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Construction cost rises 10pc

KARACHI: The cost of construction rose 10 per cent in the outgoing year due to increase in cement and steel bar prices, and the impact of a depreciating rupee on imported construction material.

On average, the price of a 50 kilogram cement bag edged higher by 6pc to Rs530 and steel bar prices jumped 26pc to Rs72,000 a tonne during the year.

Besides, property prices have also gone up. “The price of a new apartment having three bedrooms has jumped 10pc on average,” Association of Builders and Developers (ABAD) chairman Mohsin Sheikhani told Dawn. This figure may be higher depending on the location and position of an apartment block.

In 2016, as many as 100 new apartment projects were launched in Karachi compared to only five projects in Lahore and Islamabad combined, he said.

However, given the shortage of houses in the country, Mr Sheikhani believed that construction activity in the outgoing year remained relatively slow, mainly because of delay in approval of new projects. Obtaining approval from the Civil Aviation Authority, Pakistan Air Force and other regulatory authorities to build a high rise can take up to eight months, he said.

On the impact of new valuation and deputy commissioner (DC) rates, followed by the announcement of an amnesty scheme, he said construction activity remained closed for almost four months (from July to October).

The new mechanism paying 3pc extra tax on the difference between Federal Board of Revenue and DC rates announced by the federal government for registering and transferring property “is not any kind of amnesty”, he said.

“The mechanism has been introduced to improve tax collection that was affected by suspension of property registration and transfers,” he said, urging the government to do away with double taxation.

On the prospects of property business in 2017, he said the coming year may be good for the construction industry as projects under the China-Pakistan Economic Corridor pick up pace.

He urged the government to adopt a comprehensive and transparent policy for developing the sector. “With a good policy, I hope 400 new projects will be announced in 2017,” he said.

Meanwhile, prices of tiles manufactured locally rose 5pc to 10pc in 2016; however, there was no change in weighted average prices of imported tiles.

Atif Iqbal, executive director of the Organisation for Advancement and Safeguard of Industrial Sector, said the share of imported tiles rose to 65pc in 2016 from 60pc a year ago. He believed that the construction sector is showing an annual growth of 15pc to 20pc.

Meanwhile, a paint dealer in the Federal B. Area said paint prices remained unchanged in the outgoing year due to intense competition.

As for window glasses, dealers gave mixed reviews saying prices rose by Rs5 to Rs30 per cent. However, the price of aluminium did not show any increase during the year.

An analyst at Topline Securities said cement remained the second-best performing sector on the stock market, posting a return of 61pc in the outgoing year. Rising domestic demand and lower energy charges kept the sector in the limelight.

He said that in 2017 the cement sector was likely to benefit from increased infrastructure spending on power projects, motorways and several private sector construction and housing projects.

Courtesy : Dawn News

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