KARACHI: Builders foresee the collapse of the real estate sector if the government acting under the IMF’s pressure imposes new taxes on the sector to boost revenue generation.
“The eventual victim will only be the end-users as everything will be passed on to the allottees of the housing units by the developers,” chairman Association of Builders and Developers (Abad), Babar Mirza Chughtai said.
The common man is already overburdened by ever-increasing cost of basic necessities, escalation in electricity, gas and oil prices, he said adding that increase in taxes on real estate will further shatter people dreams to own a house.
The Abad chief said that the poor economic conditions have drastically cut the number of transactions in the housing sector. The projects, which had been launched in last couple of months, were without substantial buyers and many projects were in difficulty.
Instead of bowing down to the IMF’s conditions, it is high time for the government to reconsider its policies, Babar Mirza said adding the government should create a conducive business environment by introducing investors-friendly rules and regulations, reducing taxes and keeping a strict vigil on the law and order situation.
It is feared that if the government does not take these steps, another situation will develop where flight of capital will take place this time, perhaps to Malaysia, and the latest entrant in the real estate market is Turkey, where all the elements of a business-friendly environment are present, he said.
The housing demand in the country has mostly been met by the private construction sector. Its share comes to over 90 per cent in the housing market. Despite such huge contribution, the new government has ignored the country’s construction industry.
Even though the government has announced that it will construct millions of houses, this will prove to be peanut in the current situation, where the demand of housing is much more. Without active participation by the private sector, it will not be possible for the government to provide housing facilities to the common man, he added.
The construction industry is already overburdened by a number of direct and indirect taxes, he said adding that the current worldwide recession, which has impacted many countries, has also affected Pakistan’s economy. The construction industry has also become a victim of this recession, he added.
