Study Shows Low-Cost Housing Projects to Generate Massive Economic Activities

Investment in low-cost housing would bring “massive” economic benefits to Pakistan, according to a new study published by Karandaaz Pakistan and funded by the UK Government’s Department for International Development (DFID).

The study estimates that the construction of 100,000 more houses each year will lead to economic growth as well as increased employment opportunities.

According to the study, Pakistan’s economy will benefit massively if affordable housing units were increased.  The study suggests bringing improvements in the regulatory environment for builders, besides giving banks sufficient incentives for mortgage and house financing.


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The new study, ‘Enhancing Builder Finance in Pakistan’, was launched at an event in Islamabad at the Marriott hotel.

With this study, Karandaaz Pakistan aims to show the wide benefits to Pakistan of building more affordable housses, but also help boost the businesses of Small and Medium Enterprises (SMEs) that work on house building.

 Joanna Reid, the head of the UK’s Department for International Development (DFID) Pakistan, said at the event: “Only the richest of companies can afford to build homes for the richest of people.  Pakistan needs financing mechanisms to ensure everyone can have a roof over their head.”

Speaking at the occasion, CEO Karandaaz, Ali Sarfraz, said: “It is important for such discussions to be given a platform and for players within both the construction and the banking community to come together and engage in a conversation on how the challenges in access to finance, especially for small and medium-sized builders and developers, can be resolved. We hope that the study Karandaaz has conducted motivates members from the financial sector to take steps in making available financial products better suited to the needs and asset base of SME builders and developers and thereby catalyzing the availability of affordable housing for everyone in Pakistan.”

Zaigham Mahmood Rizvi, Chairman Prime Minister’s Task Force on Housing, also participated in the event and said: “The stakeholders of housing, namely developer, planners, the Governments, fiscal and regulatory agencies all are needed to be engaged to address affordable housing challenges, both from its supply-side and finance-side parameters. The supply-side players, mainly the developers/builders need to be engaged for meeting this challenge of affordable housing. In turn, this will boost the economy, and create jobs. Housing and real estate sector is directly linked to about 42 construction materials industries and creates jobs at much higher rate.


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The discussion highlighted the need for improvement in the current regulatory environment, and factors such as the increases in property prices, rising costs of construction materials, a lack of documentation within the SME builder community and absence of collateral as deterrents to accessing formal financing.

There are 40-50 allied industries associated with the construction and real estate sector, most of which are SMEs. The construction sector contributed 2.7 percent to Pakistan’s GDP in FY17, estimated to be 2.8 percent during FY18. With over 50 industries indirectly associated with the real estate construction sector, the overall economic impact is much higher.

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