Realtors yesterday urged financial institutions to provide more loans to the real estate sector due to the higher demand.
“Investment in our sector is highly secured as the loans are backed by tangible assets,” Shafiq Rahman, chairman of a standing committee of Real Estate and Housing Association of Bangladesh, said in a keynote presentation.
He spoke at a seminar on “Secure and Prospective Investment: Real Estate Industry of Bangladesh”, organised by REHAB at Ruposhi Bangla Hotel in the city.
The current demand for housing in urban areas is 30,000 units annually and is expected to cross 60,000 units in the next five years, he said, adding that the real estate sector is now only producing 17,000-18,000 units per year.
“If banks finance in the prime asset market to original buyers, there will be no risk of recovery.”
Currently, there is a 65-35 ceiling for equity and loan ratio for apartment buyers, meaning that a buyer has to pay Tk 65 lakh against a loan of Tk 35 lakh to purchase a flat worth Tk 1 crore, which has hit the sector's hard, according to industry insiders.
Realtors further said that banks should make investment in the real estate sector considering their heavy investment in its backward linkage industries such as steel mills, cement industries, sanitary and tiles industries. Currently, banks have about Tk 40,000 crore to Tk 50,000 crore investments in the backward linkage industries, according to Rahman.
“The recovery and business of banks with them mostly depend on our healthy status.”