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Real estate sector progressing amid global recession : REHAB Chief

Real estate business has started showing some signs of improvement although the sector has passed through a bad time for the last few years amid global recession, capital market fall and political upheaval.
The number of unsold flats and apartments now almost halved to 6,000 to 7,000 which was some 12,000 few years back, supported by waning supply glut and increased flow of money mainly due to increased bank financing, says REHAB President Alamgir Shamsul Alamin.
“Local real estate sector has been struggling for the last four years. But the sector has now started showing some signs of improvements. Hopefully, things will be better in the coming days,” commented the chief of the country’s apex private sector housing sector organisation.
Provisional GDP estimate of Bangladesh Bureau of Statistics (BBS) for the outgoing 2015-16 fiscal year suggests that the construction sector’s growth surged to 8.87 percent from last year’s 8.60 percent and the previous fiscal’s 8.08 percent.
Meanwhile, real estate, renting and business activities grew at faster rate of 4.51 percent this year, up from last fiscal’s 4.40 percent and the previous fiscal’s 4.25 percent.
Construction sector’s share of GDP has been estimated at 7.28 percent for the current fiscal year, up from 7.16 percent last year and 7.03 percent in the previous year.
Real estate, renting and business activities’ share in GDP, however, slipped to 6.64 percent this year, which was 6.81 percent last year and 6.95 percent in the previous fiscal, according to provisional BBS data.
Industry insiders say the improvements are not enough to reverse the flagging trend in real estate sector as it is still struggling to recoup business losses caused by the 2010 capital market fall and recent political violence.
Some realtors even claimed that their businesses fell beyond their expectations by 5 to 10 percent this year compared to their last year’s sales record because of increased cost of construction and higher registration fees.
They added that there might have been some improvement in the stock of ready unsold flats, but the sales scenario of unready flats is worse as many developers were compelled to abandon their projects.
Even, many realtors had to count loss of around Tk 20 lakh per ready flat as they had to sell those ready flats at lower cost to lower bank burdens, they also complained.
REHAB president said the capital market debacle played a key role in plunging the real estate business.
Besides, lack of confidence among consumers, political instability, thin money flow into the sector, and discontinuation of the central bank loan are the other major reasons for the sorry state of the business, he pointed out.
Asked whether high real estate prices caused the plunge, Shamsul Alamin said it is a “relative matter” as apartment prices are higher in posh areas of the capital while prices are comparatively low in other parts of the city.
He, however, admitted that flat prices are somewhat high because of ever increasing land price and increased cost of construction. To lower flat prices, he suggested improving road connectivity in the capital so that projects can be taken up in places where land prices are low.
The REHAB boss particularly stressed on providing home loans on easy terms to revive the real estate business in the country. And the central bank can play a proactive role in this regard with introducing a refinance scheme for the sector, he said.
About the provision of setting up solar panel at the rooftop of every apartment project, he suggested for setting up solar panels through separate companies so that the initiative can be more viable.
Apart from special funds, REHAB also sought VAT cut on flat purchase and to allow untaxed money into the real estate sector to prop up the business.
If real estate sector collapses, many related sectors like that of rod, cement, fan, lighting, power cable, furniture and others will be destroyed which will ultimately have an adverse impact on the overall economy, realtors also cautioned.

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