased public sector development spending along with infrastructure and power sector development projects under the China-Pakistan Economic Corridor (CPEC) initiative. CPEC has not just positive impact on construction sector but it has also increased economic activity in the country and also stirred positive growth in the real estate sector across Pakistan.

Cement industry is the one that has experienced vast expansion as all the development can be directly attributed to this sector. And it is because of this expansion of the sector that the surplus demand of real estate sector can be easily met. On the whole, the construction sector contributes 2.4% to Gross Domestic Product, according to the government estimates. It is also estimated that new cement producing plants have been installed in the current fiscal year to meet the robust demand of the construction industry.

A sudden increase in construction activities also led to an increase in demand for steel and allied products. According to survey, "Cement growth derived from robust domestic demand, which allowed manufacturers to enhance their capacity utilisation. The outlook is encouraging on account of firm demand due to flourishing housing schemes and rising development spending along with anticipated CPEC-related projects."

Share On: