With an already Covid-led business slump, small and medium size apartment makers in Chattogram brace for further blow thanks to spiralling prices of construction materials and shrinking income of Bangladeshi expatriates – the main buyer of the properties.
Realtors say the expats – mostly in the Middle Eastern countries – are not putting money into new homes now as they are yet to recover the pandemic blues.
Apartment booking fell by 50% during the pandemic, plus 10% to 15% of the earlier orders were cancelled, causing a Tk200 crore loss to the port city real estate sector, according to Real Estate and Housing Association of Bangladesh (Rehab) sources.
"We are going through a very tough time," Abdul Qayyum Chowdhury, chairman of Rehab Chattogram chapter, told The Business Standard.
The housing association in Chattogram has 80 members. Besides, there are at least 80 other housing companies in the business. The annual investment in the sector, which involves around 5 lakh people, amounts to more than Tk1,000 crore.
According to housing entrepreneurs, the sector witnessed a business crisis in 2012 and started turning around in 2016. The sector was dealt with a mighty blow last year, undoing all that recovery.
Rehab Chattogram Chairman Abdul Qayyum Chowdhury said expatriates are their main customers and they want medium and small apartments.
"But Bangladeshis in the Middle East are currently in income trouble. Meanwhile, living costs back home have also increased. They cannot even think about putting money into the housing sector now," he added.
According to the Bangladesh Bank, remittance flow to the country is declining. Last October, expatriates sent $1.6 billion to the country – the lowest in 16 months and 21% less than the corresponding period last year and.
ASM Abdul Gaffar Meyazi, a member of Rehab and managing director of East Delta Holdings Ltd, said around 20% of their flat bookings were cancelled during the pandemic, and now many customers are asking for the money back.
"Medium and small businessmen in the sector are in trouble," he added.
Big businesses unhurt
Chattogram Rehab Chairman Abdul Qayyum Chowdhury said some ten port city realtors who make high-end and larger flats are doing well despite the pandemic situation.
"The reason is the buyers of such high-end properties are either government officials or businessmen who did not have to face any income loss," he noted.
Companies that sell flats at Tk4,000 or less per square foot are not getting new bookings. But those who sell flats at Tk6,000 per square foot or more are doing good business like pre-pandemic times, according to the realtor association leader.
With the demand almost steady, high-end realtors said they kept their constructions running during the Covid lockdown last year and this year too. They said they adapted "special plans" to shake off the Covid fallout.
Tanvir Shahriar Rimon, CEO of Ranks FC Properties Ltd, said, "Construction at our sites was on by maintaining health safety in May last year, though our market peers suspended works. With isolation rooms at all our sites, we even worked in double shifts."
He said their ramped-up construction activities met with solid customer confidence as the buyers were paying the instalments.
"When the lockdown was imposed again this year due to the second wave of the pandemic, we vaccinated all the workers. We tried to ensure the safety of the investment of our customers," he added.
Project cost up 30% due to pricier raw materials
Realtors said construction raw material prices have gone up the lowest 11% to the highest 53% in the last six months. During the period, prices of rod, cement and bricks spiked 32%, 10% and 12%.
According to sector insiders, the price of 60 grade rods commonly used in building construction was Tk57,000 per tonne at the end of last year. Currently, the price has increased to Tk74,500. The average price of a 50 kg sack of cement was between Tk360 to Tk390 last year, which is now at Tk420 to Tk480.
East Delta Holdings Ltd Managing Director ASM Abdul Gaffar Meyazi said their project costs have gone up by 30% due to the spiralling prices of the construction materials, which eventually affected flat booking and sales.
Ranks Properties CEO Tanvir Shahriar believes the increase in flat prices is logical.
According to Rehab sources, a per square foot apartment in Chattogram's Panchlaish would cost Tk8,000 in 2015. The rate is now about Tk12,000.
In Halishahar, per square foot apartment is Tk6,000 while the 2015-rate was Tk4,000.
Per square foot apartment in the upscale Khulshi area is now Tk14,000 as the rate was Tk10,000 a decade ago. Apartment prices in Agrabad, Nasirabad, Bayezid and Chandgaon areas have also increased at a significant rate.
Even with the pricier raw materials and poorer customers, Rehab Chattogram Chairman Abdul Qayyum Chowdhury sees light at the end of the tunnel.
He said apartment sales in the port city increased by about 25% since July as some of the customers who stopped paying instalments came back.