LAHORE: The construction work on multi-storey building projects in Lahore’s private sector aimed at promoting vertical growth has either stalled or slowed down due to the fast-escalating material cost caused by inflation, dollar exchange rate and political uncertainty.

The situation is likely to worsen in the coming days as builders contemplate shifting the financial impact to customers for projects that have become unviable, Dawn has leant.

“You don’t know the situation we have been going through for the last year, in particular. The cost of building materials is rising almost daily, weakening our investment strength,” says a builder.

“On the other hand, the political situation is uncertain. No one knows what will happen tomorrow. And now we have no option but to stop construction work on our multi-storey project,” he said.

Since his project became unfeasible, the management decided to inform customers of the need to pay more for project completion.

After coming into power in 2018, the Imran Khan government devised policies to promote vertical growth in Lahore to protect green areas, improve environmental conditions, and promote commercial and residential activities in urban areas. Builders, developers, construction experts and government departments were unanimous in promoting the culture of high-rise buildings. They viewed vertical growth as the only option to protect precious agriculture land and provide economic residential facilities to the public.

An official source in the Punjab government said political uncertainty has stopped or slowed down most business activities.

“Business people always keep a close eye on the political situation. When they feel it is disturbing, they try to recover their money and investments, slow down or stop projects, and avoid launching new plans,” the official said.

In addition to political uncertainty, the judicial crisis, fast-increasing steel and cement prices, and rising commercial rates in several areas have forced builders and developers to stop or slow down construction-related activities.

The official stated other factors have also contributed to builders and developers halting or slowing down construction activities.

“The district collector (deputy commissioner) has recently doubled the commercial rates of several commercial areas. The rates of major boulevards in various posh localities are now shockingly high, which has led to an increase in the commercialization fee charged by the LDA,” the official explained.

Presently, the DC commercial rate for the main boulevard and MM-Alam Road (Gulberg) stands at Rs9.7 million and over Rs6.5 million per marla. Additionally, the commercialization fee, which is always 20 percent of the per marla DC commercial rate, is approximately Rs2 million and Rs1.5 million per marla for these roads. “Therefore, if anyone owns five kanal land on Gulberg’s main boulevard and wishes to launch a permissible commercial project, they will have to pay around Rs200 million to the government as commercialization fee before commencing the project,” he added.

LDA chief town planner Shakil Ahmad said there were over 100 multistory/high-rise building projects on which work was launched after the LDA accorded approval. However, work on some projects has reportedly stalled or slowed down due to fast-increasing prices of steel, cement, and other materials that have almost doubled in one year. Despite difficulties, the LDA’s town planning department has collected around Rs.5 billion to date since July 1 of last year. The target is to collect Rs.8 billion by June 30 of this year.

Akbar Sheikh, who represents the Association of Builders and Developers, expressed grave concern over the situation and urged political parties and stakeholders to make sincere efforts to bring calm to the country’s political situation. “The price of steel skyrocketed from Rs150,000 per ton a year ago to over Rs300,000 today,” he said.

“Additionally, the cost of cement bags has risen from Rs700-800 six months ago to around Rs1100. Imported materials such as elevators have also doubled in price, causing confusion and panic among the business community and the public at large. Given this situation, it is challenging to make any project viable.”

Therefore, Mr Sheikh said, they are urging the government, political parties, and other stakeholders to sit down with the business community and find solution to protect their investment. He also requested that the LDA arrange meetings with builders and developers to work collaboratively towards finding viable solutions.

Moreover, he emphasized that the LDA should work as a development authority rather than a demolition authority. Several commercial properties are being sealed or demolished based on the pretext of violating various rules and regulations. Thus, he urges LDA to work towards the development of the community rather than imposing harsh measures.

Published in Dawn, April 4th, 2023