The country’s real estate sector has been suffering due to a drop in sales and investments in this sector, resulting from economic headwinds and political unrest ahead of the election, said people involved in this sector.

According to The Real Estate and Housing Association of Bangladesh (REHAB), the sales of new apartments in the country came down by 33% to some 10,000 in FY23 compared to the previous fiscal year.

Many real estate companies have postponed or halted their construction projects due to a hike in construction material prices and lack of investments amid the current political and economic situation, said people involved in this sector.

Moreover, higher property registration costs, and complexities in Detailed Area Plan (DAP) prepared by the Rajdhani Unnayan Kartripakkha (RAJUK) have recently driven down their sales.

According to the Trading Corporation of Bangladesh (TCB) data on 5 December,

the price of 60-grade MS rod increased by 7.26% and that of 40-grade MS rod increased by 5.36% this year compared to the previous year.

Recently the price of 60-grade MS rod was around Tk92,500-Tk99,500 per tonne in different markets of Dhaka, while the price of 40-grade MS rod was around Tk87,000-Tk90,000 per tonne, according to TCB.

TCB data also revealed that the price of MS rods had reached Tk100,500 per tonne on 24 November this year, but came down by around Tk1,000 since 29 November.

Regarding the hike in rod prices, Dr Sumon Chowdhury, secretary general of the Bangladesh Steel Manufacturers Association (BSMA), told the Daily Sun, “Currently, we cannot import raw materials to manufacture steel due to the dollar crisis. Banks cannot provide dollars for opening letters of credit (LCs) due to its high price.

Besides, the opposition parties’ ongoing blockades and hartals are disrupting the supply chain of the backward-linkage industries of the construction sector, said sector insiders.

“Currently, the steel sector is using only 50% of its production capacity. It has become very tough to adjust prices now. So we have to count losses too,” said BSMA Secretary General Dr Sumon Chowdhury.

Alamgir Shamsul Alamin Kajal, managing director of Shamsul Alamin Real Estate Limited (SAREL), told the Daily Sun that the real estate sector is now in trouble as there are no sales of apartments and no new construction projects due to the national election. Currently, customers do not want to invest in new projects due to political unrest and economic problems.

“Currently, many people do not want to make investments in this sector due to the complexities related to DAP. However, later the DAP has been finalised with a seven-point amendment, including the rules related to floor area ratio (FAR), which is somewhat positive for us,” said Alamgir, the immediate past president of Real Estate and Housing Association of Bangladesh (REHAB).

Expressing his hope that the situation would improve in the next six months, Alamgir said, “We expect that the sector will perk up in the coming months overcoming the current difficult situation.”

According to the Bangladesh Bureau of Statistics (BBS), the real estate sector contributes around 7.9% to the country’s GDP.

A review of Mir Real Estate Limited (MREL) said the real estate sector in Bangladesh has a market value of Tk6,000 crores. The real estate market generates approximately Tk20 billion in sales in a year, and about Tk2 billion in tax revenue for the government.

The REHAB sources said currently it has 833 members. There are over Tk1,50,000 crore investment in the sector. The demand for apartments in the country is around 10,000-15,000 units per year.

Around 269 backward linkage companies including rod, steel, cement, brick, paint, glass are involved in the sector. And around 40 lakh people engaged in the real estate sector, the REHAB sources said.