Find out existing real estate challenges, outcome of REHAB fair and more in Real Estate Update March 2019!
“Reduce property registration cost” Realtors Demand
Source: The Daily Star
Date: 5 February 2019
The article features a Press Conference organized by REHAB ahead of the REHAB Fair. In the press conference, realtors demanded a reduction in apartment registration cost. They opined high registration cost is a major obstacle for the growth of the real estate sector in Bangladesh. Customers have to pay an additional 15% of the apartment value as registration fee, which is too high. Liakat Ali Bhuiyan – Vice President of REHAB stated that they want to provide quality accommodation at low cost for middle income people. However, high registration cost, high interest rate of home loans and scarcity of long-term loans are reasons for which real estate sector, that contributes to 15% of the country’s GDP, is not flourishing.
Realtors Target Middle-Income Group
Source: The Daily Star
Date: 8 February 2019
The article features REHAB Fair highlights where real estate companies have given more focus on providing housing solutions for the middle-income people. Majority of the real estate companies displayed flats in Dhaka of around 1500 sft at 80 lakh in populated areas and 1.2 cr in the upscale areas.
At the fair Anwar Landmark included 8 projects ranging from 1400 sft – 1500 sft. The apartments cost Tk 6000 per sft in Mohammadpur area whereas in Gulshan a commercial property is priced at Tk 28,000 per sft. Meanwhile another real estate company, Runner Properties showcased 3-bedroom apartments of 1300 -1500 sft at 75 lac. However, with the current pricing, apartment purchase would be difficult for the lower-middle income group even with installment facility as monthly installment would be Tk 40,000 for a 1400 sft flat. Mr. Atiqulllah Bhuiyan Maruf, a prospect customer at the fair commented that he had hoped to buy a flat within 60 -70 lac but failed to find an ideal flat at this price range.
REHAB Fair receives Tk 1500 cr spot orders
Source: Dhaka Tribune
Date: 11 February 2019
The article features the highlights of the five-day REHAB Fair 2019 which concluded on 10 February 2019 at Bangabandhu International Conference Center. In the fair, participants received booking for plats, plots, commercial space worth Tk 1500 crore. In addition financial institutions made claims to provide loans worth Tk 2000 crore for flat purchase. According to sources, more than 28,000 people visited the fair this year. A realtor from Anwar Landmark commented that buyers expressed keen interest in buying and booking flats. He cited the stable political condition, growth of economy as well as loan availability to government employees at low interest rate as reasons responsible for boosting buyers’ confidence.
Is affordable housing a pipedream for most of Bangladesh’s residents?
Source: The Daily Star
Date: 13 February 2019
The article features an interview with Irteza A Khan – Managing Director of Meridien Finance & Investment Ltd. by Syed Manshur Hashim of The Daily Star. In the interview he addressed the current real estate scenario of low cost housing finance market, prospects of future growth of the market, challenges faced by the sector, policy recommendations and much more.
Mr. Irteza A Khan commented on the scarcity of land and high cost as major problems for housing in the capital city. He commented that majority of the people living in the city belongs to lower-middle and low-income groups and at present it is impossible for them to afford a house. He cited poor regulatory system, inadequate developed land, poor land planning and urban development policies as factors contributing to hike in real estate prices. In Bangladesh there is a huge gap between demand and supply of housing and real estate developer companies cater around 60% of the demand whereas only 2% of these fall under low cost housing.
To overcome problems in financing low cost housing, he stated Meridien Finance & Investment Ltd. has been aiding landlords to establish low-cost dormitories near readymade garments factories and industrial zones as demand for housing is huge in those areas and it is impractical for commercial companies to set up accommodation for own employees. In addition due to high demand of small sized apartments, the organization is offering loans to small families looking to buy flats in the outskirts of the city and in districts.
He also commented that although currently there are 34 non-banking financial institutions, only a meager amount of these are invested in low-cost housing financing. Moreover, there are many limitations which prevent them from growing. He stated the requirement of low cost and long term funds for NBFIs is essential for house financing problems to be solved. He further added that there needs to be changes in the legal and regulatory framework for land record system such as computerization of the system as well as zoning of areas for low-income housing. He also stressed on the importance of public-private partnership and mass rental establishments to solve the housing crisis.
Construction sector looks to thrive on higher demand
Source: The Daily Star
Date: 24 February 2019
The article features the current construction sector scenario in Bangladesh. 2018 was quite a good year for the construction industry and industrialists expect this year to be even better than last year owing to the stability in prices of raw materials. Munir Uddin Ahmed, President of Bangladesh Association of Construction Industry (BACI) stated that prices of raw materials such as cement, stones, sand and bricks did not see any sharp rise apart for prices of steel. Last year consumption of steel rose from the previous year due to many development activities as well as mega projects undertaken by the government. Meanwhile cement consumption increased to 12 % in 2018 which is above average than annual growth rate of 8-10%. In addition growth of bricks industry remained quite satisfactory at 3-5% a year. Liakat Ali Bhuiyan – Vice President of REHAB commented that the demand of building materials is high at present owing to a large number of government and private projects. However, the sector has certain challenges as Bangladesh imports many raw materials for its products. Although prices are expected to remain stable internationally, depreciation of the value of taka could increase cost of construction materials. Munir Uddin Ahmed suggested slashing value added tax and other taxes on imports of construction materials and capital machinery as well as development of digital VAT calculator by NBR to strengthen the construction industry.