KARACHI: Revision in property valuation to hurt construction industry

[Lahore_Real_Estate]

By Moonis Ahmed

KARACHI: The construction industry might face challenges if government does not review the revised property valuation rates that have been increased up to 300 percent per sq yard, industry people said on Saturday.

Chairman ABAD, Engr. Farooq-uz-Zaman Khan, while talking to Daily Times strongly opposed the increase in valuation rates and said that the increase by 50 to 300 percent is not only exorbitant and unrealistic but also prejudicial to the interest of revenue as well as property owners.

Farooq said that there is no doubt that the Sindh government and the federal government had exhibited good governance when they reduced stamp duty from three to two percent (i.e. 33 percent decrease) and CVT from four to two percent (i.e. 50 percent decrease) respectively in the budget 2010-11, but the abnormal increase in collector value by the provincial government of Sindh have nullified the positive steps taken by the Sindh and federal government.

In the last five years, real estate sector has been, and is still in a pathetic shape in Pakistan. As per the State Bank of Pakistan’s Annual Report for 2008-2009, the real estate and construction had shrunk by 12 percent. Furthermore, severe economic recession globally has led to a terrible liquidity crunch all over the world. The upward revision of value of real estate would be extremely disastrous to the interest of the Construction Industry, which is already ailing under the unbearable heavy cost of construction and tremendous economic depression.

Another major problem for the industry is low housing financing by HBFC, he said, adding that it has, on one hand, hampered the construction activities, and on the other, a number of industries like steel, pipes, tiles, cables and numerous others have either closed down or have curtailed their production, thus drastically cutting down the revenue of the exchequer.

He added that strict regulations, high interest rates, and centralised policy of approving loans is adding to the woes of the public and it has been virtually made impossible for them to obtain loans. The housing shortage has reached a tremendous 8.2 million and main reason for this backlog is the increase in population and the urbanisation trend, he said.

He said that the construction industry has been suffering since last 4-5 years and only 50 small and mega hosing projects were launched in the last fiscal year 2009-10. It is pertinent to point out that the prices of real estate have fallen by more than 30 to 70 percent of those in the year 2005.

He asked the government to examine the true facts and reduce the value of the real estate determined by government.