A sudden rise in interest rates and prices of key construction materials has created volatility in the country's real estate sector, a top developer of the country has observed.
The developer also noted that the dream of middle-income people to own flats or apartments would be shattered again by the spike in interest rates and prices of construction materials.
Dr Toufiq M Seraj, managing director of Sheltech (Pvt) Ltd., made the remarks while talking to the FE last week.
"In the first quarter of this year, the price of one tonne of MS rod has surged by around 24 per cent," he said. "Such a price hike will obviously push up overall construction cost. As a result, prices of flats will also jump in the near future."
Dr Seraj, also an urban planner, was of the view that the property developers that are committed to optimising clients' satisfaction would be hit hard by such escalation in costs.
A leading real estate firm of the country, Sheltech steps into its 30th year in 2018.
"We never compromise on quality and safety standards and our pricing mechanism works accordingly," said the managing director of Sheltech. "Over the last 30 years, we have always tried to maintain all the standards. But additional costs sometimes make it difficult for us to keep the prices within the reach of customers."
The property developer has successfully completed more than 160 projects in the country in its 30 years.
In recognition of the firm's quality control measures in design and construction of buildings, Sheltech has been awarded the 'ISO 9001: 2015' certificate, a global recognition for quality management and quality assurance.
One of the founding members of the Real Estate & Housing Association of Bangladesh (REHAB), Sheltech is also a pioneer in research and analysis of the country's real estate market.
About the present market, Dr Seraj said a significant market correction has been taking place in this sector over the last couple of years.
"Both the developers and land owners are forced to make correction in their business mechanism," he said, adding that some more corrections are in the offing.
By market correction, he meant revision of flat prices and flat-sharing ratio between landowners and developers in the projects.
Dr Seraj also pointed out that more corrections are needed at the clients' level. "Clients need to be more informed and rational to get long-term benefits from their investments."
He also stressed the need for developing a secondary market for the real estate business in the country. "We have long been arguing for this, but no efforts have been made so far to this end," he added.
The government could easily facilitate the process by reducing the registration fee for a flat or apartment sold for the second or even third time, Dr Seraj explained.
"There are both sellers and buyers of second-hand apartments in the country. But the registration cost for second-time transfer of an apartment is similar to new one. This deters many from making such a transaction," he said.
Turning to another issue, the urban planner stressed the need for a better public transport system to make the capital city liveable.
"There is no alternative but to introduce a well-designed public transport system," he said.
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