Staff Reporter : A dramatic drop in the sales of plots and apartments since third quarter last year largely owing to political uncertainties and social instability has discouraged investment and aggravated the crisis plaguing the real estate sector.
Many companies are selling assets without making profits, while many others are failing to even pay the wages of workers, threatening their livelihood. Furthermore, due to the dwindling demand for construction works, almost all the backward linkage industries – like cement, steel, electrical equipment, tiles, pipes, sanitaryware, dye ¬– are limping.
Almost 35 lakh people employed in the real estate-related industries are facing job losses, about 90% cement factories have already shut down, the steel industry suffered T3,500 crore losses in the last three months alone, and overall investments worth Tk1.5 lakh crore is at risk.
Plot and flat sales have dropped 20%-25% in a year, while sales of luxury apartments worth over Tk10 crore have declined by 50% over the same period.
A change of power on 5 August last year has naturally halted many government infrastructure and construction works. And the falling real estate demand and investment has only made things worse, as sector has failed to lift relevant industries amid the reasonable slowdown in government projects.
People have significantly lost their appetite for buying immovable assets not only for socio-political instability but also due to renewed economic pains: the inflation crisis has further worsened under the new interim government.
Businesses are in a separate uncharted territory: borrowing costs have been hiked, raw material costs surged, and the government has promised but is yet to rectify the problems in “Detailed Area Plan” for Dhaka’s proper urbanisation all the while the shortage of asset supply persists.
Furthermore, the government has restricted investment of undisclosed money and a usually prospective customer base has diminished, thanks to many politicians as well as allies linked with the ousted regime going into hiding.
To alleviate the crisis plaguing the real estate and relevant sectors, the government must expand long-term soft mortgage loan facilities for buyers, allow for the unconditional investment of undisclosed money for a specified period, significantly reduce property registration costs in line with neighbouring countries,
offer new incentives, swiftly reform the “Detailed Area Plan” and work towards improving the overall economic scenario, starting with curbing inflationary pressures.(The writer is the managing director of JCX Group)