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Islamabad protests: Lights dim in the housing, construction industry

September 9, 2014
KARACHI
Among the many businesses that have taken a hit during the current political deadlock that has persisted for over three weeks, the housing and construction industry is easily noticeable where activities are at a virtual standstill.

The dynamics of this industry are quite different from others. Perhaps more than any other industry, construction is highly interlinked with the political situation and economic growth of the country.

When Pakistan Peoples Party led-coalition government completed its five-year term in 2013 and for the first time power was transferred from one democratically-elected government to another, the construction industry experienced a strong rebound after a gap of over five years.

Though confidence grew across all sectors of the economy after the general elections of 2013, the surge in confidence of the construction industry was one of the most prominent.

This industry started enjoying a boom following improvement in the confidence of Pakistanis in the democratic process. In the past one year, many residential and commercial building projects emerged on the landscape and portals and property dealers reported a considerable jump in real estate prices in all big cities of the country.

Investors were expecting a further increase in interest in the real estate market, but the on-going political impasse put a big question mark over the future of the government what to talk of political stability.

“The construction industry reacts too fast. It can react positively or negatively. In the current political standoff, it acted very negatively,” said Engineer Akbar Sheikh, a builder in Lahore.

Sales and marketing of almost all housing projects in Lahore have virtually ground to a halt, said Sheikh, who is also the northern region chairman of the Association of Builders and Developers (ABAD) – a body of over 700 builders and developers.

Builders and developers say work on all projects in Punjab including those of Lahore Development Authority (LDA) has stopped with the government busy in breaking the political deadlock. The provincial government is not pushing ahead with the schemes and bidders are also hesitant to make offers.

“Who will come up with bids for state projects when nobody knows the future of the government,” Sheikh asked.

The situation is not different in Karachi and Islamabad, in fact, the capital has been hit the most.

“The protests and sit-ins in Islamabad have badly disturbed my housing project. I have encountered difficulties in purchasing cement and steel as roads are blocked and suppliers are also unable to run their businesses,” said Arif Jeewa, proprietor of Capital Residencia in Islamabad.

He was of the view that the political crisis had weakened the government and that could affect its decision-making powers, which were necessary to address grave economic challenges.

“I fear for the country’s economic growth and I think this government will become just like the previous one, which was politically weak,” he said. “The political instability will not allow the construction industry to grow much in the next four years.”

ABAD Senior Vice Chairman Salim Kassim Patel commented that many of the foreign companies had postponed or cancelled their visits in the last one month just because of the uncertainty.

“Investors are shying away, it’s difficult for them to take decisions in the present uncertain situation. Recoveries from customers have also slowed down, causing cash flow problems for those who are in the midst of their projects,” he added. 

Published in The Express Tribune, September 8th, 2014.

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