Real estate sector has fared better than expected amid pandemic: DBH MD

Like other businesses, the real estate sector took a battering due to the general holidays announced by the government to stem the spread of the Covid-19 infections last year.

Property sellers, however, have recovered quite well from the pandemic induced business losses, thanks to increased sales from September last year to June this year.

Stakeholders think people bought more flats or apartments in the period mainly because of availing low-interest loans.

While speaking with The Business Standard recently, Nasimul Baten, managing director of Delta Brac Housing Finance Corporation Ltd (DBH), the only private sector lender in the real estate sector, said businesspeople are very happy with the current state of the real estate sector. This is because in the last 10 months, the companies fared better than they had expected, he added.

"Last year, everything was closed for two months amid the general holiday, which has not been the case this year. During this time, sales of new flats as well as old flats have increased," he said.

But the coronavirus pandemic has reduced people's income. Many have refrained from investing their savings.

Asked how the sale of houses or flats has increased in the meantime, he said people have not given up on wanting a "home of their own" even amid the pandemic.

"The interest rate on bank loans has come down to 9% as per the government's directive. Earlier, the interest rate was 12% to 14%. Moreover, prices of flats and plots have also remained stable. That is why people have become interested in staying in their own homes instead of renting."

The DBH managing director also said that their company provides loans only in the housing sector. In the first six months of this year, the loan disbursement of the company has increased by 141% compared to a year ago, he added.

The profit of DBH grew 81% in the January-June period of this year as compared to the same period last year.

The company's managing director said, "Our profits have increased due to higher loan disbursement as well as lower cost of funds and lower operating costs."

Nonetheless, construction costs have risen as prices of rods and cement have surged amid the pandemic. This has also affected the real estate business.

In this context, the DBH boss said so far the previously-built flats are being sold. However, the new buildings that are being built will be affected by the construction cost hike, he added.

Flats are very costly in our country. Flats are not built especially considering the condition of the middle class. But, if they were included in the housing sector, the business of this sector would have multiplied.

In this regard, Nasimul Baten said in collaboration with the government, real estate companies in India have developed housing projects in different slabs considering the financial capacity of their customers.

"In our country, the government has taken the Purbachal project where the land is being sold as 3 to 5-katha plots. Customers are buying land at a lower price, but are selling it to real estate companies at higher prices without building a house themselves. Those who are getting plots are basically acting as intermediaries. If the housing system is developed in this way, neither party will be able to gain much."

The Purbachal project is very important, he mentioned, adding this is because a large supply of land in the housing sector can be obtained from there.

"However, all the parties would have benefited, if the project could have been built on a larger scale by contracting with real estate companies. Without big projects, it becomes difficult to supply flats in different price slabs. And it is not possible to build low-cost flats in plot-based projects. It is important for the Rajdhani Unnayon Katripakkha (Rajuk) to pay attention to this matter," said Nasimul Baten.

There have been some big projects in Dhaka, including the Japan Garden City and the Concord Lake City, but they are much smaller in number. The DBH MD expressed hope that the housing business will improve if these types of projects are taken on a larger scale.

He further added that Rajuk has taken up such a project in Uttara where more than 12,000 flats have been built for sale at low prices. But most of the flats remain unsold.

"There, they (Rajuk) should have done contract work with private companies. If the regulatory body itself becomes a trader, the sector is harmed."

Speaking about the future of the real estate sector in the country, Nasimul Baten said, "We have been financing the housing sector for 25 years. There is still much room for development of the housing sector.

"Roads in the vicinity of Dhaka such as Keraniganj and Bochhila have been improved. Many houses are being built and sold illegally there. But, real estate companies are not able to invest there as the areas are not in Rajuk's plan. Therefore, the cooperation of the government is necessary to restore discipline in the housing sector."