Despite policy supports, realtors felt the pinch last year

Ismail Hossain | Published: January 02, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

The business of the country's real estate sector witnessed a sluggish trend in 2013 calendar year despite its having some policy supports. Â
Sector insiders and experts hold the prolonged political turmoil, indecisiveness of the customers, poor access to housing loans and conditional supply of electricity responsible for the situation.
They fear that the prevailing slow pace of growth in the sector could persist unless the country's political situation is improved.
The most significant trend the realtors have been witnessing for the last few months is that the clients are in a state of uncertainty over investment.
Â "There is almost no booking for new flats and apartments in the last two months," said M Wahiduzzaman, general secretary of the Real Estate and Housing Association of Bangladesh (REHAB).
REHAB has postponed its biannual exhibition REHAB Winter Fair 2013, which usually takes place in the month of December. This is a period of business opportunity for the realtors.
According to the association, real estate companies sold 595 flats and 652 plots worth Tk 6.20 billion at the REHAB Fair 2012 in Dhaka. The participating companies also got assurance of buying plots and flats worth Tk 9.52 billion from the visitors.
M Wahiduzzaman said overall sale of flats and apartments dropped by more than a half in 2013 because of the ongoing political turbulence, creating a cash crunch in the housing sector.
The realtors started witnessing the sluggish trend in business from July 2010, when the government suspended fresh gas and power connections to households, leaving thousands of ready flats unsold for long. Many of the apartments have not yet been sold out.
At present, there are around 20,000 to 22,000 unsold flats in the country, mainly in Dhaka and Chittagong, according to REHAB, the country's apex body for the realtors. Â
This calendar year came as a welcome one for the industry, when it saw a few key measures, including resumption of fresh gas connections to the households. It has brought a ray of hope for the community in getting rid of the sluggishness.
REHAB president Nasrul Hamid Bipu said the fiscal support the government has allowed for the industry in this year on using undisclosed income for buying ready flats could not be utilised for the political uncertainty.
But Mr Bipu, a lawmaker of the ruling party also, expressed hope that the situation would be improved in the new year.
Â "The year 2014 would be the buyers' year due to the decreasing prices of apartments," he predicted.
Mr Wahiduzzaman said that the transactions have reached a record low. Most construction projects have been put on hold as the developers cannot bring raw materials due to blockades.
Mr Wahiduzzaman, who is also Japan Garden City Ltd's Managing Director, said "Everybody is concerned about what is going to happen next, whether the political situation will be improved or not, or whether it will get worse, which have thrown the buyers into a state of great uncertainty."
Â "Because of the political unrest, financial crisis and non-availability of the utilities' connections banks are shying away from providing loans," he added.
Meanwhile, the classified loans in the real estate sector have increased rapidly due to the sluggish investment amid the political unrest centring on the upcoming general election in the country.
The real estate association leaders said the total classified loans, known as non-performing loans, almost doubled. It rose to 7 per cent from 4 per cent from October, 2012, to June, 2013, according to Bangladesh Bank data.
Moreover, around 20,000 to 22,000 ready flats worth between Tk 140 billion and Tk 160 billion remain unsold and the construction work of over 8,000 flats is in suspension.