Boosting housing and construction sector
Thursday, 22 November 2007
The members of the Real Estate and Housing Association of Bangladesh (REHAB) would be showcasing to buyers under one-roof all the opportunities of buying real estate at the five-day long fair organised by it. The fair that began last Tuesday is an annual event that the REHAB has been holding every year for long. But the fair this year is taking place amid a backdrop of concern in the wake of the slack period that has gripped this highly prospective sector. The functionaries of the REHAB authorities recently highlighted their woes specially the big drop in the sales of their apartments, by some 50 per cent. They have been also consistently airing their grievances for a swift response from the government.
The housing and construction sector including largely the real estate developers which are members of the REHAB, has been an emerging one in the economy. It currently is the source of livelihood of some 10 million people who are directly and indirectly engaged in it or are employed in its backward linkages industries and associated distribution businesses. Thus, any squeezing of this sector must have a negative effect in shrinking the country's gross domestic product (GDP), employment and income. The housing and construction sector also provides a big sum of money to the government in the form of revenues. It is also the main supplier of flats and has been playing a very significant role in meeting the housing needs of people.
Thus, the importance of helping this sector to regain its buoyancy and for the economy on the whole to get the benefits thereof, should be obvious. It appears from various assessments that this sector can get a big boost from the government acting favourably in relation to certain key suggestions. The same would involve reduction of government's revenues to some extent. But the government faces the risks of losing comparatively greater revenues by keeping the stresses on this sector. Therefore, the government should have a prudential policy to give some breaks to this sector by reducing taxes and duties which would allow the latter to flourish. In that case, greater revenues can be earned from it in the medium and longer terms. In this connection, some suggestions have been made by the REHAB for lowering the tax per square metre and taking steps for reducing the rate of interest on bank loans. The duty structure relating to input costs for construction of flats does also merit attention in this context. The moot point for consideration is to ensure conditions so that the potential buyers can purchase ready flats or plots at affordable costs. The developers will, on their part, would like to have appropriate policy supports so that they are in a position to lower their operational costs and offer flats to buyers at reduced prices. Buyers are expected to respond well to such a drop in prices of flats. The existing registration costs are also considered as too high. The same should reasonably be lowered and this step, too, will help in lowering the prices of flats to get a more enthusiastic response from the buyers.
There are other policies to be considered such as Rajdhani Unnayan Katripakha (RAJUK) remaining committed to approving plans assuredly within a time-limit. Progress in this area has been noted recently but it has to be sustainable. There should be no bureaucratic hassles frustrating the real estate developers and such problems must be overcome on a lasting basis. The utility agencies should be also similarly made to act quickly in relation to the application from developers for various services. Government may also consider selling to the developers at less than market prices some of the lands it owns for building low cost apartments by the latter for selling to less affluent or non-affluent sections of people.
The housing and construction sector including largely the real estate developers which are members of the REHAB, has been an emerging one in the economy. It currently is the source of livelihood of some 10 million people who are directly and indirectly engaged in it or are employed in its backward linkages industries and associated distribution businesses. Thus, any squeezing of this sector must have a negative effect in shrinking the country's gross domestic product (GDP), employment and income. The housing and construction sector also provides a big sum of money to the government in the form of revenues. It is also the main supplier of flats and has been playing a very significant role in meeting the housing needs of people.
Thus, the importance of helping this sector to regain its buoyancy and for the economy on the whole to get the benefits thereof, should be obvious. It appears from various assessments that this sector can get a big boost from the government acting favourably in relation to certain key suggestions. The same would involve reduction of government's revenues to some extent. But the government faces the risks of losing comparatively greater revenues by keeping the stresses on this sector. Therefore, the government should have a prudential policy to give some breaks to this sector by reducing taxes and duties which would allow the latter to flourish. In that case, greater revenues can be earned from it in the medium and longer terms. In this connection, some suggestions have been made by the REHAB for lowering the tax per square metre and taking steps for reducing the rate of interest on bank loans. The duty structure relating to input costs for construction of flats does also merit attention in this context. The moot point for consideration is to ensure conditions so that the potential buyers can purchase ready flats or plots at affordable costs. The developers will, on their part, would like to have appropriate policy supports so that they are in a position to lower their operational costs and offer flats to buyers at reduced prices. Buyers are expected to respond well to such a drop in prices of flats. The existing registration costs are also considered as too high. The same should reasonably be lowered and this step, too, will help in lowering the prices of flats to get a more enthusiastic response from the buyers.
There are other policies to be considered such as Rajdhani Unnayan Katripakha (RAJUK) remaining committed to approving plans assuredly within a time-limit. Progress in this area has been noted recently but it has to be sustainable. There should be no bureaucratic hassles frustrating the real estate developers and such problems must be overcome on a lasting basis. The utility agencies should be also similarly made to act quickly in relation to the application from developers for various services. Government may also consider selling to the developers at less than market prices some of the lands it owns for building low cost apartments by the latter for selling to less affluent or non-affluent sections of people.