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Construction Financing - Growth Emerges
Roshan Apna Ghar & Financing for under-construction projects
SBP to the rescue - Roshan Apna Ghar & Financing for under-construction projects!
Construction sector has been the much touted savior of the economy. Even before assuming power, PTI believed that this sector alone can lift the economic growth in the country. Marred by economic uncertainty & other teething problems, sector is on the move. So is the economy.
Factors such as construction amnesty, financing for projects, SBP's mandated lending to the sector, low interest rate, low cost housing, Mera Pakistan Mera Ghar policy, simplification of builders etc have propelled the sector. Now, overseas Pakistanis can invest directly into approved projects & consumers get loans for under development projects.
Roshan Mera Ghar:
- Digitally & Remotely buy a property
- Build & renovate your house
- Conventional & Sharia Compliant
- 3 to 25 years
- Fully repatriable & subject to final taxation
- Pre-approved projects for fast approval
- Since bank is involved, rest assured on legality of assets
- Nominate a person locally to handle the process
- Co-borrower allowed
- Free Property Insurance
- Lien based financing: 99% of property value, 40% for renovation.
- Non Lein financing: 95% of property value, 30% for renovation.
- Variable : 1 Year KIBOR (Lien) & KIBOR + 1.5% (Non-lien)
- Fixed : 5 Year PKRV (Fixed) & 5 YEAR PKRS + 1.5% (Non-lien)
- Off-plan Financing: Down payment & Periodic
Financing under-construction projects:
- Financing risk of Banks through mortgaged land
- Under construction projects are relatively cheaper
- Banker's monitoring will ensure timely completion
- Increase demand as 3/4 year payment plan can elongate by Banks
- Mera Pakistan Meri Ghar subsidy to be available for these
The government has last 2 years of the term. With low interest rates & right policies, the construction growth has taken off now. The recent 22% growth in cement offtake & double digit growth in local offtake over 2-3 years is a clear sign of sustainable uptick.
Although rising cost of raw materials - steel, cement, copper & labour - is upending some feasibilities. However, SBP's timely intervention has opened up the sector for sustainable growth. Buyers & developers must be excited with the availability of finance, shariah compliant options, lesser working capital, better property security & improved foreclosure laws.
It's time for the unhoused to be housed. Entrepreneurs to venture into housing businesses. Banks to lend. Economic growth to get catalyzed.