Development of the real estate sector
Saturday, 19 September 2009
The real estate sector, comprising about 600 developer organisations, is going through a stressful period for the last couple of years. Some Taka 800 billion have been invested by them in this sector. Before the slump in 2007, the sector was contributing annually some Taka 240 billion to the country's gross domestic product (GDP) or about 9.0 per cent of indigenous production. The sector was poised to accelerate to a much higher plateau before its downturn from that period. It was identified as one of the few very promising areas of the economy with prospects for high growth.
The real estate sector directly and indirectly employs some 12.5 million workers. Besides, it exerts push or pull effects on allied industries and trade such as in sanitary wares, electrical goods, paints, etc. Production, employment and growth in these industries are vitally linked to the vitality of the real estate sector. The entrepreneurs and the employees in these allied industries have understandably been affected by the declining conditions in the housing sector as a whole.
The growth in the housing sector was stifled during 2007 and 2008 by the panic created during the caretaker government among resourceful persons who are major buyers of real estate and the abnormal rise in the prices of construction materials in the international market. The panic has been removed with the transition to a new government and the severe squeeze on this sector has been eased to some extent. But the developers say that the authorities have not gone far enough as the utilisation of undisclosed money to buy real estate has been limited to only one house, one flat or a single plot for every buyer. The developers maintain that the limits on spending undisclosed money in buying real estate need to be relaxed further for them to be able to get back the momentum in their business. There is no denying that resourceful persons should have relatively more freedom to buy real estate to boost demand in this sector.
Meanwhile, the developers are also unhappy with the Rajdhani Unnayan Kartripakkha (RAJUK) for the kind of treatment they receive from this body. They allege that in the name of observation of this or that rule, RAJUK officials sit for too long on many plans submitted by the them or decide not to approve some plans on flimsy or unjustifiable grounds. The apparent miscarriages of the regulatory functions of RAJUK in these matters are found to be a hindrance to smooth growth of the real estate sector. Furthermore, the developers have to face rent seeking and long waits at the desks of several utility and environment-related bodies before getting ultimately the clearance from all sides to embark on their projects. Not only time is wasted, the total costs of projects also go up from the delays and the need to grease well the so many palms.
The government has recently submitted a bill in the Jatiya Sangshad for consideration that seeks to protect the interests of the buyers of real estate. That is welcome. However, the bill should also realistically address the above and more woes of the developers to help reinvigoration the real estate sector.
The real estate sector directly and indirectly employs some 12.5 million workers. Besides, it exerts push or pull effects on allied industries and trade such as in sanitary wares, electrical goods, paints, etc. Production, employment and growth in these industries are vitally linked to the vitality of the real estate sector. The entrepreneurs and the employees in these allied industries have understandably been affected by the declining conditions in the housing sector as a whole.
The growth in the housing sector was stifled during 2007 and 2008 by the panic created during the caretaker government among resourceful persons who are major buyers of real estate and the abnormal rise in the prices of construction materials in the international market. The panic has been removed with the transition to a new government and the severe squeeze on this sector has been eased to some extent. But the developers say that the authorities have not gone far enough as the utilisation of undisclosed money to buy real estate has been limited to only one house, one flat or a single plot for every buyer. The developers maintain that the limits on spending undisclosed money in buying real estate need to be relaxed further for them to be able to get back the momentum in their business. There is no denying that resourceful persons should have relatively more freedom to buy real estate to boost demand in this sector.
Meanwhile, the developers are also unhappy with the Rajdhani Unnayan Kartripakkha (RAJUK) for the kind of treatment they receive from this body. They allege that in the name of observation of this or that rule, RAJUK officials sit for too long on many plans submitted by the them or decide not to approve some plans on flimsy or unjustifiable grounds. The apparent miscarriages of the regulatory functions of RAJUK in these matters are found to be a hindrance to smooth growth of the real estate sector. Furthermore, the developers have to face rent seeking and long waits at the desks of several utility and environment-related bodies before getting ultimately the clearance from all sides to embark on their projects. Not only time is wasted, the total costs of projects also go up from the delays and the need to grease well the so many palms.
The government has recently submitted a bill in the Jatiya Sangshad for consideration that seeks to protect the interests of the buyers of real estate. That is welcome. However, the bill should also realistically address the above and more woes of the developers to help reinvigoration the real estate sector.