'Facilities of investing black money will ease housing sector crisis'

The country's housing sector is in dire straits due to soaring prices of all construction materials, including rods, cement, bricks, tiles, aluminium and sanitary items. The prices of flats are now going beyond the reach of average apartment-seekers, said Md Abdul Kauiam Chowdhury, president of REHAB's Chattogram branch and vice-president of central REHAB, while talking to The Business Standard's Omar Faruque about the current state of and challenges to this sector.

In the midst of a major dip in housing sales, the Real Estate and Housing Association of Bangladesh (REHAB) held a four-day "REHAB Chattogram Fair 2023" at the Radisson Blu Chattogram Bay View hotel on 23-26 February.

What is the current situation of the housing sector?

The housing sector is going through tough times right now. For the past two years, the prices of construction materials have skyrocketed, not to mention rod prices surging to an all-time high. As the value of the dollar increased, the prices of import-dependent materials soared.

Two years ago, steel rods were available at Tk65-70,000 per tonne. Now they cost around Tk90-95,000. A sack of cement now costs Tk530-540, which was available at Tk420-430 earlier. Building costs have increased by an average of 30-40% over the last two years due to the price increase of all materials. As a result, the cost of flat construction has increased by Tk500-700 per square foot compared to earlier.

If the cost increases by Tk500 rupees per square foot, then customers will have to pay Tk1,000 because 50% of the flats in a building are handed to the owner in exchange for his land.

Two years ago, in Chattogram city, a medium-quality flat was available at Tk4-6,000 per square foot, which now stands at Tk6,000-8,000. Currently, good quality flats are selling at Tk10-14,000 per sq ft in upscale areas.

The price hike of construction materials drove up the price of flats. Besides, the cost of living has also increased. Does the ongoing economic crisis have an impact on investment in flats?

Middle-class consumers are now struggling to make ends meet due to the economic decline, which has slowed down the market for small and medium flats. Those builders who have undertaken projects of small and medium flats have faced problems. The sale of relatively low-priced flats has dropped.

Did the price of flats increase more than the rate at which the price of construction products increased?

Housing traders have no hand in raising the prices of flats. Costly construction materials drove up the prices. Actually, traders fell into a quandary due to rising prices. For example, many builders accepted advance booking money from buyers two years ago, but later they could not finish the projects, buying materials at an increased price. That is why REHAB decided to increase the prices of flats which are being constructed under ongoing projects.

A buzz about building the "one city, two towns" around the Karnaphuli Tunnel is going around Chattogram. What is the plan of REHAB or housing traders in this regard?

The amount of land available to build housing in the port city is decreasing. Planned housing needs to be developed in the suburbs now to accommodate large numbers of people. The Karnaphuli Tunnel will open new doors for enhanced communication. Hence, there will be a possibility of building a residential area on the other side of the River Karnaphuli.

Government agencies should come forward now so that no unplanned housing is undertaken. The government can allot land to REHAB for developing satellite towns under the "one city, two towns" model. If the price of land is low, the cost of flats will also be low. Then not only government agencies, but also buyers will get the opportunity to buy flats from REHAB at low cost.

What are the thoughts of housing sector traders about the ongoing economic crisis and the upcoming national election?

There is an opportunity to invest undisclosed or black money in the housing sector and such investment should be allowed without question. Sources of finance to buy houses or flats in Canada, the UAE, and Malaysia are not questioned, which is why people are buying flats there.

In order to prevent money laundering abroad, scope should be given to people for investing black money without any conditions because thousands of crores of black money are being generated every year just by trading in land and flats. For example, the selling price of a flat is Tk2 crore, but the price mentioned in the registration paper is Tk50-60 lakh. This undisclosed amount would have stayed in the country if the government had allowed reinvestment in the country with minimal taxation and without question.

In addition, if the registration fee is charged at a minimum rate while selling a flat for the second time, then investment in this sector will increase more.