Housing gloom pervades the supply lines

The prevailing sluggish business trend in the housing and real estate sector has left an adverse impact on its backward linkage industries as the demand for their products and prices have fallen while production costs have gone up.
Former acting president of Real Estate and Housing Association of Bangladesh (REHAB) Maj Gen Md Abdur Rashid said many sub-sectors were affected by the sluggish real estate business.
REHAB Senior Vice President Liakat Ali Bhuiyan said in last six months the total apartment sales declined to 10,000 units from 22,000 units earlier.
Such a fall in the housing business affected many backward linkage industries, including steel and re-rolling mills, cement, tiles, sanitary, sands, cables, ready-mix and bricks.
Former president of Bangladesh Steel Mills Owners Association Mizanur Rahman Babul said due to the low demand for their products and higher production costs attributed to electricity, more than 130 mills had to stop their production.
He said production of iron, mild steel (MS) and other types of rod dropped by 20 per cent to 3.2 million tonnes over the first three quarters of the current year from 4.0 million tonnes in the corresponding period of last year.
The price of MS products also dropped by Tk 6,000 to Tk 6,500 per tonne. He said during the heyday of real estate business many steel mill owners expanded their production lines with borrowed money, but following the sudden fall in sales their capacity was remaining unutilised.
The cement manufacturing industry is also facing trouble due to the dull housing business.
Senior Vice President of Bangladesh Cement Manufacturers Association Abdul Khalique Parvez said until November last the demand for cement fell to 14 million tonnes from 20 million tonnes in the corresponding period last year.
He said due to reduced market price and declining demand many mill owners curtailed their manufacturing capacity.
As per market sources, price of cement has also fallen. Like cement and steel rod products, the demand for brick, sand, tiles, sanitary wares, cables and other products have also declined in the market, sources said.
When contacted, a senior banker said housing loans from banks and non-bank financial institutions (NBFIs) fell significantly and currently there was no sign of a reversal.
Former acting president of the REHAB, Maj Gen Md Abdur Rashid, said if the government provided incentives and took some measures relating to financing facilities the sector could be revived.
Brick business is also in trouble due to higher stock and declining demand.
Secretary of Bangladesh Sand Mining Association Shah Jahan said their supply fell drastically. He said: "We are currently supplying sand to the old projects and new orders have fallen by more than 50 per cent."
Secretary of Bangladesh Sanitary and Tiles Merchandising Association Afsar Uddin Khan said demand for their products was falling every year. He said their main buyers were from the real estate and housing sector, but the market demand in the last two years declined by more than 60 per cent.
[email protected]