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Low housing aim needs more collective effort

Low housing aim needs more collective effort

Interview with Mr Ahmed Owais Thanvi — Managing Director, King’s Group Builders and Developers

PAGE: Tell me something about yourself and your organization, please?

Ahmed Owais Thanvi: I am the Managing Director of King’s Group Builders and Developers.

King’s Group is the leading construction company in Karachi. King’s Group was established in 1977 (preciously known as Al Ahmad Pvt Ltd). The company was established to function as both a developer and a contractor, which allows the flexibility to work in various capacities on a range of projects. Our passion is building and delivering attractive homes to pre-eminence and as a result, have built a reliable team to ensure the best for our customers. We have strong relationships with our valued customers whom we promise to always provide the level of quality that we impress upon.

Kings Group prides itself on construction knowledge and capability to successfully deliver projects on time and budget. Our in-house team has a vast amount of experience and knowledge which gives us the ability to undertake the role of principal builders on a variety of projects. Kings Group is proud to be one of the emerging construction companies in Pakistan. We have a strong reputation for the finest construction with proficiency, and authenticity.

PAGE: Could you tell us about the construction activities in Karachi these days?

Ahmed Owais Thanvi: The Nasla Tower episode in Karachi and the rising costs have slowed down activities all over the country despite State Bank’s claims of a rosy picture. The prices of construction materials have risen due to rupee devaluation against the dollar, higher fuel and energy charges, sea freight costs and interest rates, massive jumps in steel bars and cement bag prices have also ruined the cost of production of the projects. Steel bars and cement hold 23% and 18-20% share in the construction of a high-rise project respectively. Another reason for lackluster construction work in Karachi was the non-approval of 275 high-rise and housing projects by the Sindh Building Control Authority (SBCA) for the last 2 years.

PAGE: What is your perspective about cost of construction?

Ahmed Owais Thanvi: The construction industry and its operations are one of the main sources of economic growth and development. The prices of all raw materials have increased by more than 70 percent during the last 3 years. Over 60 percent of Pakistan’s construction activities have come to a standstill following an unprecedented increase in the rates of basic building material amid rising global commodity prices, the overall construction cost had gone up from about Rs2,500 to Rs4,000 square feet across the country. The cost of construction depends on a number of factors. Broadly these can be categorized as:

The cost of construction on a high-rise project has risen by 6% to 9% as steel bars hold 40% to 45% share in total construction cost of such developments. The cost of construction in Pakistan for housing projects has also crawled up by 4% to 6% as the share of steel bars ranges between 15% and 20% in the total expenditure.

PAGE: Could you tell us about bank financing for the purchase of apartments?

Ahmed Owais Thanvi: Easy Home is a completely interest (Riba) free solution to home financing needs. Unlike a conventional house loan, the nature of the contract is co-ownership. This is because the transaction is not based on lending and borrowing of money but on joint ownership of a house. With Easy Home you participate with any bank in joint ownership of your property, where the Bank will provide a certain amount of financing. You agree to a monthly payment to the Bank of which one component is rent for the home, and another for your equity share. In fact, the total monthly payment is reduced regularly as your share in the property grows. When you have made the full investment, which had been agreed upon, you become the sole owner with a clear title to the property.

PAGE: Could you give your views on the low-cost housing?

Ahmed Owais Thanvi: Pakistan, like other developing countries, has been facing shortage of housing units. This fundamental human need is acting more significantly at the base of the population pyramid. Authorities have observed that requirement for new homes is around 700,000 units/year. But only a small portion of this requirement is met. In general, the housing deficiency is assessed at 10 million units and is increasing at a rapid rate. Pakistan has seen political sloganeering of roti, kapra aur makaan since the 1970s, but practically, on-ground results have been few and far between. Overview of the challenges highlights the lack of mortgage financing driven primarily by weak foreclosure laws and inadequate land registration and titles documentation, among other reasons.

PAGE: Kindly tell us about government support to builders?

Ahmed Owais Thanvi: The Prime Minister said thirty-five billion rupees have been allocated for subsidy on construction of houses for the low-income people. The government will provide three hundred thousand rupees subsidy on every house for the first one hundred thousand units. About one hundred thousand apartments are under construction and the process will now speedily move forward as the structure of the system has been finalized.

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