Real estate business dull as govt tightens grip on policy measures

FE Team | Published: August 18, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

M Azizur Rahman
The real estate business in the country is passing a dreary time due to tightening of the government's grip on policy measures coupled with price hike of construction materials in the local market.
Sources said sale of both apartments and land fell drastically in the last several months, especially since takeover by the incumbent caretaker government in January last as clients were more cautious about making any purchase decisions.
Apartment sale dropped by 71 per cent during January-March this year compared to that of the previous year, statistics of the Real Estate and Housing Association of Bangladesh (REHAB) revealed.
According to the Rehab statistics, a total of 510 apartments were sold in first three months of the current calendar year compared to 1,794 apartments in the corresponding period of 2006.
Land sale also dropped significantly as the clients were becoming cautious about the ownership of lands being sold by the land developers.
"The opportunity of whitening black money paying only 7.5 per cent interest through purchase of apartments is no more in place," REHAB General Secretary Tanveerul Haque Probal told the FE pointing to the cause of the fall in sales.
He also said the significant hike of the prices of construction materials also pushed the real estate sector into a dire straits.
Every type of construction material including mild steel (MS) rod, cement, brick, electric wire and galvanised iron (GI) pipe recorded a sharp rise in the local market in the last several months, he added.
According to the REHAB statistics, the present market prices of MS rod have risen by 19 per cent, cement by 32 per cent, brick 62 per cent and sand 72 per cent compared to those in 2005.
Electric wire prices increased by 100 per cent, aluminum and paint 32 per cent, labour and other materials 28 per cent, the REHAB data showed.
Admitting the price hike of MS rod, General Secretary of Bangladesh Re-rolling Mills Association SK Masadul Alam Masud said the price hike of the raw material - ship scraps - has pushed up the rod prices.
He also said the 60-grade MS rod is now being sold at Tk 48,000 a tonne against Tk 42,000 a tonne of last year.
"Cement price increased to Tk 320-Tk 330 per bag from Tk 270-Tk 280 per bag in the last several months," said General Secretary of Bangladesh Cement Manufacturers' Association Azizur Rahman Selim.
He said the hike of clinker price in the international market has pushed up the cement prices in the local market.
The scarcity of required soil and the price hike of coal have pushed up the brick prices in the local market, said Abu Bakar of Bangladesh Brick Manufacturers' Association.
A thousand bricks, which were sold at Tk 3100 several months ago, are now being sold at Tk 3500, he said.
Commenting on the real estate sector, the REHAB secretary general said: "During March-June last the business, however, started recovering, as the clients were out to grab the last opportunity of legalising their undisclosed money."
He said extension of the deadline for legalising untaxed money from July 31 to September 30 has also added an impetus to the real estate business to some extent.
"But it might turn bleak again after expiry of the September 30 deadline," he feared.