ISLAMABAD: The Federation of Realtor Association Pakistan (FRAP) has expressed concerns over upcoming challenges for the real estate industry in terms of FATF conditionality and rise of construction material cost.
In this regard, FRAP Chairman Ejaz Mussarat Khan, said that after Prime Minister Imran Khan announced a concessional construction package and amnesty scheme for the real estate industry, billions of rupees investment was injected in this sector and a growth of around 150 to 200 per cent was seen; however, the government also announced strict policies to meet FATF criteria.
Recently, the government unilaterally registered all tax returns-filing real estate dealers as Designated Non-Financial Business and Professions (DNFBPs) and directed them to provide full details of clients and property transactions after completing customer due diligence.
All tax-filing real estate dealers are required to submit an online four-page questionnaire in seven days. In case of non-compliance or partial compliance, action as per law will be initiated.
“The second challenge the industry is facing is the high cost of construction material. As the industry is experiencing substantial growth, demand of steel bars has surpassed the local production capacity and resulted in hitting the record level of Rs161,000 per tonne in the open market,” he explained.
He said that an increase in input cost will ultimately bring a surge in construction cost whereas under this circumstance, it is difficult for the builders to control the price of construction and deliver the project within the budget, adversely affecting the purchasing power of a common man.
Ejaz Khan demanded the government to intervene and suggested that a practical way to meet the FATF requirements could be to register all the brokers and dealers with land transferring agencies like CDA, LDA, KDA, DHA, etc, under minimum criteria being a filer and having a bank account, which would increase the number of filers and tax collection at the same time.
“This would help the professional agencies report all transactions and best brokers can report cash transactions above Rs2 million,” he said, adding that the government must introduce a strict price control mechanism to control construction cost.
“They can allow imports of steel bars to meet local demand and offer tax concessions to local producers to put a halt to price increase,” he further added.
The real estate industry has warned that if the government fails to address these challenges, Naya Pakistan Housing and amnesty scheme won’t be able to create its impact on the industry as being projected.
Further, industry professionals have said that government policies are forcing dealers and real estate professionals for comprehensive customer due diligence and at the same time promising that sources of investments and incomes would not be asked until June 30, which was not only contradictory but will also discourage investments in the construction sector under the prime minister’s amnesty scheme.