Housing sector begins to overheat

Powered up by the rebounding of economy and pent-up housing demand, the prices of apartments continue to rise and are likely to be more so in the days to come.

The price spiral of construction materials has already begun to hit the construction sector that will ultimately shoot up the home unit prices.

According to the sector people, the flat price under any new real estate project is bound to go up since the price of building materials – rod, cement and the like – is going through the roof.

“We call upon the government to take necessary steps to rein in the price hike, which will be a win-win for both businesses and customers,” they said.

Talking to The Business Post, Md Moniruzzaman Shah, Sales and Marketing Executive of Concord, a market leader in real estate development, opined that the apartment prices remained stable over the last one year during lockdown caused by the pandemic.

“The demand for apartment came back after the Covid-19 situation turned normal, so did its price by Tk 1000-Tk 2000 per square foot based on the areas,” explained Mr Shah.

“Generally, we sell a variety of flats like simplex, duplex and condominium, and their prices count on areas, design and brand value.”

Concord flat is sold at Tk 15,000-Tk 19,000 per square foot (sqft) in Dhanmondi area. Besides, particular flats sell for Tk 4000-Tk 5,500 per sqft in other areas either.

The real estate company has so far handed over 1200 buildings in the capital since its inception.

Sheltech Group Managing Director Tanvir Ahmed posited that the exorbitant price of rod has made a big impact on the construction business.

“Not only have the rod prices gone high, the cement prices have also followed suit by 15-18 per cent in recent months. So, the upcoming projects will be costly as the whole supply chain is affected in the wake of inflation,” argued Tanvir. 

According to information provided by bproperty based on data available on the organisation's platform, some 13 per cent price per sqft went up in Banasree area for under-construction flats in September-October compared to that in July-August this year while 10.4 per cent price hike was noticed in Mirpur and 2.4 per cent in Bashundhara Residential Area.

The company’s Head of Marketing and Public Relations Mahzabin Chowdhury said the impact of construction material price hike is already being felt in the real estate sector.

She said ready apartments can be an alternative option for buyers since those are independent of recent price changes.  

"There are plenty of ready flats across Dhaka that can be found on bproperty. Those should be well within the budget of buyers," she added.

Managing Director of Sopnerbari Properties Ltd Najmul Islam, however, made a different observation.

He held that demand is the key to determining the prices of flats. There are a good number of realtors in the country. So, who will build better apartments at comparatively reasonable prices will be able to draw customers.

“The prices of land doubled in Purbachal and Mawa areas in the last three years, but not so when it comes to apartment prices, which shot up to some extent recently following a rising demand,” Najmul gave his version.

He observed that there are many areas in Dhaka where flats are available but are hardly any customers, and vice versa.

The flats at Banasree, Aftabnagar, Basundhara, Uttara, Mirpur are high in demand while those in old Dhaka hardly get sold.

Businessman Nojibullah said he has recently purchased a 1,300-sqft ready flat with three beds and two baths at Tk 78,00,000 in Khilgaon area.

Price hike of construction materials

According to the data from the state-run Trading Corporation of Bangladesh, the retail price of 60-grade MS (mild-steel) rod rose by 33.92 per cent while the price of 40-grade by 40.68 per cent.

The 60-grade MS rod sells at Tk 79600 to Tk 81,100 and 40-grade at Tk 76500 – Tk 74500.

Traders said the cost of cement has spiked by around Tk 50 per bag this year over the previous year. A 50kg sack sells at between Tk 430 and Tk 480 in retail markets.

Similarly, the price of imported stones went up due to increased carrying cost that has gone up by around 25-30 per cent in a year. Per ton stone sells at between Tk 2800 and Tk 4000.

Real Estate and Housing Association of Bangladesh (REHAB) president Alamgir Shamsul Alamin (Kajal) said now it is very difficult for developers to align the prices of apartments with the spike in construction cost.

“The government should take necessary initiatives to control the price hike since it will leave a big impact on the sector,” he added.

The housing sector has a total of 269 linkage industries, including cement, iron, tiles, stone, brick, sand and electric cable, and around 50 lakh people are engaged in it. Some 1200 developers are listed with REHAB.