Political instability in the country along with the impact of the past global economic recession have brought the country’s real estate companies to their knees.
Real estate companies are passing a hard time as sales of plots and flats, which were otherwise robust even a few years back, are now on the decline.
Sales fell by a half in recent times because of the ongoing political turbulence creating a cash crunch in the housing sector.
The Real Estate and Housing Association (Rehab) has already postponed its biannual exhibition, Rehab Winter Fair 2013, which usually takes place in the month of December.
A few months back the government ensured that it would give fresh gas and electricity connections but it was not true to its words, said an association member.
Even people are feeling discouraged to purchase a flat with gas and electricity connections given the current political uncertainty.
Sheltech Managing Director Toufiq M Seraj said: “The business of real estate has been in trouble over the last two years and the political instability in the country is now rubbing salt into its wounds.”
He claimed that in 2006 about 5,684 flats were built by the private real estate companies and in 2010 the number went up to 13,309. The figure began to come down since the recent economic recession.
“If political stability is not ensured this sector is sure to meet its doom,” he added.
The association’s Senior Vice-President Mokarram Hossain Khan said: “There are about 20,000 flats ready for sale worth about Tk 600 crore. But buyers are reluctant to buy flats.”
He said the realtors along with customers who bought flats with bank loans owe more than Tk18, 000 crore to banks.
“We are counting loss every day because of unrest,” he added.
Meanwhile, the classified loan in the real estate sector increased rapidly due to sluggish investment amid political unrest ahead of the upcoming general election in the country.
The Rehab leaders said the total classified loan known as non-performing loan almost doubled. It rose to 7% from 4% during October 2012 to June 2013, according to the Bangladesh Bank data.
Moreover, around 20,000 to 22,000 ready flats worth between Tk 140bn and Tk 160bn have remained unsold and the construction works of over 8,000 flats remained suspended.
The average sales of both flats and land plots dropped by 60% in 2012 compared to the level of the previous year.
Rehab General Secretary Md Wahiduzzaman told the Dhaka Tribune: “The real estate companies are passing hard times as sales of plots and flats have dropped sharply.”
Japan Garden City Ltd’s Managing Director Wahiduzzaman also said: “We have been hit hard by the political unrest. Our transactions have reached a record low. Most construction projects have been put on hold as the developers cannot bring raw materials due to blockades.
Because of the political unrest, financial crisis and non-availability of utilities connections banks are shying away from providing loans.
Under such circumstances the leaders of Rehab, a trade union of real estate agents, threatened to announce a tougher movement if the countrywide political violence was not stopped immediately.
