What will be the impact of new VAT structure on the real estate industry? Read on to find out the latest real estate news!
“bti Apartment Fair starts tomorrow”
Source: Kaler Kantho
Date: 26 July 2018
The article features a three-day apartment fair, Chayabithi Abashon Mela organized by leading Developer Company of Bangladesh – bti from 27th July 2018 to 29th July 2018. The fair was held at the project site located at Uttar Khan Mazar Road of the capital city.
The fair had special offer of free kitchen cabinet with every booking of apartment in the fair. It also included long-term installment facility, home loan facility from reputed banks, and so on.
bti Chayabithi offers modern apartments for sale in Uttar Khan, ranging from 935 sft to 1065 sft with features like children’s playground, gymnasium, super shops, community hall, prayer space, bbq zone, and other modern amenities.
“New VAT structure places added burden on small flat buyers”
Source: Dhaka Tribune
Date: 3 July 2018
The article reports that the new VAT will further add financial stress to first-time home buyers. Buying a small apartment is the dream of majority of Bangladeshi people as around 80% of apartments sold are under 1100 sft. The budget for fiscal year 2018-19 is a discouragement for many prospective homeowners. As per the budget, VAT for small apartments is supposed to hike up to 2% from existing 1.5%. However, those looking to buy flats in Dhaka that are between 1100 sft to 1600 sft will enjoy a reduction from 2.5% to 2%. Meanwhile, VAT for large apartments will remain as it is at 4.5%.
REHAB in its pre-proposal recommended apartment prices be slashed by 7% due to slow sales as a result of high registration cost. Liakat Ali Bhuiyan, first vice-president of REHAB commented, “Bangladeshi homebuyers pay around 14% to 16% in overall registration costs for apartments and plots. However, the tax rate for apartment and plot registration in other South Asian Association for Regional Cooperation (SAARC) countries remains within 4% to 7%.”
The Centre for Policy Dialogue (CPD) further added that the VAT on small-sized apartments will add to the tax burden on consumers. The government has also imposed a 2% VAT on re-registration fees for old and used apartments. According to REHAB, homebuyers will have to bear an additional cost of Tk 20,000 – Tk 25,000 for re-registration.
On the other hand, under the new policy, a public servant will be entitled to loans for the construction of a house or purchase of flats anywhere in the country. The home loan will be provided to public servants at a moderate interest rate through the banking system, and the interest differential will be paid by the government as a subsidy to the commercial banks.
“Purbachal American City Apartment Fair now at Westin”
Source: Kaler Kantho
Date: 6 July 2018
The article features a four-day apartment fair – Purbachal American City fair by US-Bangla Asset. The apartment fair started on 5th July 2018 at Westin Hotel in the capital city of Dhaka.
So far the company has had apartment fairs in Chittagong, New York and Canada. The real estate company also plans to hold several fairs in different parts of the city as well as in different cities of the country. The Purbachal American City is a project located 15 minutes away from Hazrat Shahjalal International Airport which will include facilities like educational institutes, medical facilities, shopping mall, amusement park and so on.
“Rod prices still high: Real estate sector worried”
Source: The Daily Star
Date: 29 July 2018
The article features high price of rods since April this year. Although steel makers stated that the price is stable, construction and real estate developer companies in Bangladesh commented that the main construction product is exorbitantly priced.
On July 22, prices of better quality mild-steel rod (60-grade) were Tk 64,500 to Tk 66,500 per tonne which is 2.24% down from a month ago at Tk 66,000 to Tk 68,000. The current price is however still 22.43% higher than a year ago at Tk 53,000 to Tk 54,000. Steel-makers stated a number of factors are responsible for the high price including high US dollar price, high cost of bank loans, restriction on vehicles on moving more than 13 tonnes of goods, increase in energy prices, increased transport cost, and high raw material prices in the international market.
Rod consumption in Bangladesh has grown at a stable rate in the last few years due to increased purchasing power of rural people as well as an increase in the number of Government development projects. As per the article, annual rod consumption increased by 15% – 20% in the last two years from 10% per year. Today, the country uses around 55 lakh tonnes of rod per year and has a production capacity of 70 lakh tonnes to 90 lakh tonnes.
Realtors added that rod prices have reached at an unsustainable level and this would have a negative effect on the real estate sector as the price hike comes at a time when the country’s real estate sector has only started improving after years of stagnation.
“Remodeling business gains as home sales drop”
Source: Economic Times of India
Date: 31 July 2018
The article features slowing down of the housing market as reported by National Association of Realtors. Sales of new homes slashed by more than 5% last month whereas sales of existing homes has been down for the third month. The article cites rising interest rates and home prices as reasons for a slow market. On the other hand, another report by Harvard University’s Joint Center for Housing Studies predicts a strong home remodeling market through the middle of 2019. This will benefit contractors, painters and landscapers who tend to be small entrepreneurs. Homeowners are currently investing in remodeling as they cannot afford new homes in the existing market. However, a slow market has not deterred realtors from joining the real estate industry as the National Association of Realtors’ membership number rose to 1.33 million in June from 1.32 million in May and this was the highest membership count since December 2007.