The chances of introducing further favourable regulations sometime in the near future is not out of the realm of possibility
Since April, all eyes were on the upcoming national budget. While it is quite normal to pay close attention to budget announcements every year, this one felt different. The impact of the coronavirus pandemic on the economy is still a clear and present danger — forcing individuals and businesses alike to look to the forthcoming budget announcements for hope and reprieve.
As the weeks rolled on, so did the announcements of new and revised regulations, changing many sectors in their wake. And now that those announcements have come into effect, it is time to review the post-budget real estate sectorfor a better grasp of the situation.
It is no secret that the real estate sector has been greatly impacted by the shutdown and lockdown in the last few months.According to REHAB, the sector is actually one of the worst-hit industries in the country. There is still no definite number on the amount of loss incurred during the past few months.
However, as there has been almost zero construction and real estate activity since the end of March and only limited activity in recent times, it is safe to assume that the property sector was/is in dire need of some support. Some small-time developers have even stated that their business might die soon and that they feel helpless.
Unfortunately, the request for a place for the real estate sector in the stimulus packages remained unheard and the sector remained devastated. As a result, the entire industry, as well as real estate enthusiasts, placed all their hopes on the forthcoming budget for some positive indicators.
The hope was that the government would announce a further reduction of the home loan interest rate in light of the Covid-19 pandemic or finally answer the long-standing calls of reducing the property registration cost from theusual 14%, which was one of the highest in the region.
Many experts suggested that such regulation changes would inject much-needed life into the sector on the aftermath of the shutdown period just as similar changes have helped the sector overcome the previous global economic crisis and led the sector to the height it had reached pre-Covid-19.
But as we got closer and closer to June 30, the chances of such an announcement got slimmer. By the end of the pre-budget period, neither the interest rate nor the registration cost was reduced and instead, it was announced that people can now legally and without any penalty invest their previously undisclosed income into real estate.
For all intents and purposes, this is somewhat akin to a double-edged sword in so much as the move is undoubtedly open and prone to criticism for several aspects but it can, nonetheless, be a game-changer for the real estate sector as it allows fresh money to flow through the market which it desperately needs.
Many developers fear that people, even those that had already decided to buy a property before the lockdown, would be hesitant about investing in the aftermath of the pandemic — thus, leading to capital drying up in the market. But if the people can whiten their money through real estate, many people, some for the first time, would be motivated to engage with real estate.
From the perspective of developers, this inflow of money would enable them to resume their planned projects and may even recover some of the losses they have been enduring for some time now. For many developers, this might mean survival in the market — at least for a little longer until further encouraging regulations are introduced.
This has inserted some much-needed optimism in the market as many builders and sellers see a hint of sunshine amidst the overcast economic atmosphere. But whether this regulation alone will be enough to change the fortune of the property market is still uncertain as this is uncharted territory for all.
Nonetheless, the property market deals in a product that is always a necessity as evident by the constant demand Bangladesh’s only property solutions provider Bproperty receives on a regular basis. The real estate marketplace has seen a resurgence of activity on its online platform during the month of June.
The number of people looking for real estate on the Bproperty website has increased by nearly 50% in the span of one month, ever since safety measures were a bit relaxed and murmurs of budget regulations such as allowing investment of undisclosed money in property began.The number seen during June by Bproperty was nearly the same as those pre-Covid-19.
But as mentioned earlier, the chances of introducing further favourable regulations sometime in the near future is not out of the realm of possibility as we have seen in earlier years when some regulations were announced during the middle of the fiscal year.
In fact, on the first day of the new fiscal year it was announced that the registration cost would be reduced to around 10%. So it appears there is still hope for some further positive indicators down the line. For now, though, the real estate sector is still somewhat dependent on the whims of the novel coronavirus.
This year’s budget has put limited focus on real estate and declared very little. However, we are already living on the post-budget era and the budget and real estate are intertwined. All we can now do is wait and see how everything plays out.