It is expected that property prices may decrease by 5-10% as a result of the current situation
The supply side of real estate is often one of the most underappreciated aspects of the property sector. Unlike a lot of other products, creating, or in this case constructing, enough “goods” to fulfill peoples’ needs is not only time consuming, but also dependent on a variety of internal and external factors. From understanding the ever-changing trends to conceptualizing the product and finally building it, it takes years to complete — all the while withstanding rising costs of building materials, maintaining compliance and, sometimes, even irregular cash flow.
As a result, despite the best efforts of both the private and the public sectors, there is an immense shortage of housing in Bangladesh, especially in cities — with the shortage projected to reach 8.5 million units by 2021, according to the Bangladesh Bureau of Statistics (BBS).
However, it is the private sector, in particular,that has been leading the charge for housing — trying to help fulfil the goal of “Housing for all” by 2021. Unfortunately, the recent scenario has put a dent on the march of real estate development with almost all residential and commercial projects coming to a halt.And since the need for real estate never really ends, this will increase the shortage in supply of real estate products in the country — creating pressure on the developers to shift gears and move at a faster pace than the pre-pandemic rate so that future needs can also be fulfilled.
But how feasible is that expectation? Continuing on with trying to fulfill current demand is a challenge of its own, but also creating products in accordance with the shifting mindset of the customers is a whole other thing.
Yet, this is also necessary if the industry is to quickly recover and maybe even thrive again.Once everything normalizes and the economy is fully open, the problem may be reaching the pace required to meet demand. Developers would and should need some time to get their bearings and move forward. Existing projects may need to be re-evaluated — as will any upcoming projects that were already in the pipeline.
According to real estate experts, the giants of the industry would fare well and require less time to start their operations back up again. However, those tier-2 or tier-3 developers need to assess their current situation and communicate with their buyers about the path ahead on whether there might be a delay in handover, a change in plan or even if everything is on schedule for reassurance.
But to actually come on top of the economic crisis of this pandemic and for the industry to thrive again,developers would have to think and take on projects sensibly that incorporate the new and rising needs of the people — even if it means limiting the launch of new projects. The industry may see an increase in popularity and demand for houses in gated communities, office spaces that have ample space so as to maintain minimum distance, or some other feature that may come out of the Covid-19 challenge we are facing. The goal would be to provide the people with what they might need without making false promises and over reaching from one’s capabilities.
This is also an opportunity, though. Opportunity for new players and up and coming players to make their move. The consumers of real estate have a difficult time trusting new developers — and rightfully so. For a long time, the industry had numerous problems with mistrustful entities. A lot of that has changed today, but the stigma has remained to some extent. However, as some developers will struggle to return to operation post-coronavirus, others may take the opportunity to invest in new projects and, most importantly, in acquiring new land.And as everyone knows, land can be as good as gold in Bangladesh.
Land is something that almost everyone desires — both buyers and investors. Some have even attributed owning land to being the “Bangladeshi dream.” That is why like many industry experts, Bproperty CEO Mark Nosworthy has said that he believes people will continue to invest in land and does not see it changing anytime soon as it provides security and investment.
Furthermore, it is expected that property prices may decrease by 5-10% as a result of the current situation — opening up an opportunity for both established and up and coming land developers to purchase land at a reduced price. But then again, those land projects need to be geared towards the needs of the future to be truly successful — both financially and societally.
From the outside, it is difficult to fully grasp everything that goes behind creating real estate projects and fulfilling the needs of the people. The industry has been trying to keep pace with the growing demand but is still coming up short. But the situation has changed now and the need to fill the impending gap is more important than ever.
The current situation has shown us the importance of home — particularly that of an “own home”. The safety and security provided by that is unparalleled. That is why all the real estate developers need to step up, think sensibly and move accordingly.