Ask any well-known realtor for a flat ready for sale, chances are there will be just a handful of offers. However, assurances will be aplenty that more are being erected in some ongoing projects.
Most ready-for-occupants flats in Dhaka, the key market for real estate, have been sold out.
Demand has soared after the government allowed unquestioned amnesty for investment of illegal and undisclosed money, or in other words untaxed money, on land and flats on payment of certain amount of tax, which would be calculated based on the property’s size and location.
A fall in interest rates on loans for home purchase and a bearish trend in the stock market further fuelled demand for new homes, doing away with troubled times faced by the home and property builders two to three years ago.
In May 2018, there were around 11,000 flats lying unsold, said the Real Estate and Housing Association of Bangladesh (REHAB) at that time.
“During the pandemic we did not take the risk of constructing complete or readymade apartments,” said REHAB President Alamgir Shamsul Alamin.
“But the demand increased thanks to government policy support. For this reason there is now a shortage of ready apartments against demand,” he said.
The influencing factors include the demand increase, the government policy support, a reduction in flat registration fees and availability of cheaper home loans, he said.
He said around 2,000 flats were sold between last November to January.
The REHAB president believes that at least Tk 5,000 crore of untaxed money has been invested in the housing sector.
But he could not state how many flats were sold during the last eight months of the current fiscal year.
The REHAB chief went on to say that the government should extend the existing support and reduce the registration rate on the price of the purchase to 7 per cent from around 12 per cent at present.
FR Khan, managing director at the Building Technology & Ideas (bti), said the demand for flats had increased since September for the government amnesty as well as the low rate on bank deposits.
For this reason people who have money available invested in purchasing flats to permanently own assets, a psychological impact of the helplessness created by the Covid-19 pandemic, he said.
On a recent price hike of raw materials, he said it would raise prices of every square feet by Tk 400 to Tk 500 and this impact would fall directly on customers.
In December, the price of steel, a major raw material of the construction sector, increased by 17 per cent.
The retail price of 60-grade mild-steel (MS) rod rose to Tk 64,000 per tonne, up from Tk 54,000 in November and to Tk 61,500 in the corresponding period last year, data from the state-run Trading Corporation of Bangladesh showed.
The price has remained unchanged.
Afterwards the price of cement increased by around 5 per cent as a form of commercial adjustment. The 50-kg bags, which were being sold at Tk 390 to Tk 420 depending on the brand, reached Tk 410 to Tk 440.
However, he said, no realtor had yet increased prices of flats after the pandemic as they had used raw materials purchased at previous rates. But the impact will come about in the near future, he warned.
IPDC Finance lends up to 85 per cent of a flat’s value at 9 per cent interest for a maximum of 25 years.
IPDC provides this financing scheme to clients of Assure Group, BTI, Sheltech, UDDL, Concord, Assurance, Bay Developer, Shanta Holdings, Ranks Real Estate, ABC Real Estate, Anwar Landmark, Finely Properties, ANZ Properties and Sunmar.
Sirajus Salekin, head of mortgaging at IPDC Finance, said now they were getting clients who were purchasing readymade flats, which made it clear that there would be a shortage of ready flats in the market.
As per their observation on loan applications where prices are mentioned, the price of flats and land had increased this year compared to last year.
“We have been disbursing home loans of Tk 120 crore to Tk 150 crore per month for the last four to five months to individual clients and entrepreneurs of the real estate sector,” he said.
Tanvir Ahmed, managing director of Sheltech Group, one of the leading realtors in Bangladesh, said the present trend was a form of recovery of the deficit left behind by the Covid-19 pandemic as demand had increased compared to the preceding months.
Sheltech is organising a month-long solo housing fair at its corporate office at the city’s Panthapath area.
According to him, Sheltech has 12 ready and partially complete projects and 16 ongoing projects where flats prices ranged between Tk 90 lakh to Tk 14 crore.
However, he said, the number of flats ready to be handed over were very low compared to those in ongoing project.
He said credit facilities were available for homes and commercial spaces in different parts of the city.
However, he said, the prices of construction materials had increased in recent times, the impact of which would fall on the shoulders of the consumers.
In the budget of the current fiscal year, the government allowed use of the untaxed income for purchase of property, land and flats in certain areas, saying no questions would be raised on the source.
Besides, banks are providing home loans at very cheap, single digit interest rates, taking it to be a secured form of investment, according to industry players.
Md Arifur Rahman, chief executive officer at Assurance Development, said the price of flats increased by around Tk 100 to Tk 500 on every square feet in different locations of Dhaka city compared to that last year due to a shortage of the product.
Basically, the construction work in the housing sector had remained stuck in 2020 due to the pandemic, he said.
“As normalcy returned in economic activities and the government provided policy support, it helped to create demand for apartments. But apartments are not sufficiently available against demand at this moment,” he said.
As an example, he said in Uttara the cost of every square feet of a flat ranged between Tk 7,000 to Tk 11,000 whereas it was Tk 6,000 to Tk 8,500 from 2016 till the start of the pandemic.
During the last five years, flat prices increased by over 25 per cent, Rahman said.
Mohammad Farhaduzzaman, marketing in charge, Eastern Housing, said a low bank deposit rate, unsteady share market and a stable political condition were helping the housing sector.
Kamal Mahmud, vice-president of REHAB and managing director of Skiros Builders, said the demand for mid-sized flats of 1,000 to 1,500 square feet had increased.
Basically, the demand increased for readymade flats as people wanted to waste no time in investing untaxed money.
Clients apprehend that they may not get a chance to whiten their untaxed money in the year as demand had created a shortage of readymade flats.
According to him, less than 5 per cent of their clients were expatriates while the rest residing in Bangladesh, which proved that there was a lot of untaxed money in the country which was being used though the government initiative to revive the housing sector.
Mahmud believes that if the government continues to provide such scopes, the real estate sector would do good this year and recover from the losses faced during the early stage of the pandemic, when around 6,000 projects were put on halt.
