Since its slump in 2011, the real estate market had been passing through difficult times until 2016 when it started to gradually pick up, thanks to the economy's growing strength, a surge in the pace of development work and an expansion in the size of the middle class. Now, with lowering of the interest on bank lending, the formal sector of the economy including the real estate is poised to take off.
The cumulative lending figures for the sector over the past six consecutive fiscal years (from FY 14 to FY 19) as revealed by the Bangladesh Bank also bear out the contention. Actually, aggregate lending increased by about 224 per cent in six years. Clearly, the figures are indicative of robustness of the demand for funds from both the real estate operators' and the apartment buyers' ends.
Following the years of aggressive practices by the property developers, which were largely to blame for the sector's image crisis and consequent crash, the real estate operators this time will be required to bring about necessary changes in their business approach, for example, making their business deals more transparent and gaining the potential clients' trust. With further innovations in digital marketing techniques, the realtors can now offer the customers multiple options to choose from online.
Admittedly, the growth of the real estate sector is a corollary of rapid urbanisation which triggers city-ward migration driving up demand for housing. That is more so for a land-poor country like ours with increasing concentration of people in the cities where nearly 40 per cent of the population live. So, the crucial role of the real estate sector in meeting the housing need of the ever-growing urban population cannot be overemphasised. Therefore, the return of the real estate business with renewed vigour is a welcome turn of events for the overall growth of the economy.
A vibrant real estate has its many positive sides. The multiplier effect it has on the economy would boost demand for construction materials which is apt to set off a spurt of activities in the related backward linkage industries like rerolling mills, cement factories, tiles, glass and aluminium works, to mention but a few. And, all such activities mean more jobs for the unemployed.
Hopefully, the property developers would take hold of the opportunity provided by the government by way of reducing the cost of fund as well as exemptions given to untaxed idle money to enter the formal economy. However, their challenge would be to set standards in terms of quality of their products and service, competitiveness and fairness in dealings with their clients. The delivery side apart, their exemplary track records in this respect will also go a long way in earning confidence of the banks that seem to be treading a cautious ground considering their focus on selective and secure lending.
The real challenge before the realtors would be to make the residential quarters affordable to the general public. The impediments coming in the way of reducing building cost of the apartments are, among other factors, scarcity as well as high price of land, the practice of joint-venture projects with landowners, rising cost of construction materials and weakness of Taka against US dollar resulting in escalation of import prices.
As an answer to the challenge, the government can think of creating zones surrounding the city centres where qualified realtors would build apartment complexes which common people can afford. This would also contribute to reducing population pressure on the large cities.