Housing and Public Works Minister Mosharraf Hossain yesterday pledged to announce an incentive package for the ailing real estate sector shortly.
“It is a must to bring dynamism back to the sector,” he said at the inauguration of the REHAB Winter Fair 2014.
The real estate sector is passing through a tough time as apartment sales have continued to decline this year too, said Alamgir Shamsul Alamin, president of the Real Estate and Housing Association of Bangladesh (REHAB).
The sector's sales fell as much as 60 percent in 2013 and the situation is not any better now as a significant number of completed flats remain unsold despite the stable political environment.
REHAB recently surveyed 209 companies and found that they were sitting on 12,185 units of unsold flats worth Tk 8,811.19 crore. Since the association has around 1,200 member companies, the actual number is far higher, officials said.
The companies surveyed have sold 1,749 units of flats this year, in contrast to 1,965 units in 2013 and 2,370 units in 2012.
The slump can mainly be attributed to the buyers' lack of access to low-cost home loans.
Apartment buyers now have to pay up to 18 percent rates for loans, which ward people off from going for apartment purchase, said Alamin.
Subsequently, the housing minister has called for a Tk 20,000 crore fund to disburse long-term loans with single digit interest rates to middle-income apartment buyers.
Hossain said many developing countries extend housing loans at lower than 5 percent interest rate to apartment buyers. “Such loans have been absent in our country.”
“We will have to provide low-cost loans to keep the real estate sector alive,” he said, while citing the sector's multiplier effect.
The sector has around 300 backward and forward linkage industries like cement, iron and steel, bricks, electrical equipment, tiles, fittings and ceramics and they too have been hit hard by the sluggish apartment sales, according to the REHAB president.
Hossain said his ministry will urge the prime minister to resume the scope to legalise undisclosed income through apartment purchase.
Such benefits will help reduce illegal capital flight from the country as well as boost apartment sales, he said. He will also call for more housing projects under public-private partnership. The prime minister is scheduled to call in at his secretariat on Sunday and he will make the suggestion for the incentive package then.
Nasrul Hamid, state minister for power, energy and mineral resources, also urged the government to extend policy support to the real estate sector without further delay.
He recommended setting up a committee comprising of representatives from realtors to get wind of the sector's most pressing issues.
Meanwhile, the housing minister said the government aims to build around 100,000 units of apartment within the next four years across the country to ensure affordable housing.
The government has tied up with two Malaysian companies to build about 8,400 flats in Uttara, he said, adding that they will also build apartments for slum dwellers.
Hossain also urged the realtors to keep sewage treatment plants in mind when designing their building plans.
A sewage treatment plant is a must to get approval of any building designs in the metropolitan area, he added.
A total of 145 real estate companies and building material suppliers as well as five financial institutions are participating in the five-day fair at Bangabandhu International Conference Centre in Dhaka.
A team comprising officials from city development authority Rajuk and REHAB will monitor the authenticity of the projects showcased at the premises.
If any illegal project is found, the monitoring cell of Rajuk will remove the stall from the fair venue, REHAB said.
The exhibition, which will remain open from 10am to 9pm, will cost Tk 50 for single entry and Tk 100 for multiple entries.
The real estate sector now contributes around 7 percent to the GDP. It employs around one lakh skilled people and another 35 lakh in the backward linkage industries, according to industry people.