FATF terms, material cost hike: Realtors concerned over upcoming challenges

ISLAMABAD: Federation of Realtor Association Pakistan Chairman Ejaz Mussarat Khan expressed concern over the upcoming challenges for the real estate industry both in terms of the Financial Action Task Force (FATF) conditionalities and rise of construction material cost.

He shared his thoughts during the third anniversary celebrations held at "AAA Associates" Head office here on Friday, which was attended by all important members of the association.

While addressing the members, he appreciated the performance of the industry growth and contributions of all players by completing projects within a timeline that has boosted investors' confidence in the industry.

The ceremony was attended by Chairman AAA Associates Sheikh Fawad Bashir, MD Shehzad Kiyani, Yaseen Minhas, Daniyal Khan, Dr Rizwan, Malik Habib, Najeeb Gull, and Ali Taab.

After PM announced a concessional construction package and amnesty scheme for the real estate industry, billions of rupees investment is injected in this sector and around 150-200 percent growth is seen during the past one year, which indicates progressive growth of the industry.

With the boom in the industry has brought many challenges to it, the government has announced strict policies measures to meet the FATF criteria.

Recently, they 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 their 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.

Second biggest 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 ton in the open market.

Increase in input cost will ultimately bring a surge in construction cost.

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 the common man.

Chairman Federation of Realtor Association Pakistan demands government to intervene to address these challenges by suggesting to the government that a practical way to meet the FATF requirements could be to register all the brokers and dealers with the land transferring agencies such as the 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 further added, "Government must introduce a strict price control mechanism to control construction cost. They can allow imports of steel bar to meet local demand and offer tax concessions to local producers to put a halt to price increase. If the government fails to address these challenges, then Naya Pakistan housing and amnesty scheme won't be able to create its impact on the industry as being projected".

On this occasion, MD AAA Associates Shahzad Ali Kiyani informed that the government policies forcing dealers and real estate professionals for such comprehensive customer due diligence and at the same time promising that sources of investments and incomes would not be asked until June 30 was not only contradictory but would also discourage investments in the construction sector under the prime minister's amnesty scheme.

Chairman AAA Associates Sheikh Fawad Bashir said that we appreciate the government for creating a level-playing field for real estate industry to thrive and always stood beside the government to make and implement conducive policies for the industry.

We want to see the real impact of government schemes on the industry by helping us overcome these challenges with amicable solutions that must be beneficial for the industry and at the same time support the government to meet the FATF criteria.

Copyright Business Recorder, 2021