New flats likely to be 10% more expensive from May

The price of newly built apartments will likely increase in the capital by more than 10 per cent starting May as increased rod, cement, brick, and other material prices are forcing realtors to pass on the additional construction costs to customers, say industry insiders.

As the global Covid pandemic situation improves, the pent-up demand and supply disruptions have been driving up building raw material prices.

The price escalated further as the US and Europe placed sanctions on Russian exports following Russia’s invasion of Ukraine at the end of February.

Rods, cement, and other construction raw materials have lately become costlier in Bangladesh, with the worsening of the global supply chain disruption.

Speaking to The Business Post, some realtors said they were reluctant to get involved in big projects due to the steep rise in construction material prices, while, several of them have already been forced to raise flat prices by around Tk100-500 per square foot (sft).

According to an assessment of the Real Estate & Housing Association of Bangladesh (REHAB), the construction cost has risen by Tk 381 per sft.

Shariful Islam Tareq, assistant general manager (marketing) at Rupayan Group, said new apartment prices may rise by 10-20 per cent starting next month due to the rising cost of construction raw materials in the country. “Small businesses are feeling the brunt of the building price surge.”

Md Farhaduzzaman, the managing director (marketing) of Eastern Housing Ltd, said that due to the increase in construction material prices, the company is no longer undertaking big projects, fearing that their projects might not be commercially viable.

Their data also showed that the price of steel increased to Tk90,000 per tonne this year, up from Tk70,000 the previous year, and the price of a 50-kg cement bag increased to Tk550 in the same period, up from Tk425.

Labour cost increased Tk220 per sft in March which was Tk160 in the last year. Besides, the cost of bricks increased Tk20 per sft while observing the cost of 2000 sft flats cost.

Furthermore, while observing the cost of 2,000 sft flats in March, REHAB found that the cost of bricks increased by Tk20 per sft and labour costs jumped to Tk220 per sft, up from Tk160 the previous year.

Contacted, REHAB President Alamgir Shamsul Alamin said the recent price hike of construction materials has once again cast a shadow over the housing industry.

“We fear that the price of flats would soon go out of purchasing capacity of the country’s middle-income people. So, we request the government to permit undisclosed money to be invested in the real estate sector in the upcoming national budget for 2022-23,” Shamsul added.

REHAB president also urged the government to form a special fund for them and run secondary market management in the sector.

The real estate industry employs about four million people in the country, who are now at risk of losing their jobs since construction work is slow due to the current situation, added the official.