Top realtors take cost-cutting steps

Jasim Uddin Haroon Country's leading realtors have taken major cost cutting measures in a bid to make their investment safe in the face of fast falling of apartment sales, industry insiders said. Market watchers predict that Bangladesh's housing sector might face a 'bubble' amid a large number of housing projects with a small number of buyers. The leading realtors numbering nearly 30 companies decided that they would not offer signing money to the land owners. The signing money ranges between Tk 20 million and Tk 30 million. They also planned not to build flats on small lands as part of a strategy to make their projects sustainable. Some of these companies are also modifying their business strategies to optimise their profits. They said these measures will lead to fall in prices of lands and flats and will subsequently increase sales of flats. Managing director of one of the oldest real estate companies -- Sheltech -- Toufique M Seraj told the FE that they had taken a number of steps to make their projects viable. "We've decided not to take up small projects like flats on 5-6 kathas of land," he said. Mr Toufique said: "We'll not take any small piece of land from now on. Our next projects will be bigger ones in the country." He ruled out the possibility of retrenchment in his firm. Mr Toufique said in the current scenario his company is focusing on volumes rather than margins. According to REHAB (Real Estate and Housing Association of Bangladesh), the demand for new apartments has fallen by nearly 50 per cent in recent months in the face of crisis in the Europe and the USA and due to current collapse of share market in the country. Leading realtors said sales of apartments dropped by 30 per cent on an average during the last few months, as the purchasers were delaying or postponing their decision of buying houses. Tanveerul Haque, managing director of another big real estate company --- Building for Future --- said: "We're not giving signing money to the land owners and it will help reduce prices of lands and flats." He said: "It is time for the developers to recalibrate and refix prices of their products in the face of fast fall in prices of flats." A K Chowdhury, managing director of Airbell, said the scope for forward selling of their projects also declined. "We're really in great trouble as cash flow is being squeezed day by day in the sector." Mr Chowdhury said commercial banks used to fund almost cent per cent of the total flat price to the buyers. "This facility is not available now, leading to a massive plunge in apartment sales," he added. Flat sales in the country hit the rock bottom in 2007, when a nationwide crackdown on corruption saw sales of only about 3,000 flats, against the average sales of 6,000-7,000 flats during the previous few years. He said many developers have cut prices of their apartments significantly. "We've reduced 15 per cent of the prices of our flats to lure customers," the Sheltech managing director said. The average price of apartment in prime locations in the city is now more than Tk 10,000 per square foot (sft). The prices of apartments in posh areas like Dhanmondi, Gulshan and Banani range between Tk 15,000 and Tk 16,000 per sft. Flat prices in Mirpur, Mohammadpur and Shyamoli areas range from Tk 6,000 to Tk 8,000 per sft, whereas prices in Segunbaghicha and adjacent areas range between Tk 7,000 and Tk 8,000 per sft. Bangladesh's housing sector saw a record boom in 2009 after a slump of two years, when more than 7000 flats were sold.