Realtors are expecting the property market to flourish in 2018 as sales have finally started to pick up this year upon banks' slashing of interest rates to single digits.
The relative political calm, the bearish trend in the stock market and a lack of solid investment options also drove sales in 2017, leading to a price spiral in almost all areas save for Gulshan and Baridhara in the capital.
“I think the real estate sector will get a boost next year,” said Toufiq M Seraj, managing director of Sheltech, one of the leading developers in Bangladesh.
Seraj, who closely follows the property market, said the sector has started to pick up -- although slowly -- from July.
While no accurate data is available yet on the sales of homes, commercial spaces and land in the outgoing year, the Real Estate & Housing Association of Bangladesh said the sector grew 5-7 percent in 2017, bucking the downturn of the last several years.
“2017 has been much better than 2016 and 2015,” Seraj said.
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.
Developers said the property price corrections in the past few years have lured in many prospective home buyers.
Prices hit rock-bottom at the beginning of 2017, after which it started to pick up little by little, Seraj said.
The construction of relatively smaller flats by major developers also attracted the middle-class and fixed income groups.
“The real estate sector is repositioning itself. The apartment prices have also seen correction. And we the developers have paid attention to design features in line with the customers' demands,” he added.
The prices have increased by Tk 200-500 per square feet this year in almost all areas except for Gulshan and Baridhara, said AKM Shafiuddin Shahin, sales in-charge of Structural Engineers Ltd.
“This is because of increased demand.”
Shahin went on to link the relative political calm in 2017 for the pick up in property sales. “People tend to hold back on making new investments during times of political instability.”
However, the demand for luxury apartments has not increased, according to developers. “It appears that a section of the rich people is more interested in owning a second home abroad,” he added.
The number of unsold apartments has declined for rising sales, said Md Noor-E-Alam Siddike, executive director of sales of Building Technology and Ideas.
“I think all have now gathered that the market has become stable and the prices will not fall further,” he said, adding that the declining interest rate on home loans was a big factor in rallying sales in 2017.
In some cases, the interest rate came down to as low as 8 percent.
“Falling interest rate on home loan has encouraged many middle class to think of buying homes of their own,” said Mohammad Farhaduzzaman, marketing in-charge of Eastern Housing. The low interest rate coupled with the lack of attractive investment opportunities in other sectors including stock markets will bring in increased investment into the real estate sector.
“The rate of interest is unlikely to rise soon,” he added.
Like Seraj, Shahin also feels next year will be a good one for the real estate sector.
In another development, investments in flats by Bangladeshis living abroad have increased in 2017. This is likely to rise further in 2018 because of the uncertainty surrounding immigrants in the West, he said.
“The market will grow next year if there is no political instability. The main challenge is ensuring gas connection to household,” said Siddike of BTI.
Farhad of Eastern Housing said the government has already stopped giving new connections to households.
“The sector will seriously be affected if gas connection is not provided to households next year,” he added.
The electricity situation though has improved, according to Seraj.
The government should provide gas connection to homes if there are reserves and the capacity to distribute in Dhaka, he added.