Real estate sector gets back its buoyancy, flat booking rises

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Yasir Wardad and Shah Alam Nur The real estate business in the country is back on track after three agonising years as the government's decision of resuming fresh gas connections to the households took effect, enlivening the customers, realtors said. "Apartment sales, which had been witnessing a negative growth since 2010, are now poised to experience a revival thanks to the declaration of providing new gas connections to households by the government," Managing Director of Building for Future Ltd Tanvirul Haque Probal said. Mr Probal, also former president of Real Estate and Housing Association of Bangladesh (REHAB), said the declaration has come as a great relief for the realtors and has brought back confidence of the clients. He said: "The sector which was hit hard by the decision of stopping new gas and power connections to newly built apartment houses by the government and also by higher inflation, cash crisis and capital market debacle, got a new lease of life just after the declaration by the Prime Minister on new gas connections." The Prime Minister gave the order, which came into effect in the second week of the current month. "The sales and booking has increased by nearly 20 per cent in May compared to April just after the Prime Minister's declaration of fresh connections of gas to the households" Mr Probal said. The booking orders and sales will increase further in the next months as a good number of orders from the expatriates are expected. Mr Probal also urged the withdrawal of the order on setting up of solar panels in households for the betterment of the sector. Director of Adept Consultants Ltd Md Firoz Iqbal said flat bookings had increased by 25 per cent at his firm in May compared to April. Many customers are coming and showing special interests thanks to the new declaration on gas connections, he said. He expressed his optimism that the sales and booking would increase further in the next months. Managing Director of Atlantic Properties and Development Ltd, Md Shah Alam, told the FE that the booking had witnessed a 15 per cent increase in the last two weeks. Flat sales will gain momentum just after the beginning of the new financial year, he said. Former president of REHAB, MA Awal, said in the last three years, signing of new projects had dropped by 50 per cent and a good number of companies handed over their projects to bigger firms as it became difficult for them to continue business. Mr. Awal said the sector, which contributes nearly 15 per cent to the gross domestic product (GDP), and provides Tk 20 billion to the national exchequer in VAT, registration and other taxes, has been facing problems like liquidity crisis, inflation, high materials' cost and impact of the fall in the capital market. Due to unavailability of gas connections, high registration costs, and the current 'complicated' system of making black money white by purchasing apartments, the buyers were feeling discouraged, he said. MA Awal expressed his optimism that the new government decision would help boost the sector having an annual turnover of Tk 280 billion. REHAB president Nasrul Hamid Bipu said as the overall economic condition was not good, the real estate sector might need some time to recover from the declining growth. He emphasised 'softening' of the interest rate on bank loans for the revival of the sector as loan disbursement for flat sales came down drastically. Up to 22,000 ready flats worth Tk 150 billion, of which 30 per cent have been sold out to customers, are now lying vacant, due to lack of utilities such as electricity and natural gas. Nasrul Hamid Bipu said 30 per cent of the sales proceedings from ready flats could not be realised from the customers as they were unwilling to pay the amount as they could not be convinced that the flats would be ready to use soon. The real estate sector provides employment to 3.5 million people. The present turnover of this sector is about Tk 280 billion a year and it contributes 14 per cent to the nation's GDP.