Real estate sector faces severe crisis

Anisul Islam Noor :The sale of apartments has fallen by 60 per cent compared with the previous year’s sale position due to absence of gas and electricity connections, and high interest rate in bank loan. Though the realtor have declared discount for Tk 4000 per squire feet for a flat in some areas of Dhaka and Chittagong, about 22,000 ready flats worth Tk 210 billion remained unsold. Besides, construction work of over 8,000 flats also remained suspended. As a result, currently about 35 lakh workers who are involved with the sector almost remain jobless, said Alamgir Shamsul Alamin, President of Real Estate and Housing Association of Bangladesh (REHAB).The real estate sector has almost stopped undertaking any new projects following a drastic fall in the sales of plots and flats in recent times. New projects of the developers have declined by around 70 per cent compared to that of the previous year despite rebate offer, he said. “In last one year, we have not taken any new project for extension of business due to drastic fall in dealing,” Toufiq M Seraj, Managing Director of Sheltech, a leading real estate and construction company, told The New Nation.He said, the business of real estate has been in trouble over the last two years and if political instability erupts here again the industry would face more additional recession.M Seraj, also a former president of REHAB, said they have around 40 ongoing projects and usually they take 12-15 new projects annually but in 2013 the number was only three because it was the worst year for the sector.During the last one year, their company’s sales also declined by more than 50 per cent, he added.According to REHAB, a recent study has found that a total of 338 companies are yet to hand over 7,014 flats worth approximately Tk 7.73 billion.In 2006, the real estate companies built about 5,684 flats and in 2010-12, the number went up to 25,000. But the figure began to decline due to lack of political stability and recent economic recession said, Tanveerul Haque Probal, Managing Director of Building For Future Ltd.He said, a few months ago the government ensured that it would give fresh gas and electricity connections but it did not keep its words.REHAB data shows that around 22,000 ready flats worth Tk 160 billion have remained unsold and the construction work of over 8,000 flats also remained suspended due to political impasse in 2013.Managing Director of Great Wall Ceramic Shamsul Huda said: “Not only the real estate sector but also the backward linkage industries like MS rod, cement, paint, furniture and tiles are in dire straits as demands of their products have fallen by over 50 per cent”. “The ceramic industry has now been badly affected due to decrease of taking new projects in the real estate sector,” he said.In recent times, Huda added, their business has drastically fallen. So, neither they are not expanding their existing plants, nor planning to invest in any new projects now.Vice Chairman of Diamond Cement Ltd Abdul Khalique Pervez said: “Our business with the real estate sector fell by about 50 per cent in last one and a half year.”He said, the real estate business, which has continuously been falling, is now a big problem for the cement industry.According to the REHAB, the sector provides employment to 35 lakh people. The present turnover of this sector is about Tk 2,800 crore a year.