How the Construction Sector Can Benefit From Vertical Development of Cities

Introduction

The demand for high-quality housing is constantly rising in urban centres. Providing urban populations with better and more spacious accommodations is crucial for reducing the overcrowding of living spaces. The challenge is to achieve this growth in a fast, sustainable, and environmentally friendly way. Many cities worldwide are now looking towards vertical development to tackle the challenges of urban expansion into green lands. Vertical development is the construction of high-rises in place of single-unit homes on the same plot of land. Instead of housing a single-family unit, luxury apartments, high-rise buildings can accommodate multiple residential units, commercial shops, hospitals, schools, restaurants, and fitness complexes in the same building. The phenomenon can have massive implications for the construction sector as newer technologies, materials, and collaborative mechanisms will be required to shift towards vertical development. Continue reading to understand how the construction sector will benefit from the vertical development of cities.

Graana.com through this blog highlight how the construction sector can benefit from the vertical development of cities. 

Construction Sector of Pakistan

Pakistan is the fifth most populous country globally, with more than 60 million strong labour force and a growing middle class. Out of the total population, 36 percent reside in urban areas, whereas 64 percent live in rural parts. The demand for housing is growing annually by three hundred thousand units with an annual population growth rate of 2.4 percent. The country’s construction sector contributes 2.5 percent towards the annual GDP and employs 7.6 percent of the entire labour force. According to the Association of Builders and Developers (ABAD), pending construction and housing projects add up to Rs 1.1 trillion in monetary value. The construction sector has recently been declared an industry that will bring tax relief to firms and businesses in the industry through amendments to the tax ordinance. Reforms in the tax processes have provided builders and developers with numerous incentives to boost activity in the sector. These include reducing tax rates, removing previous taxes, and helping the industry in its ease of doing business. The construction sector has also seen a boost in revenues due to the development of the China Pakistan Economic Corridor. With the coronavirus taking its toll on the country’s economy, a boost to the construction sector remained an important step in achieving recovery and growth of Pakistan’s economy in FY 2020-21. Not only did the incentives provide an impetus for growth in its allied sectors, but the government also released a special amnesty package for investors, diaspora investment incentives, and Rs 36 billion subsidies under the Naya Pakistan Housing Program (Newsweek, 2020).

Growth in the construction sector can boost Pakistan’s economy and create new job opportunities for the youth. In light of the incumbent government’s desire to see a growth of high-rise buildings in Pakistan, a policy on the construction of high-rise buildings has also been formulated and endorsed by the national cabinet. The Lahore Development Authority (LDA) has promulgated various laws to promote high-rise buildings in the provincial capital. The approval process for constructing high-rise buildings has been simplified along with the removal of unnecessary restrictions such as obtaining a No Objection Certificate (NOC) from different government agencies. Not only will this reduce compliance and construction costs, but it will also ensure the timely completion of construction projects (Adnan, LDA enacts new laws to promote high-rises, 2019). The authority has also relaxed by-laws for construction to boost the vertical development of cities. New buildings and zoning regulations have also been moulded to encourage the vertical development of cities. The plot size requirement for construction of high rises has also been reduced from 4 kanals to 10 marlas. There is also no height limit for commercial buildings having an area of 12 kanals and above. These buildings will also have a mandatory requirement to set up rooftop gardens, rainwater harvesting systems, parking, and firefighting systems (Adnan, 2020). Besides Lahore, the cabinet has also allowed high-rise buildings in four major cities, namely, Karachi, Islamabad, Peshawar, and Multan (HP, 2019). Therefore, the construction sector proved to be Pakistan’s lifeline in times of pandemic induced lockdowns and a dip in the country’s economy.

How Vertical Development of Urban Centres will Boost the Construction Sector

The construction of high-rise buildings can provide a massive boost to the construction sector in the form of increased foreign and local investments, increased demand for labour and employment, increased use of raw materials leading to a growth in construction allied sectors, and increased utilisation of high-end technologies that provide greater efficiency and innovation. High-rise buildings are considered an indicator for the development of a country’s real estate sector. The first benefit of increasing vertical development will be realised in the form of increased foreign investments in Pakistan that will boost the setting up of new projects and provide resources for completing ongoing projects. Also, with the construction sector being recognised as an industry and the government providing incentives for the growth of high-rise buildings, the market rates for raw materials will stabilise. This will help set accurate forecasting models for projects that often face financial problems due to market volatilities.

Pakistan has a strong labour force of young individuals who lack job opportunities due to their unskilled nature. As construction of homes and low-rise buildings does not require as much manpower as high-rise building construction, many of this labour force is forced to shift towards other countries that can provide training and employment. Boosting the vertical development of cities will create a demand for this labour in Pakistan and allow the construction sector to absorb a massive level of skilled and unskilled labour locally. The construction of high-rise buildings will also give a boost to the allied sectors of the industry. A high-rise requires greater amounts of raw material, efficient logistics, and advanced supply-chain management. Therefore, the impact of vertical development will be seen in increased consumption of raw material, installation and upgradation of infrastructure for better logistics, growth of the local market, and ultimately, increase in exports of construction-related equipment. Lastly, vertical development requires complex technologies to be implemented during the construction phase. Pakistan’s construction sector lags in the adoption of innovative practices and requires an impetus for the introduction of newer technologies in the sector to make construction more efficient, sustainable, and environmentally friendly.

Conclusion

The demand for high-quality affordable housing is rising due to rapid urbanisation. Accommodating this demand is not possible without the vertical development of cities. With the pandemic taking its toll on the country’s economy in the earlier stages of FY 2020-21, incentives given to the construction sector provided a strong growth to Pakistan’s economy. Continuing on the same line of argument, the government of Pakistan is now incentivising the vertical development of cities. The construction sector stands to gain from this vertical development in the form of increased foreign and local investments, increased demand for labour and employment, increased use of raw materials leading to a growth in construction allied sectors, and increased utilisation of high-end technologies that provide greater efficiency and innovation.