KARACHI: The construction slump, caused by unprecedented monsoon rains and subsequent flood devastation, is about to be over as all players await the receding of floodwater and restoration of the road network to start rebuilding activities across the country.

Stakeholders, however, say reconstruction has already started in some of the flood-hit areas, but on a limited scale due to disruption in the supply of building material.

Association of Builders and Developers Association (Abad) Chairman Hanif Memon said construction activities shrank 35-40 per cent in the last two months which led to a 34pc drop in overall cement sales in July-August. Also, Amreli Steels Ltd (ASL) closed its plant from Aug 31 to Sept 19 due to low demand for steel bars on account of unprecedented monsoon rains and flash floods.

“Almost 35pc of workers have been sitting idle due to massive slowdown in construction activities,” he said, adding that builders in Sindh have yet not started construction of their high-rise projects due to uncertain situation after rains and floods.

Expensive building material, devastating floods blamed for slowdown in July-Aug

“Punjab-based workers have returned to their homes while some of those belonging to Sindh have also gone back after floods have devastated their homes. This has also affected construction work in Karachi,” Mr Hanif said, adding that a high-rise project generates at least 100 jobs, which means 100 families earn their livelihood from a single venture.

He said the association was trying to hold a meeting with the federal government to discuss steps in reducing the high cost of construction due to the massive hike in steel bars, cement and other construction materials.

For example, he said, the price of crush was now Rs80 per cubic foot compared to Rs42-43 earlier while Reti was available at Rs53 per cubic foot versus Rs28-30. Similarly, cement costs over Rs1,000 per 50kg bag while steel bars sell for around Rs220,000 a tonne.

The country still faced a dearth of one million units a year as against construction of only 350,000-400,000 units, he added.

To address the grievances of flood victims, Abad has engaged consultants for preparing models of a “modern village” based on rooms measuring 12x14 feet, which would cost around Rs150,000 depending on the fibre and aluminium sheets, bamboo, etc.

He said Abad was trying to get this project done with the help of federal and provincial governments.

Mr Hanif said construction activity, which he said was already in decline, would also remain subdued during winter.

“I cannot say when the construction activities will revive at full pace and how much time floodwater will take to recede,” he added.

Growing demand

Attock Cement Ltd General Manager Irfan Amanullah while giving a different view, anticipated additional cement demand for five to seven million tonnes and 800,000 tonnes of steel bars after 45 days. As per estimates, floods had swept away 2.5 to three million houses.

He said investors and people in Swat would start rebuilding their hotels, houses and other structures in view of the winter tourism season.

He said cement sales during July-August mainly remained depressed because of monsoon rains and floods instead of any price issue.

He said buyers or contractors could only postpone cement purchase for a limited time due to seasonal factors but they could not cancel the purchase as they have to complete the work even with low-priced cement.

“It’s a temporary phase and the situation would be different after 45 days. Cement sales are going on even at a price of over Rs1,000 per 50kg,” he observed.

He said it seemed that a robust market change was coming up and people were accepting the structural reforms taken by the government.

“In my view, Finance Minister Miftah Ismail is taking tough decisions under tremendous pressure and the business community and people are understanding the gravity of the situation by accepting them.”

He was of the view that the finance minister was fully prepared to take up the challenge and he was taking the tough decisions despite immense political pressure, “which is a very good sign”.

Revival begins

Wajid Bukhari, secretary general of the Pakistan Association of Large Steel Producers, said construction work had resumed in Punjab and Islamabad after rains stopped while in Sindh and Balochistan, the situation was different due to issues in steel bars and cement transportation.

“I think construction activities will pick up pace in the entire country after the end of a rain spell forecasted in mid-September,” he said.

Mr Bukhari said builders and contractors would try to complete their projects from September to November before peak winter.

As for additional demand for steel bars during the revival phase, he said the demand would not be robust owing to the low Public Sector Development Programme allocations and until big private projects came into full swing.

He said the last four months remained uneasy for the steel bar makers due to high raw material prices, a drop in production and a slowdown in construction activities.

“I think the overall situation will improve in FY23, especially after the start of repair work in Balochistan, Sindh and Swat mainly,” he said.

Published in Dawn, September 4th, 2022

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