Construction Industry of Pakistan Latest Trends and Opportunities as per PACRA
According to a recent report from Pakistan Credit Rating Agency (PACRA), Pakistan’s construction sector is slated to grow in the upcoming fiscal year.
The local building market has been examined by PACRA experts, and this year’s growth has been estimated at 6%. They predict that the industry will expand by a staggering 92 percent over the next seven years, with average annual growth potentially reaching 11.8 percent.
In the upcoming years, it is anticipated that the rating would continue to rise as additional mega-projects and(China Pakistan Economic Corridor) construction projects are announced.
Infrastructure and housing projects are expanding as a result of increased incentives, concessions made by the government to investors, and aggressive private sector investment.
In the private sector, gross fixed capital creation increased to over 6.6 percent between FY2020 and FY2021.
According to reports, the construction industry contributed Rs. 1,231 billion in FY 2020 and Rs. 1,409 billion in FY 2021.
The construction financing has grown significantly year over year in the first months of FY2022, by a factor of 70%. Private investments and the Public Sector Development Program are both included (PSDP).
In Pakistan, the construction industry employs roughly 76.1% of all workers. Being the fifth most populous nation in the world, it is significant that there are roughly 60 million people employed nationwide.
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According to the 2017 census, the population is increasing at a pace of 2.4%, which has resulted in a rise in demand for housing and infrastructure projects.
As real estate agents and financial organizations make significant investments, that is where the public sector enters the picture.
To meet the expanding needs for communication and transportation, a number of large-scale restoration and transit projects is currently under construction.
According to the National Highway Authority’s portfolio, there are 40 active projects with a total budgeted PSDP expenditure for FY21 of PKR 176 billion.
As new massive CPEC projects get underway, experts are optimistic that the nation’s international ranking for the size of its roadways would increase. The length of Pakistan’s roads is currently ranked 22nd in the world.
Aside from CPEC and private investments, the government’s special packages, which included an amnesty program, tax exemptions, and allocation accounts for the Naya Pakistan Housing Scheme, were a beneficial influence in the expansion of the construction sector.
These factors have sharply increased demand in the building industry and related sectors.
The global construction industry is anticipated to rise to US$15.2 trillion in 2022, above the US$13.6 trillion it reached last year. Pakistan’s construction sector is expanding in line with this forecast.
According to reports, the sector significantly contributes to gross domestic product (GDP). It is anticipated to provide 14.8% in 2022, which is more than the 14.3% it did in the previous year.
Due to the increased government backing and a rise in private sector investment, there was an 8.1% increase in construction operations by various construction businesses in FY20.
Because of this, the industry had a roughly 20.6% increase in Gross Fixed Capital Formation (GFCF) in the private sector.
42 associated industries and ancillary sectors, including cement, aluminium, brick, cables, fixtures, glass, kitchen and bathroom fittings, marble, paint, steel, tiles, transportation, warehousing, and wood, are among those that have significantly benefited from the rise of the construction sector.
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