Financial institutions should make it easier and cheaper for apartment buyers to get loans in order to kick-start the struggling real estate sector, says REHAB President Mukarram Husain Khan.
In the last 10 months apartment sales have fallen by around 50 percent according to the Real Estate and Housing Association of Bangladesh (REHAB) and the difficulty in securing financing is one of the reasons behind this slump, said Khan.
“Every income generating person wants to have a flat or apartment of his/her own. But, in many cases the prospective buyers face financing problem due to the shortage of enough financial institutions who are willing to lend money,” he said.
Khan said he welcomed the central bank’s housing re-financing scheme and House Building Finance Corporation’s new home scheme that have been launched recently, but added there was still a need to arrange financing facilities with lower interest rates.
Under the Bangladesh Bank’s scheme, an amount of Tk 300 crore has been allocated for the housing refinancing scheme, of which Tk 100 crore kept aside for disbursement during the current fiscal year. The rest amount will be disbursed in the next two financial years.
Under the loan facility of House Building Finance Corporation, an applicant can apply for receiving a maximum amount of Tk 40 lakh for 5 to 15 years at 12 percent simple interest.
However Khan said financing is only one of the problems to hit the industry that was burdened with high registration costs, soaring construction material prices and the ongoing anti-corruption drive that had undermined investor and business confidence.
Khan, who has been elected new president of REHAB this month, urged the government to reduce registration costs from existing 16 percent. He said this would not only increase the volume of apartment sales, but also increase the government’s revenue collection.
In the neigbouring countries, the registration costs range between 5 to 10 percent, he said.
To encourage the prospective clients he also suggested that there be better coordination between the different government agencies. “The government can open up a one stop cell through which the clients will get all the related services for buying a flat or apartment,”
Khan, who has spent 18 years in the business and is currently managing director of Capital Land Development Ltd, said the government should implement the Dhaka Metropolitan Development Plan and Detailed Area Plan immediately to speed the land development programme. “There should also be a nationalised urban policy for appropriate urbanisation,” he said.
Presently, activities of the real estate developers are mainly concentrated on Dhaka and Chittagong. But, they are willing to go to other divisional headquarters and also to the district level. “If the government provides incentives to us we can expand our activities across the country,” he said.
So far, Tk 3,000 crore has been invested in the real estate sector, which is yet to be declared as an industry by the government, he said, adding that every year Tk 300 crore are generated as revenue from this sector.
According to REHAB statistics, some 7,000 apartments are constructed every year. Some 20 lakh people are involved in the real estate sector either directly or indirectly.
The annual REHAB housing fair opens at the Hotel Sheraton in Dhaka tomorrow.
