By Irfan Ahmed ISLAMABAD, Feb 15 (INP-Wealth): Fitch Solutions projects an industry value of Rs1,740 billion in 2025 and Rs2,705 billion by 2028, representing the potential of the housing and construction industry. The construction sector has been declared an industry. Reforms to tax policies provide numerous incentives to builders and developers as well as contractors. Tax relief has been granted to firms in the industry and numerous taxes previously hampering the ease of doing business in the sector have been removed. This provides one of the best opportunities for investment. Construction business in Pakistan is considered the most favorite at the moment. Government efforts and the overall pro-business environment ensure high-profit margin in the construction business and the investors are willing to invest in the construction industry because of high-profits. The Income Tax Ordinance (ITO) was amended in March 2021 to declare construction sector as an industrial undertaking, making it eligible for benefits and concession available to other industries as well. The China Pakistan Economic Corridor (CPEC) has given a boost to the construction sector through the inflow of infrastructural projects, including highways, power plants, and dams, leading to increased investments in the housing sectors. The capital gains received by an individual on the sale of a residential property house or flat have been exempted from income tax. With a view to promoting housing and construction of buildings in Pakistan, the State Bank of Pakistan (SBP) has decided to advise mandatory targets to the banks. Accordingly, each bank shall ensure that the financing for housing and construction of buildings (residential and non-residential) shall be at least 5% of their domestic private sector credit by December, 2021. The most attractive concession available to real estate investors and owners as well as builders, contractors, developers and potential homeowners is the tax amnesty aimed at whitening the undocumented money. In addition, further concessions and subsidies were offered in the budget to encourage affordable housing for low-income segments. Reasons to attract investment Pakistan’s annual demand for housing is estimated to be about 700k units, while only about half is currently being met and the housing deficit is growing every year. Therefore, it is expected that the annual housing demand will increase from 800k housing units in 2022 to 1.24 million housing units per year in 2025. This shows the potential for investment and growth in this sector. According to the Pakistan Economic Survey, there is a growing demand for houses due to a 2% annual population growth rate. The construction industry accounts for 2.53% of the country’s GDP and the sector employs 7.61% of the employed Pakistani labor force. The economic situation and prospects for the development of the country's economy largely depend on investment activities. Investment activity has always been a necessary condition and source of economic growth. It was also observed that due to the positive construction environment in the country, 389 projects of worth R157 billion were registered. In the present circumstances, the industry is expected to grow 4.7% to 5.2 % from 2022 to 2025. Despite decreases in GDP, public sector spending on infrastructure, and Foreign Direct Investment (FDI), the outlook remains positive due to exceptional reforms carried out by the government through improvement in regulatory environment, introduction of incentives and relief packages for the construction industry. source: Pakistan economic survey   Benefits of investments in construction industry The construction industry plays an important role in the economic uplift and the development of any country. It can be regarded as a mechanism of offering job opportunities to millions of skilled and unskilled workers. The construction sector provides stimulus to almost 42 sub-sectors including brick, cement, cables, glass, wood, paint, tiles, transportation and warehousing. With the construction of every house, two jobs of permanent nature are created – either directly or indirectly. It also plays a key role in generating income in both formal and informal sector. It increases foreign exchange earnings derived from trade in construction material and engineering services, boosting the economy of Pakistan. With strong government support, the construction industry in Pakistan was expected to grow around 3% at the end of 2021.