How does the real estate sector look in the second half of 2018? Read the March 2018 update to find out.
“More lenders should come up with low-cost home loans”
Source: The Daily Star
Date: 20 March, 2018
The article features an interview with Sheltech’s Managing Director Toufiq M. Seraj where he commented that more lenders should provide low-cost home loan offers to make apartment buying affordable for the middle-income group as well as others. He stated currently only a handful of financial institutions provides home loan products to customers in Dhaka and in the outskirts of Dhaka. However, he commented positively that many more customers are now able to purchase flats in Dhaka due to the existing low-interest rates on home loans at 8.5 – 9.5% which before 2016 used to be at 18% – 19 %. Mr. Seraj stated that apartment prices in Dhaka are justified when compared to other posh cities in the world owing to the high cost and scarcity of land. He also stated that although some areas like Gulshan, Banani, Baridhara, etc. have high apartment prices, a middle-income family can now invest in an 1100 sft apartment with Tk. 60 lac in other locations. Commenting on the challenges of real estate sector in Bangladesh, Mr. Seraj stated that apartment prices have recently been on the rise due to increase in price of construction materials. He also stressed that the real estate sector needs to be well-regulated so that customers cannot get hoodwinked by fraudulent real estate companies, which taint the image of the entire real estate sector. He also suggested that the government should focus on developing the city with a vision for the next 100 years as Dhaka is already overpopulated.
“Rod prices soar”
Source: The Daily Star
Date: 21 March, 2018
The article features the price hike of rod as the price of scrap metals increased in international market after the announcement of 25% and 10% tariff on imports of steel and aluminium respectively. The announcement has caused a stir among the real estate developers who will be the most affected by this increase as rod is one of the essential construction materials. This can have a detrimental effect on the real estate sector which has gained momentum after being stagnant for many years.
According to Manwar Hossain, chairman of the Bangladesh Auto Re-Rolling & Steel Mills Association (Barsma), the price of each tonne of scrap now stands at $435 which was $310 in late 2017. Meanwhile, Trading Corporation of Bangladesh reports that the price of rod rose by 18% since January 2018. On January 1, 2018 each tonne of rod was priced at Tk. 53,500 – Tk. 54,500 whereas recently, they sold for Tk. 62,000 – Tk. 65,000. Commenting on the same issue, Tapan Sengupta, Executive Director of BSRM spoke that the rise in price of rods is due to devaluation of Taka against the Dollar and high transport costs for prohibition on overloading. Mr. Sengupta further stated that the price hike has not been overnight and is a result of increased production cost. On the contrary, Md. Sheikh Kamal, Vice President of the Bangladesh Steel Mills Owners’ Association stated that the price of rod has increased locally much more than in international market due to a group of opportunistic scrap traders. Apart from the increase in price of rods, the price of cement has also risen from Tk. 40 to Tk. 60 per bag and the realtors are tensed that the increase in prices of construction materials would surely disrupt the real estate market for the landowners, developers, and apartment buyers.
“REHAB protests price spiral of construction materials”
Source: The Daily Star
Date: 21 March, 2018
The article features a press conference at National Press Club where REHAB members protested the price hike of construction materials. Recently prices of two of the most important construction materials – rods and cement – have risen significantly. Realtors spoke that the increase in price would affect apartment prices, thereby reducing sales. Mr. Alamgir Shamsul Alamin, REHAB president commented the price hike to be significant within a span of a week, where a grade of rod used to cost Tk. 52,000 per tonne, the price has increased to Tk. 70,000. He further commented that per bag of cement used to sell for Tk. 370 a few days back which is now Tk 420.
REHAB Senior Vice President Nurun Nabi Chowdhury Shaon spoke that as a result of the price hike of construction materials, apartment price could increase by Tk. 200 – Tk. 250 per square foot. He urged the government to take initiatives to reduce the prices of the construction materials. Meanwhile, banks and financial institutions have recently raised interest rate on home loans to 13% – 14%. Mr. Alamin expressed his dismay stating that the real estate sector had just recently gained momentum after a long time but the price hike of construction materials would be a huge setback for the sector.
“Real estate sector to face huge crisis”
Source: Daily Sangram
Date: 24 March, 2018
The article reports the upcoming crisis of the real estate sector as prices of several construction materials are rising rapidly. Realtors are blaming a certain syndicate as responsible for the price hike and putting the real estate sector of the country under crisis. Price of rod per tonne has increased by Tk. 8,000 – Tk. 10,000 within the span of a week and concerned businessmen have cited that the increase is due to increase in price of raw materials in the international market. Meanwhile, the cement industry is facing the same price escalation as prices have increased from around Tk. 390 per 50 kg bag to Tk 470. Realtors expressed their fear that such dramatic rise in prices would put the sector in jeopardy, especially when it has been showing some momentum only recently. When people from concerned industries were asked about the sudden increase in price, they commented that the price hike is a result of a combination of several factors such as increase in prices of raw materials in international market, increase in transportation costs, weakening of Taka against US Dollar, and so on. Apart from these, prices of sand, tiles, stones, etc. are also increasing day by day which can put the real estate sector under a huge crisis. Realtors stated that in the upcoming days flat price may increase by 20% – 25% which would not only slow down the real estate sector but the overall economy of the country.
“Is Blockchain the Answer to Real Estate Woes?”
Date: 12 March, 2018
The article features a new kind of technology called blockchain technology which can change the way real estate transaction works. Although it is at a nascent stage globally, it would make real estate transaction easy, fast, and transparent. When a buyer wants to purchase a property, he has to spend a lot of time, money, and face many uncertainties during the process. The blockchain technology would provide a platform for quick buying and verify the authenticity of the seller as it will have a digital database of ownership documentation accessible to both buyers and sellers. It will also make the jobs of financial institutions easier for someone buying with home loans as it will keep records of credit history of the buyers. According to the article, there are countries that are already using this technology including Sweden, the first country to implement this technology in real estate purchases and India may follow suit sometime in the future.