Market Research Report
Construction in Pakistan - Key Trends and Opportunities (H1 2021)
|Published by||GlobalData||Product code||1000656|
|Published||Content info||17 Pages
Delivery time: 1-2 business days
|Construction in Pakistan - Key Trends and Opportunities (H1 2021)|
|Published: April 7, 2021||Content info: 17 Pages||
The outbreak of the Coronavirus (COVID-19) pandemic has further exacerbated the weaknesses in the Pakistani construction industry, which had already recorded contractions in 2018 and 2019. The government had initially restricted activity in the construction industry amid the lockdown restrictions imposed to contain the pandemic; however, in mid-April 2020, it allowed the industry to resume operations. The construction industry in Pakistan is expected to expand by 3% in real terms in 2021, following a decline of 6.2% in 2019.
To support the construction sector, and boost employment and economic output, Prime Minister Imran Khan announced a construction stimulus package in April 2020. The package includes a fixed tax rate for the construction industry, a subsidy worth PKR30 billion (US$191.5 million) for the Naya Pakistan Housing Scheme, a decrease in sales tax and incentives for builders to construct affordable housing. In addition to this, those who invest in newly constructed buildings will be exempt from declaring their source of income until June 2022. Under the new law, tax on low-cost housing construction under the Naya Pakistan Housing and Development Authority was reduced by 90%, advance tax on the sale of property was reduced from 10% to 5%, one-time capital gain tax was exempted on houses and flats, and zero withholding tax is applied to all construction material except steel and cement. According to government estimates, as of early December 2020, 389 projects worth PKR157 billion (US$1 billion) have registered with the government to take advantage of the tax benefits enacted in the construction package.
Although GlobalData expects the construction industry to expand in 2021, a downside risk to the industry's outlook in the short term could arise from the recent rise in COVID-19 cases and a subsequent tightening of restrictions to control the outbreaks. The financial weakness of the country could further dampen growth in the industry's output. According to the Ministry of Finance, the country's debt-to-GDP ratio increased from 86.1% at the end of June 2019 to 87.2% at the end of June 2020. However, the government plans to reduce the debt-to-GDP ratio to 78% by 2024, by increasing revenue mobilization and reducing expenditure.
Industry growth is expected to improve, registering annual growth in the range of 4.8-5.3% between 2022-2025, supported by investment in China-Pakistan Economic Corridor (CPEC) infrastructure projects. Growth will also be supported by investments in transport, electricity, housing, telecommunication, and industrial infrastructure projects. To support industrialization, the Pakistani Government is creating Special Economic Zones in the country. Moreover, to address the housing shortage, the government aims to build five million housing units during 2019-2023.
This report provides detailed market analysis, information, and insights into the Pakistani construction industry, including -
This report provides a comprehensive analysis of the construction industry in Pakistan. It provides -