Pandemic brews real trouble for Cumilla real estate

The ongoing coronavirus pandemic has severely affected the real estate business in Cumilla city, with the construction of scores of buildings in the city coming to a stop and many newly constructed ones not being used due to lack of tenants or buyers.

There are at least 1,000 such under-construction and newly constructed buildings, worth Tk5,000 crore, in the city, according to sources.

Among the buildings, about 100 are shopping malls while the rest are residential and other buildings. Although the construction work of some buildings has been completed, the premises are not being used owing to a scarcity of tenants.

These facts have emerged in the light of conversations with officials of Cumilla City Corporation, local shop owners association, building owners and those involved in the housing business.

Faruk Ahmed, general secretary of the Cumilla unit of the Real Estate Housing Association of Bangladesh, said, "We developers are in a lot of crisis. Even after paying 90% of the money to build a house, owners are taking back the money because of financial problems. We are having a hard time returning the money. Moreover, there are no customers to buy the already constructed apartments. Many buildings are vacant even after construction has been completed due to a lack of tenants and buyers. In Cumilla, there are at least 1,000 such buildings, worth Tk5,000 crore, where construction has been stopped, or those are not being used after construction."

Sources have said that rapid urbanisation has been taking place in Cumilla since the establishment of Cumilla City Corporation on 10 July 2011. The number of educational institutions and hospitals has been increasing by leaps and bounds. Dozens of shopping malls have been constructed. People from the six districts of greater Cumilla and greater Noakhali began living in areas covered by Cumilla City Corporation and its adjoining areas, resulting in a rapidly increasing number of residential buildings.

According to sources, most people who have built homes and rented houses in Cumilla are expatriate families, teachers and small and medium entrepreneurs. Since the onset of the ongoing pandemic in the country one and a half years ago, despite affordability, many families have migrated to the villages to save on money.

Many middle income people who were trying to construct buildings after buying small plots of land with their little capital have lost their surplus income, leading to stagnation in building construction. The construction of buildings by more than one person has also stopped due to differences in their income.

Talking to several under-construction building owners, this correspondent learnt that while constructing the building, they used to rent and sell flats, and gradually completed the work of other flats with advance rent and sale of flats. Now many of them have stopped construction as they do not have enough money due to the lack of tenants and buyers. On the other hand, many, despite having the financial means, have also stopped construction halfway out of fear that they will not get tenants.

According to the Cumilla Shop Owners' Association, shops and shopping malls in Cumilla, as in the rest of the country, were closed for more than nine months due to the corona pandemic. The construction of many shopping malls began before the outbreak of the pandemic, but could not be completed.

Mamun Ahmed, a resident of West Bagichagaon area of Cumilla city, said, "I have three houses in Bagichagaon. Two houses are a few years old. There are some tenants in those two, but not a single flat in the new building has been rented."

He said, "Most of the tenants of my houses used to work in pharmaceutical companies. Due to the reduction in salaries, they sent their families to the villages and moved to shared apartments."

Salauddin, a resident of Ashrafpur area, said, "I own a shop at Hilton Tower in Cumilla. Even after trying for the last six months, I have failed to get a tenant."

Atiq Ullah Khokon, president of Real Estate Housing Association, Cumilla, and general secretary of Cumilla Shop Owners Association, said, "The extent of the damage we are suffering from cannot be expressed in words. It has become difficult to run the old shopping malls properly. In this situation, new shopping malls cannot be launched suddenly without strong capital. We strongly demand that the government give loans on easy terms."

Abdul Karim, a tax collection officer at Cumilla City Corporation, said, "If the construction of the buildings had been completed and people started using the buildings, then we could collect holding tax. Revenue is not being collected from these buildings as they are not being used, or work has not been completed at all."