• Tanis Ahmed Shaikh

Impact Of Current Inflation on Pakistan's Construction Sector

The Limitless Associates Posted on 27 May 2022

 



The main reason for the increase in construction costs in Pakistan is the increase in gas, electricity, and fuel costs.

Inflation often looks like the worst terrible for investors, contractors, constructors, and other major stakeholders in the real estate industry. This is mainly due to rising prices in raw materials, construction machinery, and daily labor wages.


The bad impression of high inflation on the construction market.


Construction costs for independent and multiuse buildings have increased by 21% over the past year. Inflation rises the prices of building materials and land by 30%, letting constructors sell real estate and services at higher rates.

  • An abnormal rise in building material prices.

  • Increased labor costs.

  • High-Rate building materials.

  • Increased transportation and labor costs


Construction Material Inflation


Construction materials are accountable for 55% to 65% of the total cost of a construction project. Steel and cement are a common material used in construction projects and has recently seen significant price increases. These situations threatened contractors and builders, forced them to reassess their financial plans to start construction projects, and often delayed their plans.

Daily Labor Wage Inflation


Comparable to all other sectors, Labor in the construction industry request high daily labor wages from their contractors. This is mainly due to higher living costs and groceries and poorer purchasing power of workers, forcing them to raise their wages. Increased labor costs accelerate the initial and final costs of the project.


We have learned enough about how inflation increase has a negative impact on the construction sector. Now let`s see how to overcome this impact and take advantage of this upcoming situation.


Recommendations for Countering the Impact of Inflation on the Construction Sector


Don`t worry. There are several ways to avoid this to protect yourself from the negative effects of rising inflation.


  • Elegantly transforms the design into a more modern and minimalist shape.

  • Less material consumption.

  • Avoid wasting material.

  • Due to the high real estate prices, you can earn higher income from rental properties. Needless to say, real estate is the best choice to secure your future and protect yourself from the negative effects of inflation.

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