Real estate betting big on 2019
Home sales are likely to pick up this year after a underwhelming 2018, spurred by hopes of political stability and positive economic growth outlook, said realtors and lenders.
“As the election is over there is political stability. So, we expect the market to be better this year than the last one,” said Alamgir Shamsul Alamin, president of the Real Estate & Housing Association of Bangladesh (REHAB).
This year, the market may expand by up to 9 percent in terms of sales of the number of units, he said, adding that the loan opportunity extended by the government for public sector employees would have a positive impact on the demand for homes.
Toufiq M Seraj, managing director of Sheltech, one of the leading developers in Bangladesh, echoed the same.
“People feel encouraged to invest if there is stability. And it can be assumed there will be political and social stability and investment this year.”
He went on to predict that the real estate sector this year will be far better than the last couple of years.
Growth slowed down in the last three months of 2018, according to Seraj.
Many prospective buyers kept their investment on hold in 2018, said AKM Shafiuddin Shahin, sales in-charge of Structural Engineers.
“As a result, overall sales slipped a bit. But fortunately, we registered growth in sales last year,” he said.
The market was static in 2018 mainly because of interest rate increase, said QM Shariful Ala, managing director and chief executive of Delta Brac Housing Finance Corporation.
The interest rate rose in the first half of the year in the face of liquidity crisis in the banking sector.
The average interest rose to 11 percent in 2018 from 8.5 percent a year earlier because of liquidity crunch, said Ala of DBH, the largest and specialist housing finance institution in the private sector.
“Some developers might have done exceptionally well but the total market did not grow in 2018,” he added.
The home loan market shrank to about Tk 5,000 crore in 2018 from about Tk 7,000 crore the previous year.
DBH's outstanding home loans rose 8.15 percent year-on-year to Tk 4,326 crore at the end of December 2018, according to Ala.
“The market is supposed to be better this year,” he added.
Arif Khan, chief executive and managing director of IDLC Finance, said the market had been picking up gradually since 2014.
The housing market went on a downturn in 2012 for intermittent political instability, a bearish stock market and the government's apathy towards providing gas connections to new buildings.
The property price corrections in the past few years have lured in many prospective home buyers and the market is invigorated again. “Now, developers are coming and trying to build new projects. And the prices are moving towards the positive territory,” Khan said, adding that IDLC posted about 20 percent growth in its portfolio.
The industry delivers roughly 10,000-12,000 units a year.
No data is available yet on the total sales of apartments and commercial spaces in 2018.