Flat sales down to zero

Unbridled spending on housing
5 thousand unsold flats in Dhaka

Zarif Mahmud: Ahmed has been living in Sheorapara area of Mirpur, Dhaka for a long time. Wife is a banker. The couple’s long-held dream is to own a residence in the bustling city. With this, the two of them invested in a housing company running through bank loans. The down payment of Tk 50 lakh is to be paid in 24 installments. The total price of 1200 square feet flat is fixed at Tk 1.20 crore. Even if the installments are paid on time, the project takes an extra year to complete.
In the meantime, the price of construction materials has increased in several steps. Rod-cement-brick-stone started selling at record prices. The cost of the project increases by an additional one and a half to three thousand per square feet. Later, the company asked the buyer for an additional price. There is a mixed reaction among buyers and sellers.
Such incidents are more common in post-Covid and Russia-Ukraine war situations. There is a problem with the increased price and whether to accept the increased price. The complaint came from the Real Estate and Housing Association of Bangladesh or Rehab, an organization of housing traders. Although there are complaints at other times of the year, the level of complaints is heavier during these two times.
Ahmed told Daily Industry, “We make a down payment of half a crore to buy a flat. Later I paid all the money in installments. The housing company took more than one year.
Due to the increase in the price of construction materials, they are now asking for a higher price.
Masum Sheikh is an executive of housing company. He told Daily Industry, ‘We have taken down payment from the buyer for the ongoing project. While our work is in progress, the cost of every construction material has increased. In some cases, we have to provide more money up to Tk 3000 per square foot. What can we do in this case? A higher price must be paid on the basis of compromise.
However, none of them could come to an agreement. Both sides are adamant in their positions. The complaint comes to the rehab mediation cell. They had a hearing on this matter, later on the agreement of both, the new price of the flat was fixed by taking the increased price during the ongoing project.
More such complaints come from time to time. In this regard, Rehab called an emergency meeting on price determination in mid-2022. According to the decision of the meeting, the ongoing real estate projects have suffered financially due to the excessive cost of construction materials due to the deteriorating global economic situation, the Russia-Ukraine war and the abnormal rise in the value of the US dollar. In this, if the price increase of more than 10 percent of the ongoing or under-construction projects in the country is affected, the increased selling price will be re-determined based on the agreement, taking into consideration all the construction-related works. And after the start of the work, if the additional cost (effect of increase in the price of rod-cement etc.) is less than 10 percent, the flat must be sold at the previous price.
According to Rehab sources, Rehab Mediation and Customer Service Cell has been opened regarding various complaints including irregularities in buying and selling flats in housing or neglecting to provide flat-apartments. Here are the complaints of buyers and sellers. From 2004 to July 31, 2023, a total of 1,176 complaints were heard in the mediation cell. Half of these complaints were related to the post-Covid or Russia-Ukraine situation. However, most of these complaints are resolved. 34 complaints are still pending. The hearing of which is ongoing.
Market analysis shows that the prices of construction materials related to the housing sector have skyrocketed recently. The price of rods, an essential construction material, has broken all records in history. In the retail market, each tonne of rods is sold for rupee. Cement and other construction materials are being sold at high prices. Bricks, sand, filled sand, stones also set records. The cost of workers involved in construction has also increased by leaps and bounds. This price increase has affected the housing projects.
Businessmen say that the cost of construction has also increased with the price of construction materials. Project concerned have to bear additional cost of one and a half to Tk 3,000 per square foot. The seller is forced to sell at a higher price. Because of this, the buyer’s interest in buying a flat or apartment has decreased. Due to non-sale, the concerned have to count the loss. Small investors are in big money crunch. The government’s dream of alleviating the housing woes of the middle class may be illusory. The dream of buying a flat is now beyond the reach of the middle class due to the rise in the prices of various materials. They demand to reduce the price of construction materials now to build housing for everyone in the city.
5 thousand flats unsold
About 15 thousand flats are sold in the country every year. However, around five thousand flats remain unsold in the recent financial year. While 15,000 flat-apartments were sold in the financial year 2021-22, around 10,000 were sold in the entire period of the outgoing 2022-23 financial year. Besides, from 2010 to 2012, an average of 15,000 flats were sold. An average of 12,500 flats were sold from 2013 to 2016. 14 thousand flats were sold from 2017 to 2020 and 15 thousand flats in 2021.
Discussed the whole matter with Rehab Vice-President (First) Kamal Mahmud. He told Daily Industry, “The Russia-Ukraine war and the unusual price increase of the US dollar.” Due to the devaluation of the taka, the prices of the sector’s import-dependent products have increased abnormally, especially the raw material prices of rods. This increases the cost of flats, businessmen suffer. If any company is affected by increasing the price of construction materials, a logical solution has been brought.
If any project is affected by 10 percent or more due to cost of goods, it will be resolved through negotiation between buyer and seller. If the cost is below this, the company will have to sell at the previous price. We do not want any of the buyers and sellers to suffer here.