Housing sector in deep crisis
Mahfuz Emran: In the last two years, the global epidemic of coronavirus has hit the country’s housing sector hard. There was stagnation in these sectors like trade and commerce, office-court and education. Construction of many projects was stopped for a long time. After a while the housing industry began to recover from the effects of the Corona. The Real Estate Housing Association of Bangladesh (REHAB) has organized a housing fair with an order of over Tk 400 crore. This brought relief to about 269 linkage companies in the sector. However, this relief did not last long. In the last few months, the prices of construction materials including rods and cement have reached such a level that the sector is in deep crisis again.
Prices of construction materials have been rising since the beginning of last year as global supplies were disrupted by the Covid-19 pandemic. Russia-Ukraine war has been raging since the last week of February this year.
Even recently the prices of construction materials like rods, cement and tiles have gone up abnormally. The effect is to reduce the construction, transfer and sale of new buildings or apartments. The price of rod, an essential building material in the construction industry, has broken all records, so far. In the last two weeks, the price per ton of rod has increased by about Taka five to six thousand. In the retail market, the price of one ton of rod has exceeded Tk 90 thousand. Cement has reached record prices. In the space of just one and a half months, the prices of bricks, cobbles and sand are also increasing.
Construction of new buildings has lost momentum due to rising prices of raw materials.
According to the construction industry, the work of many projects has been halved due to the skyrocketing price of rod-cement. Their fear is that the cost of implementing the project has also increased as the construction cost has increased by leaps and bounds. This can increase the price of a flat or apartment by at least Taka four to five hundred per square foot. Besides, uncertainty is also increasing with the employment of more than 35 lakh people in 269 sectors related to housing.
Although the Russia-Ukraine war did not have a direct impact, the prices of daily commodities as well as construction materials began to rise overnight in the country’s market. This includes rapid investment in employment and employment in various sectors including engineering, architecture, cement industry, re-rolling mills, brick kilns, sand, tiles-ceramics, stone, transport, pipes, fittings, cables, glass and aluminum fittings. If this continues, it will have a negative impact on the country’s economy.
Rod at record price in history
For the first time in the country, the price of rod has exceeded Tk 90 thousand per ton. At present, BSRM’s 60 grade one ton rod is being sold at Tk 90,500 to Tk 91,000, which was Tk 85,000 a week ago. A month ago, the price was Tk 65 to Tk 66 thousand. AKS rods are being sold at Tk 80,000 to Tk81,000 per tonne, KSRM at Tk80,000 to Tk85,000, GPH at Tk87,000 to Tk88,000, port at Tk88,500 to Tk90,000 and KSML at Tk90,000 to Tk91,000 per tonne.
Besides, rods of some companies including Anwar and Rahim are available at Tk 87,000 to Tk 88 thousand.
The price of rods, thick-thin planets and angles is being increased on the pretext of increasing the price of raw material for making rods in the international market due to the effects of Russia-Ukraine war. Concerned traders complained that despite the purchase order of the rod, there was no timely supply. Due to the supply crisis in the world market, the prices of construction materials are also rising in the country.
The current market price of the rod is talked about by the manager of Messrs Bhandar Traders, Md Sharif of Nawab Yusuf Road, Old Dhaka. To do business with the dealership of the two companies. Sharif told that on the one hand the price of rod has gone up and on the other hand the rod is not available properly. The rod that I used to get in a day or two if I used to order from the company, now it takes 10-15 days to get it.
As a result, it is not possible to supply rods as per the demand. Due to this, the price of this building material is increasing. Sales have also declined as prices have risen. Housing traders have already stopped many ongoing construction projects. Many are not getting the courage to start anew in the volatile market of construction materials. In this situation, it is difficult to say what will happen in the coming days.
Cement at record high price
Another major raw material of cement production in the construction industry of the country is clinker, limestone, slag, fly ash and gypsum. Of these, 82 to 90 percent are clinker. Traders say the price of clinker has risen from $ 80 per tonne to $ 79 per tonne earlier. Prices of other raw materials for cement production have also gone up by an average of $10 to $ 12 per tonne.
In addition to the increase in the price of coal and fuel oil, the increase in ship freight imports of raw materials is also a major reason for the increase in the price of cement.
At present, the price of cement in almost all companies in the country has increased by Tk 30-60 per bag. Cement of Tk 400 to Tk 450 is being sold at Tk 480 to Tk 500 per sack. In various cement markets of the capital, Shah Special has increased from Tk 420 to Tk 480, and Supercrit from Tk 420 to Tk 480.
Scan Cement is being sold at Tk 480 from Tk 450, Bengal Cement at Tk 480 from Tk 410 and Mir Tk 405 toTk 450. Shopkeepers fear that the price may go up further in the coming days to Tk 500 per bag.
If you want to know about the increase in the price of cement, Premier Cement Company Secretary Kazi Mohammad Shafiqur Rahman told that the price of raw material for this construction material has gone up a lot. As a result, manufacturing companies are being forced to raise prices. The rise in raw material prices could push cement prices higher in the coming days.
Unusual price hike
In just a few weeks, the prices of building materials have skyrocketed. In this case, the price has almost doubled in the retail market than in the wholesale market. At present the imported bibcock has increased from Tk 800 to Tk 1100, the sing coke has increased from Tk 940 to Tk 1,050, the two-in-one has increased from Tk 1,575 to Tk 1,620.
Pillar Cock increased from Tk 1,207 to Tk 1,500, Moving Sing Cock increased from Tk 1,336 to Tk 1,750, Angle Top Cock increased from Tk 570 to Tk 630, Liver Pillar Cock increased from Tk 1,117 to Tk 1,280, Moving Shower Head increased from Tk 1,190 Increasing from Tk 1,895, Basing Mixer from Tk 2,898 to Tk 2,935, Double Bowl Sing from Tk 2,900 to Tk 3,200 and Giza from Tk 7,100 to Tk 9,100. Besides, the price of commode has gone up from Tk 1,000 to Tk 3,500.
Shakhawat Hossain, general manager of Aap Sanitary in Old Dhaka, an importer, said that the supply of goods has decreased due to the ongoing war between Russia and Ukraine.
The prices of these construction products are also rising in other countries of the world. Despite the arrival of construction materials ordered from some countries, the cost of imports has almost doubled due to increase in fuel prices and transport fares. Due to these reasons, the country’s market is also high. In import-dependent countries, this upward trend in commodity prices is unlikely to abruptly decline.
Asked about the global impact on the country’s housing industry in the coming days, REHAB vice-president (first) Kamal Mahmud said that prices of construction materials are rising. The construction work of various projects has come to a standstill due to this high price trend. If the project cost increases, it also affects the buyer. This can increase the price of a flat or apartment by several hundred rupees per square foot.
At the same time, uncertainty is growing over the employment of about 4 million people in 269 linkage companies involved in the housing sector.
According to Rehab, an association of real estate traders, 22,000 flats and apartments are sold in the country every year. The only exception was in 2020. At that time there was a recession in the housing due to the epidemic of coronavirus. On the other hand, the investment money of the companies is also stuck as the flats and apartments have not been sold.
The companies are in crisis. According to estimates, an average of 1,600 flats have remained unsold in the last one month. Basically, these flats and apartments are unsold as the buyer is not seen. The concerned people hope that if the price goes down, it will be sold again.
REHAB President Alamgir Shamsul Alamin Kajal told about the current state of the country’s housing sector, including the rising prices of flats or apartments, that the entire construction sector contributes about 15 percent to GDP. At current market prices, the sector’s contribution to GDP has more than quadrupled in a decade. Economists can easily calculate the relationship between the housing sector and the overall economy of the country. Considering the entire construction sector including the related linkage industry, its contribution to the GDP will be around 20 percent.
‘The entire construction sector is making a significant contribution to the national economic growth of the entire construction sector through the expansion of the industry, including government revenue, employment, rods, cement and tiles. The country’s housing industry is providing only housing. The housing industry, which provides food and clothing to 2.5 billion people who depend on the country’s 4 million workers, will suffer due to the unusually high prices of recent construction materials.
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