Real estate companies with a lower capital base are disappearing from the scene as the sector has turned capital-intensive over the years.
As many as 135 firms did not renew membership with their association, the Real Estate and Housing Association Bangladesh (REHAB), last year.
According to the REHAB, the companies in question got enough time following repeated extensions for renewal.
The association had 1,001 members at the end of 2019, but the number came down to 866 at the end of 2020, its official data show.
The REHAB said 57 companies either discontinued their membership or the association cancelled their membership for irregularities or other reasons in 2014.
Similarly, 83 members were dropped in 2015, 98 in 2016, 69 in 2017, 71 in 2018, 58 in 2019 and 154 in 2020.
Summarising drop-outs and fresh entrants in the past six years, around 400 members disappeared from the REHAB list, 1,204 in 2014 to 866 in 2020, revealed the data.
According to market insiders, rising prices of land and building materials against almost zero per cent of advance flat booking with apartment projects pushed weaker players away from the market.
Bigger companies have taken over such projects from the relatively small companies that shut down operations.
Scope for investment of undisclosed or untaxed money on land and flats on payment of some tax and a fall in mortgage rate apparently did not impact these firms.
Insiders said buyers chose only flats from ready and furnished projects of companies with reputation.
According to a circular issued by commerce ministry, REHAB membership is mandatory to run housing business in Bangladesh.
The chance is slim that companies without REHAB membership can run their business properly, according to a REHAB official.
Somotot Concrete Technologies Ltd is one of the 135 real estate members that didn't renew membership with the association.
Somotot director Sharmin Akter said they were currently running only one project.
"We won't continue our business after selling flats in the existing project," she told the FE.
About the reason for her winding up the property business, Ms Akter said it required a lot of capital to continue a housing project nowadays.
"Nobody buys flats from any half-done project," she said, adding that they did not have that much money to complete a project and wait for customers to sell.
Another top executive of a housing entity, Tanbir Ahmed Chowdhury, said they also did not renew membership.
His company, Raiyaan Properties Ltd, does not have any project at this moment.
Mr Chowdhury, the managing director, said they were adopting apartment projects with a number of partners, but the pandemic halted everything last year.
They are planning to apply for membership again.
REHAB president Alamgir Shamsul Alamin said every business has ups and downs in a free-market economy. "Those who can sustain ups and downs can survive."
"It's true many realtors are not renewing membership and it's normal," according to the business leader.
Mr Alamin said there were records of the takeover of projects by stronger players in the market.
"We've witnessed many takeovers of housing projects by bigger companies in recent months," he added.
The REHAB chief thinks a market like Bangladesh does not require so many companies.
"There are only eight companies in Singapore," he said, adding: "A stable real estate market does not need a lot of players."
Mr Alamin said it had been almost impossible these days to construct a project without ready capital in hand.
"It was possible 10-15 years back to hang a signboard on the project site at the start of construction and sell apartments in advance."
"It was possible to complete the project gradually with buyers' instalments," he said. "Those days are gone now."
Dr Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh, thinks the real-estate sector is in a stable situation now.
"The flat price was too much inflated eight to ten years back and a large number of realtors contributed to the bubble," he said.
According to Mr Mansur, 600 to 700 companies are enough for the market.
He said realtors would not be able to reduce apartment prices much as prices of construction materials and labour costs have soared in recent years.
"The purchasing power of people has also increased. So, the market will certainly see a positive turnaround," he told the FE.
But Mr Mansur said the investment of black money to boost the sector should not continue for long.
"It's not a sustainable way to manage a property market," observed the analyst.
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