Real estate sector: Thriving against all odds since its inception
The real estate sector of Bangladesh started its journey in the 1970s, with the concept of developing apartments, and has been climbing up the ladder ever since. At present, developing apartments has stretched to model cities, shopping malls, and commercial set-ups making the sector one of the key drivers of economic growth. The sector has managed to make a sizable impact in employment generation and directly adds on average nearly BDT 5.0 million to government revenue per annum.
The spiraling growth in population has made Dhaka and Chittagong into two of the most populous metropolitan cities in Bangladesh, for which they attract most of the projects. Bangladesh Bank estimates the housing finance demand for the fiscal year 2020-21 to rise compared to that of the previous year, with private banks holding the lions share in outstanding housing loans as of end of June 2020. The nationwide lockdown last year, acted as an obstacle to the growth of this sector, from which it is gradually recovering because of the enormous support from the government. Moreover, high liquidity which drove the lower interest rate in the banking sector also played a vital role here.
Many doors have opened for the booming real estate sector, for example, the development of new and spacious areas outside of Dhaka which calls for urban infrastructures in order to develop.The construction of new roads and railways will provide them with an opportunity to consider regions apart from the mainstream ones. The increasing rate of lower-middle-class people has led to a rise in demand for their homes. In addition to that as mentioned above support from the government, banks and NBFIs are also contributing immensely.
Unfortunately, the pandemic is not the only hurdle faced by the real estate. Mismanagement caused by few developers sometimes result in customer dissatisfaction. Minimal coordination between development authorities and disorganized urban planning exacerbates the situation. As a result, joint efforts from the government and industry players
are required to cater to the needs of the people. In addition, real estate should start stressing over lowcost affordable housing in order to accommodate the influx of lower-middle-income families.
Bonnishikha Chowdhury
Executive Officer
IDLC Finance Limited