Real estate business in threat

Companies cut new projects:
Byer lost buying capacity

The real estate business in Bangladesh in threat due to the sudden increase in raw material prices amid the ongoing war in Ukraine, strain on foreign currency reserves, and the latest Detailed Area Plan (DAP) for Dhaka city has caused real estate sales to plunge to a five-year low, according to industry insiders.
Real Estate and Housing Association of Bangladesh (REHAB) leaders demanded that maximum companies have cut the number of new projects.
REHAB Vice President Kamal Mahmud said “maximum companies in Mirpur and Jatrabari areas did not get any new project.”
“The price of flats will go up 30-40 per cent in the next year due to the implementation of new DAP and the price hike of construction raw materials,” he added.
REHAB president Alamgir Shamsul Alamin said, "We realtors are trying to compromise with buyers who booked apartments before the rise in raw material costs, which increased abnormally to become a burden for both asset buyers and developers."
Local developers are now being cautious in taking up new projects considering the current adversities.
"Under the current circumstances, there is no scope for realtors to be over-ambitious," Alamin said. "So, realtors should move very carefully and focus on completing their ongoing projects."
Assurance Developments Ltd chief executive officer Md Arifur Rahman said the construction costs have increased by Tk 1,500 to Tk 12,000 per square foot depending on the size and locations of the properties being developed in Dhaka city.
"So, realtors are following a go-slow business policy to tackle the situation," he added., adding that, so, the buyers are losing the buying capacity.
Building Technology & Ideas Ltd (bti) managing director FR Khan said as a result, flat prices have gone up by Tk 10 lakh to Tk 50 lakh in the past six months.
According to Khan, the pressure of higher global inflation and Russia-Ukraine war have directly affected the local real estate sector and he apprehends the demand for flats may fall owing to volatility in the global economy.
Overall, the real estate sector is not in a comfortable stage at the moment as the price of land is increasing, he said.
REHAB officials said that the new DAP has decreased the building size by 40% to 50% due to Floor Area Ratio (FAR) reduction, which is why realtors have increased the prices of apartments. Because of this, buyers are struggling to buy apartments.
Registration directorate Assistant Inspector General Sheikh Md Anwarul Haque said that the number of sales contracts of apartments, plots, commercial spaces, and commercial plots that have been registered till September this year, is not even half of that of the same period even during the Covid crisis. Apartments, in particular, are the least sold this year, he added.
According to REHAB, there are 35 lakh workers in the housing sector and over 260 backward linkage sectors that are suffering along with the developers.
REHAB Vice President Engineer Mohd Shohel Rana demanded that all real estate business organizations, employees and workers are facing threat due to decreasing the number of sale and new constructions.
Especially, the DAP implementation has created a big threat for real estate business, insiders claimed.