Troubled real estate business

Urban-centric real estate business in this country took off rather late but once it did, it made great strides within a few years until it met the reversal in the aftermath of the Russo-Ukraine war. Property development and investment may be a local phenomenon but the driving force is a country's economy not quite dissociated from the rest of the world. If the middle class of a country in general accrues benefits of a robust economy, property development and housing are sure to pick up. In Bangladesh, things do not follow the copybook when it comes to economy and business. Although black money had a major role in spurring the real estate market, a section of nouveau riche also contributed significantly to inject blood into the business. Now a report carried in this newspaper on Sunday last has painted a bleak picture of the housing sector.
It is indeed a crunch time for the building and construction sector mainly because of the disruption of the global supply line and economic slump. Although the sector has developed on domestic technology and entrepreneurship, it has to rely heavily on imported raw materials. Let alone MS (mild steel) rods and cement, even bricks require imported coal for their firing. Only the sand is available locally but when all the construction materials have registered abnormal price rise over the past two years, this cheap material has also become pricier. People with excessive unearned money have invested money in housing apparently up to saturation point. The costlier flats and houses act as a discouragement to investment even by the filthy rich because they already have their posh accommodations. Those with limited means no longer can afford the luxury of saving money for their own homes or flats. If investment by people who have idle money to do so has become riskier, others simply cannot afford the costly accommodations.
This is bound to happen in time of economic slowdown. Unless the economy turns around, the realtors cannot hope of seeing better days for their business. When local developers and investors do not have any recipe for tiding over the difficult period, there is no question of inviting foreign investment. In fact, this area was not quite explored when business was good. What is noticeable is that the shrinking of the real estate market has little to do with demand and supply. To go by the rule, when demand falls flat, a commodity becomes cheaper. In the case of housing, though, this is unlikely to happen. A few small real estate companies may go bust but others will stay afloat on their stronger cushion achieved by way of healthy business earlier.
In a situation like this, a better option is to outreach areas beyond the capital, considered the hub of real estate market. Lower land prices in outlying areas of the city and in other cities or small towns are sure to offset to some degree the higher prices of construction materials. If the biggies in the business do not feel encouraged to move beyond Dhaka City, the smaller ones can try their luck there.