Starting from March 2020, a series of lockdowns announced by the government to prevent the spread of coronavirus in Bangladesh has caused a collapse in the country’s economy. It affected all kinds of large and small businesses. And real estate business is not a different case.
The housing industry or construction sector plays a big role in keeping the wheel of the country’s economy moving. There are about 458 sectors closely involved in this industry. The current Covid-19 disaster has brought the housing industry to a halt like other sectors. In the first and second quarters of 2020, the entire housing sector has come to a halt due to the lockdown for more than a month.
However, the demand for apartments has increased due to lower interest rates on bank deposits and home loans. Many are now interested to buy apartments than renting them.
Situation of the Real Estate Business in Bangladesh before Pandemic
To understand the actual situation, we will have to go back to 2012. The recession in the housing sector started in 2012. In the next year, the housing business took a terrible shape because of the political unrest.
During that time, many real estate companies were unable to find a client even after reducing the apartment prices. Furthermore, many buyers also canceled their bookings due to non-payment of installments. After that turbulent time, the real estate business situation was a bit better in 2016, but the crisis was yet to see an end.
However, in the middle of 2018, it was announced to give home loans to government employees at 5 percent interest. The process of reducing the registration cost also started in 2019. As a result, the housing business was in a positive trend until Covid-19.
Present Situation of Real Estate Market in Bangladesh
Market observers say money is scarce for the common man. Medium businessmen and traders have also been affected by the corona. Even then, the demand in the housing sector is increasing. In this upward trend of demand, mainly government employees are in the driver’s seat. They are buying flats and land using government loans and other facilities. Market observers say money is scarce for the general people.
Why does the Real Estate Industry See a Rise in Bangladesh
Government employees have been given housing loan facilities up to Tk 70-75 lakh. This facility has played a big role in the expansion of land and flat business, as claimed by the companies in the real estate sector. In addition, the approval of non-tax income investment announced last year has also played an important role in this regard.
After the announcement of this opportunity, more than Tk 3,200 crore tax-free investments have come in the housing sector. In addition, measures such as 9% interest on home loans, reduction of land transfer tax rate from 2% to 1%, and reduction of stamp duty from 3% to 1.5% have also worked as a catalyst for the expansion of the sector.
Even before the epidemic, the housing sector was booming at the beginning of last year. Despite the occasional epidemic, the market has gradually turned around, improving the situation and using government facilities. Investment in this sector has been on the rise since the middle of last year.
Currently, this trend is continuing even in the midst of new epidemics and lockdowns. According to ‘Bproperty’, an online real estate business, the housing sector is on track to recover since the second half of 2020. There is a huge demand for land.
By the end of 2020, the demand for land has increased 10 times compared to the beginning. Investing in land is more profitable than real estate. As a result, the demand for land was high at that time.
However, land prices are still at an acceptable level outside Dhaka, especially in areas like Purbachal. But even there, it is growing rapidly. Therefore, many people are showing interest in buying land in these areas and it is expected to continue this year as well. It is expected that general people will also start investing in the land after the corona effect is removed.
Future of the Real Estate Business in Bangladesh
It is assumed that the situation in the housing sector is returning to its previous level after the impact of the epidemic. Before Coronavarus pandemic, many developers relied heavily on raising capital to sell flats. The housing business is facing a liquidity crisis as the number of buyers is declining due to the pandemic.
Furthermore, real estate owners have also been forced to reduce apartment prices significantly due to declining demand. Prices are yet to rise like the pre-pandemic situation. Many see this situation as a possibility.
According to real estate business owners, the fall in prices has created a new opportunity for investment in the housing sector. This is because, along with the economic recovery, property prices will also rise in the future.
The future of the real estate business is very bright considering the future direction of human life. In the future, people will be able to create an opportunity for themselves and future generations by investing in this sector.
Source: United News of Bangladesh