What a difference a few years make: In 2010, Bangladesh was considered a bright jewel within the nation’s economic crown thanks to rebounding markets for home sales and rental apartments. Unfortunately, the resources that bolster the real estate market—specifically gas and electricity connections that turn empty shells into livable space for residents—continues to present challenges that impact the nation’s realtors as seriously as these energy sources impact people desperate to find new residences. Will the situation improve? Perhaps.
The Situation. At the heart of the energy crisis related to property in Bangladesh is the government’s refusal to allow electric and gas connections to be installed in new residences. This trend began in 2011 and from that point forward, although sales of flats and land were up by 20-percent compared to 2009 (realtors undertook 20,000 apartment transactions in 2010), future construction was doomed by unrelenting problems associated with providing power sources. MA Baten Khanof of BDDL Properties Ltd. articulated collective fears of the Bangladesh real estate industry when he warned that if gas and electricity issues aren’t remedied, construction can’t continue.
Are Khanof’s words prophetic? Apparently. By 2013, property and flat sales dropped a dramatic 60-percent—but not exclusively as the result of energy issues. By 2013, political unrest and sky-high lending rates assaulted the market and contributed to its decline, according to Md Sydul Islam Badal of the Real Estate and Housing Association of Bangladesh. Badal told The Daily Star that apartment and home shoppers have simply stopped booking appointments. This decline has had a domino effect: Developers typically reacted by pulling out of deals encompassing a projected 75-percent of new projects. Essentially, the construction of homes and houses halted.
How bad is the situation? Toufiq M. Seraj, managing director of one of the nation’s leading housing companies, Sheltech (Pvt) Limited, proclaimed 2013 the worst year for those in the real estate profession as well as the worst year for consumers in need of housing. Seraj typically juggles 40 projects while adding another 12 to 15 annually, but he added only three projects to his schedule in 2013. Sales are down by 30-percent, a number that brought the number of unsold apartments to 22,572 at one point in time. Seraj is not alone. His colleagues are posting the same statistics and dealing with the same realities.
Will the government help? Real estate industry leader Nasrul Hamid formed a coalition of the nation’s real estate companies. Participants collaborated on a proposal brought before the finance minister that requested the “immediate formation of a Tk 3,000 crore fund to extend long-term credit to low and middle-income buyers at a single digit rate of interest.” Additionally, developers sought the power to reschedule bank loan payoffs that include a one-year grace period, during which time down payments would be suspended. Was the government receptive to this request? Yes and no. Finance Minister AMA Muhith took the proposal to the central bank. The 3,000 crore fund didn’t survive and other requests remain in limbo. The recent introduction of a ‘one-stop service’ by the government reducing bureaucratic paperwork for realtors is seen as a major step forward.
Do other factors impact this stalemate? A history of real estate in Bangladesh shows typical over-urbanization patterns resulting from rapid growth, a finite amount of land on which to establish communities and bad urban and land use planning and policies. Corruption has exacerbated the situation to the point where the government has almost forgotten its constitutionally mandated promise (Articles 15(a)) that states that it’s the fundamental responsibility of Bangladesh government to improve the standard of living of its citizens, not actively work to thwart critical growth in an area as basic as housing.
Is there hope? Women may be the key to extracting the residential housing market from its mire and righting numbers as the 21st century progresses. According to a World Property Channel article in September 2014, women aren’t just driving real estate shopping trends, they’re pushing for ownership rights. The Economist notes that inroads made by women surpass those of India, and while land remains predominantly in men’s hands, women are beginning to claim inheritances rather than handing them over to male family members in larger numbers, which could shift the balance of real estate power down the road as women seek a more equitable presence.
The stalemate will end eventually. According to a 2013 article in The Daily Financial Express, realtors were in possession of between 20,000 and 22,000 flats that couldn’t be leased due to a lack of power. Construction stopped on another 8,000 flats. Should the Bangladesh Bank acquiesce on interest rates and should burgeoning movement to solar panels and natural energy resources grow, the market can be righted, but the government must formulate long-term policies meeting population grown demands, particularly in Dhaka and Rajshahi where the real estate crisis is particularly acute.
Centralizing the market. Gas and electric access plus burdens placed on real estate professionals drone on, but one thing is clear: The Bangladesh real estate market’s recovery will only be as strong as efforts made to clean it up. Intermediaries must step in to act as catalysts so consumers seeking land, rental properties and homes in Bangladesh can be accommodated. Services like Bikroy.com are critical to this process because they form a hub from which searches can begin. Men and women undertaking job, social and family responsibilities seek help with their home searches and classified ads placed on Bikroy.com provide ongoing resources that encapsulate information and allow shoppers to eliminate properties that aren’t in their geographic areas or price ranges. Bikroy allows buyers and sellers to meet without the interference of intermediaries and there is no charge to post or respond to advertisements. Is this the future of the Bangladesh real estate market? At the moment, it’s a working example of how to meet consumer needs who require housing more than empty promises.