Real estate sales dip 60pc

Apartment and plot sales registered a 60 percent drop in 2013 from the previous year mainly due to political unrest and high lending rates, the apex housing body said yesterday.   
“The housing sector has plunged into crisis because of prolonged political turbulence,” said Md Sydul Islam Badal, general secretary (current duty) of Real Estate and Housing Association of Bangladesh.
The ongoing political stalemate is responsible for the latest setback to the industry that was already weighed down by high lending rates, he added.
In recent times, the interest rates on loans to buy property have climbed to more than 19 percent. “Customers have almost stopped making new bookings,” Badal told The Daily Star.
The sector also witnessed a significant fall in new project registrations last year.  
The number of new projects undertaken by developers declined by around 75 percent in 2013 compared to the previous year, according to REHAB.  
“The year 2013 has been the worst for the real estate sector,” said Toufiq M Seraj, managing director of Sheltech (Pvt) Ltd, a leading housing company.
Sheltech, which has around 40 ongoing projects, usually takes 12-15 projects a year, he said. “The number was only 3 last year.”
The company's sales also declined by more than 30 percent last year, he added.
REHAB in a recent study found that a total of 338 companies have 22,572 units of unsold flats worth Tk 21,506.36 crore.  
As the association has around 1,200 member companies, the actual number will be far higher, officials said.
The 338 companies surveyed are yet to hand over 7,014 flats with an approximate value of Tk 773.28 crore, it said.
Meanwhile, the platform of realtors yesterday sought a stimulus package from the government to revive the struggling sector.
A delegation, led by its President Nasrul Hamid, submitted a two-point proposal before the finance minister at his secretariat office.
The proposal included immediate formation of a Tk 3,000 crore fund to extend long-term credit to the low and middle-income buyers at a single digit rate of interest.
Developers also sought assistance for rescheduling their existing bank loans with a one-year grace period without down payments.
The REHAB president said banks and other financial institutions have been reluctant to finance the developers for the last one and a half years after Bangladesh Bank issued a notice identifying real estate and housing as a non-productive sector.
He urged the government not to treat the sector as a non-productive one.
However, Finance Minister AMA Muhith said there is a need to sit with economists and planners on whether to term the real estate sector productive or non-productive.
“And I'll do it shortly,” he said.
On loan rescheduling, Muhith said he will discuss it with the central bank so that the developers can reschedule their existing bank loans easily.  
The minister, however, turned down the REHAB proposal to form a Tk 3,000 crore fund for the low and middle-income buyers.
The unpaid loans of the surveyed 338 companies now stand at more than Tk 4,181.48 crore, according to REHAB.   
“But the amount would cross Tk 8,000 crore if the entire sector is taken into account,” said the association's president.