Daily Times

KARACHI: According to research analysts, Arsalan Ahmed and Ali H. Zaidi, the Prime Minister Imran Khan’s announcement to build 5 million low-cost houses would approximately cost around Rs 6 trillion. According to analysts, in order to make this ‘ambitious’ plan a reality, government needs to clarify source of funding for the project, and the other requirements of the project.

The analyst say that clarity is needed on multiple fronts: who would pluck the project’s fruit? What legal and regulatory framework is available? Where will the houses be built? How would finances be generated? The government seems to be juggling with choices as contradicting statements continue to flow from the top leadership, said the analysts.

According to the estimates made by analysts, using market estimates, PM’s 5 million housing project is expected to cost around Rs 5.9 trillion (Rs 1.19 trillion/year).

A single house would cost between Rs1.19 million and Rs1.87 million. That said, even assuming the more affordable option (80 sq. yards), over a period of five years the project would amount to a mind-boggling $47.6 billion or Rs5.95 trillion. This translates to an annual cost of $9.6 billion or Rs1.19 trillion, which by the way exceeds the entire Public Sector Development Program (PSDP) budget, the analysts added.

How will a country in such a serious need of external funding raise such a substantial amount? They questioned.

“It is pertinent to note here that the economy is in dire need of a demand cool-down that simply cannot happen with the housing project in play. Hence, we opine that the twin deficit (trade account, current account) should get priority over the housing project’. The PTI has undoubtedly shot for the stars; let’s hope it lands on the moon”, they added.

Chairman Association of Builders and Developers of Pakistan (ABAD) Arif Jeewa, while talking to Daily Times said Imran Khan had announced that his government will build 5 million low-cost affordable houses throughout Pakistan with the active participation of the (ABAD) and the proposal has been forwarded to the Government for consideration.

He said ABAD is on board with the PTI government regarding the housing project, though nothing has been finalized yet, since the government is still working on the proposals.

If the ABAD’s proposal is accepted, then 25% of the total price will be paid by purchaser in 2 years, 75% amount of the price will be financed by the HBFC or any other financial institution on easy and affordable terms and paid directly to builders with 6% per annum for end users.

Jeewa informed that government has assured us that the land for the project will be provided by the state. In the proposed housing scheme, most of the houses will be built in the Karachi.

“This is a giant task to complete in a year keeping in view the resources and manpower available in Pakistan. So, it can take almost ten years to overcome present housing shortage”, said Jeewa.

Recently, PM Imran Khan Khan directed the committee to finalise its recommendations regarding formulation of a comprehensive plan of action with delineated timelines within two weeks for early launching of the housing programme.

According to the ABAD’s proposal, the estimated cost of a 120 square yard/ 5 Marla home with the built up area of 400 or 600 square feet having two living rooms, two bathrooms, a kitchen and a verandah comes to Rs 2.1 million including cost of construction, infrastructure and land.

Published in Daily Times, September 16^th 2018.