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Real estate sector facing acute crisis


Published : 10 Jun 2020 09:52 PM | Updated : 07 Sep 2020 07:22 AM

Businesses of different sectors, including the housing and construction sector, are still plagued with stagnancy due to the worse situation of coronavirus, although the general holiday ended on May 30.

As a result, a total of 456 industrial sectors related to housing and construction along with other businesses are facing the crisis of existence. Such a situation has been prevailing for the last two and a half months.

There is a fear growing among the industry insiders that, businesses will take time to return to normalcy as the coronavirus cases are on the rise.
According to the Real Estate and Housing Association of Bangladesh (REHAB), about 30,000 flats remain unsold. Hence, new construction in the housing sector is also stalled. In addition to this, there are many other industries that are dependent on the housing and construction sectors. As the housing sector has come to a standstill, these industries have also suffered severe losses. Although government incentives have been announced to compensate the damages caused by the coronavirus, most of the institutions are not getting loans. As a result, most of the factories have been shut down due to liquidity crisis. Employees of these sectors are at risk of becoming unemployed.

Alamgir Shamsul Alamin, President of Real Estate and Housing Association of Bangladesh (REHAB), told journalists that, “The situation is really bad and it can't be compared to any situation in the past. All construction works have been stopped. No one knows when the situation will become normal”.

He also sought facilities in the upcoming budget, mainly they are, low-interest housing loans for customers that have been done for government officials, reduce registration cost to five percent from 10 percent for the next five years, and allow to use black money in housing sector without question from any government agency.

At present, there are only 1,001 member organizations of REHAB. But Bangladesh Bureau of Statistics (BBS) statistics showed, there are 3,132 companies in the construction sector across the country. Apart from heavy industries like cement and steel, there are many other industries including ready-mix, stone, bricks, light engineering including cables, lights, wood, GI pipe, tiles-marble, sanitary, paint. Billions of Taka have been invested in these construction-related industries.

Meanwhile, the country’s steel industry with steel and iron production stopped due to a shortfall of raw materials mainly imported from China. According to the Bangladesh Steel Manufacturers Association (BSMA), “Steel is an industry with high investment, high working capital, high cost. This sector’s per day loss is equal to the profit of a month. In the present situation, the industry could incur a possible loss of Tk 3,000 crore in the months of March and April. Unfortunately, even if the situation improves after June, it will take a long time to return to normal operation of the industry”.

Meanwhile, Bangladesh Cement Manufacturers' Association (BCMA) has urged the government to reduce clinker import duty by 60 percent. BCMA president Md Alamgir Kabir, said, “We had no sales during the countrywide lockdown. The sector counted a loss of Tk 600 crore from March 26 to May 30”.

“Now we sought government support to reduce the clinker (major raw material for cement production) price to Tk 200 per tonne from Tk 500”, he added.
According to REHAB, some 35 lakh people are engaged in the industry where a good number of linkage industries are also associated here. If the housing industry gets affected seriously, there will have a serious impact on its linkage industries, and the dismal picture will have a negative impact on the economy in the long run.