Bleeding economy has a damaging impact on real estate business

Overall, sales of flats declined nearly 17 percent in the last fiscal year of 2022-23, owing to economic uncertainties and a rise in prices of raw materials, say realtors.

Nearly 10,000 units were sold in the fiscal year whereas around 12,000 in the preceding year.

Flats are usually sold while they are under construction and handed over once complete a couple of years later.

According to the realtors, the prices of raw materials increased abnormally last fiscal year due to a depreciation in the value of the taka, the local currency, against the US dollar.

The price per square feet of rod increased by Tk 130, cement Tk 24.75, sand Tk 28.12, stone chips Tk 78.75, bricks Tk 50, Thai aluminium Tk 40, grille Tk 12, general electrification Tk 30, sanitation Tk 30 and labour charge to Tk 60. This led to construction costs rising on an average by Tk 484 per square feet.

Against this backdrop, flat prices increased by around 30 per cent to 35 per cent on average.

Prices vary depending on the location of the property.

Economic uncertainties and price increases of apartments due to a rising trend involving raw material prices reduced the sales of apartments.

Besides, people have tightened their belts to be ready for economic setbacks induced by any political instability centering on the national elections which were due to be held at the end of this year.

Flats are usually purchased through long-term plans, so a drop in sales does not affect the industry overnight.

Since property prices are high, companies having financial strength are attempting to purchase land instead of signing flat-sharing deals with landowners to reduce property costs.

If the existing situation prolongs, small companies which are financially weak will have to close down their businesses.

The realtors are not getting approval for new projects due to different conditions being attached to the Detailed Area Plan (DAP) of Rajdhani Unnayan Kartripakkha (RAJUK).

The DAP contains detailed maps, zoning regulations, and land development guidelines specific to their designated area.

For instance, realtors now do not get approvals for high-rise buildings but there could be cases where smaller ones may not be commercially viable.