The typical cost of building materials used in construction depends upon several factors. These factors are the size, type, quality, and the number of materials used. In addition to these, the location and availability of the construction materials also play an important role in determining the overall cost. Average prices of elementary construction materials (bricks, cement, sand, and steel) have seen to be on the higher side in 2021. This escalation in prices is due to many factors, though the major factor definitely is pandemic.
Steel
Steel is one of the major construction materials used in the construction of buildings throughout the world. According to the 12th Edition of World Steel Recycling in Figures published by the Bureau of International Recycling (BIR), in 2020 a total of more than 99.3 million tonnes of global external steel scrap trading took place (-1.3% compared to 2019). There was a 4.3% reduction in the amount of steel scrap used by the seven key countries and regions. This is partly due to the negative influence of the Coronavirus pandemic on global steel scrap use and crude steel output in 2020.
Turkey imported 22.435 million tonnes of steel scrap; 19% more than the previous year. This makes Turkey the world’s leading importer. India was the second imported 5.383 million tonnes, and the USA at third position imported 4.512 million tonnes of steel scrap. The exact figures for Pakistan have not released yet. But according to the statistical report in 2019, Pakistan was the fourth largest country that imported 4.3 million tonnes of steel scrap.
In the local market, the prices of steel used for construction have increased drastically over the past few months. The good quality steel, which was previously cost you 105-110/kg, now its price shoot up to 150/kg in the local market. This significant increase in steel rates has increased the total cost of construction in Pakistan.
Cement
As compared to the last year, there has seen a boom in cement consumption in Pakistan. According to the All Pakistan Cement Manufacturers Association, the cement markets in Pakistan enhanced 49.86% in May 2021 as opposed to the same month of last year. The cement despatches for this particular month are 3.947 million tons against 2.634 Million Tons despatched during the same month of last fiscal year.
One of the spokespeople from APCMA urged to Government to reduce the duties and taxes and put an end to FED. Because of the increase in coal prices from the US $ 60 per ton to around US$ 120 per ton, manufacturing costs have increased. He further explained that it is challenging for them to keep in business.
In the local market, the rate of one cement bag of good quality has increased from 510/kg to 640/kg. The high demand and the worldwide increase in prices of raw materials are the major factors of these skyrocketing prices in Pakistan.
| Cement Company Name | Rate/ 50 Kg bag |
| DG Cement | Rs. 620 |
| Lucky Cement | Rs. 600 |
| Maple Leaf Cement | Rs. 635 |
| Bestway Cement | Rs. 605 |
| Pioneer | Rs. 625 |
| Askari Cement | Rs. 625 |
| PakCem | Rs. 630 |
| Attock Cement | Rs. 530 |
| Fauji Cement | Rs. 545 |
| Kohat Cement | Rs. 530 |
Sand
According to our research and estimates, the average price of Chenab sand which was Rs 24-25 per cubic feet in the previous year rose to Rs 35 per cubic feet in the current year 2021. Ravi sand, on the other hand, is of Rs. 20 per cubic feet. The best quality Lawrancepur sand is Rs. 85 per cubic feet in the year 2021.
Development in Construction Sector Pakistan in 2021
Pakistan, like many countries, has suffered a severe pandemic known as Covid-19. Though the widespread epidemic brought many nations to a grinding halt, Pakistan worked tirelessly to bring its economy back on track. The construction sector was first among industries to be rescued because it has the power to affect every aspect of life in a positive way.
A number of incentives for the construction sector introduced by the incumbent government in 2020 helped the industry to survive. Because of these incentives, the Security and Exchange Commission of Pakistan (SECP) had seen a 32% increase in the registration of construction and real estate companies in 2020. On Jan 2021, the weekly meeting of the National Coordination Committee on Housing, Construction, and Development (NCCHCD) revealed that more than 600 billion worth of construction would start in the coming year.
A few points mentioned in the incentive package or relief package introduced by PM Imran Khan are:
- Allowing all buyers and sellers in this industry to participate without disclosing their sources of income.
- A 90% leverage in tax for investors investing with the Naya Pakistan Housing Scheme. Investors will only have to pay 10% as tax.
- Withholding tax on building materials has been exempted except for cement and steel.
- For Naya Pakistan Housing Scheme, the government has allocated a subsidy of PKR 30 billion.
- People will no longer pay capital gains tax when they sell their property.
With the implementation of several tax incentives for construction industries, our current government is struggling hard to develop a highly urbanized and globally competitive country.