Reply To: Construction costs

Mohsin Munir

The cost of construction and steel in Pakistan surges with Rupee decline

By Yasir Zeb – July 19, 2018

The house construction prices go up due to rupee devaluation along with steel prices, the recent plunge in Rupee has further increased the cost of construction in the country.

According to a report produced by the World Bank in 2017, Pakistan is facing a severe shortage in housing units, Pakistan needs as many as 10 million units to cover the shortage. According to a steel dealer, the price of high-quality steel has increased from Rs97,000 per tonne in April to Rs107,000—110,000 per tonne in July. This is almost Rs.10,000 to Rs.13,000 increase in price.

Amreli steel has raised the price of rebar on Tuesday by Rs4,000 to Rs107,000 per tonne, this is the fourth time increment since February when the Rupee started declining faster than ever before, Amreli steel has increased the cumulative price by 20%.

All that is happening due to Rupee devaluation, since, December last year, the currency has lost its value, the imports are getting expensive and profits are declining—Dawn reported.

Fayaz Ilyas, Senior Vice Chairman Association of Builders and Developers Pakistan (ABAD) told that construction cost has surged by 10 to 12 percent during the last six months; not only steel bars but also cement and wood prices elevated the overall cost of construction, cement price contributed to pushing the prices further by 10 percent. The Rupee devaluation has also inflicted upon tiles and sanitary ware prices by 5 to 6 percent, he added.

He urged the government to take measures because local manufacturers are increasing the rates of construction material using their undue advantage. The government should make a policy which would allow the construction industry to import materials rather than going to local steel and cement mafia.

Arif Jeewa Chairman ABAD said, there are some reports that the government will increase regulatory duties which would push the construction cost further and the general public would suffer from the higher prices.

Pakistan is already facing a shortage in houses by 10 million, if the government increases the RD it will adversely affect the contribution from the construction industry to build more houses because of expensive construction material, he added.