Strong financial mechanism needed for real estate sector recovery

November 30, 2014

Business leaders, government policy makers and experts on Saturday said that there should be a strong financial mechanism including bank loans with low interest rate and secondary market system for the real estate sector to make the business vibrant and ensure affordable housing for all.
At a seminar on housing for public welfare organised by Dhaka Chamber of Commerce and Industry at its auditorium in the capital, they said that a strong housing finance could work as a ‘big push’ for the sector and that would ultimately increase national savings, investment, employment and contribution to GDP through development of linkage industries.
They also said that the government should also take initiatives to give low-cost housing loans to low- and middle-income groups of the society.
Entrepreneurs in the sector will also have to build up a positive image as many people believe real estate and housing businesses grab land, degrade environment and fail to hand over flats on time, they said.
Housing and public works minister Mosharraf Hossain said that banks should come forward with loans with low interest rate so that low- and middle-income groups of the society could purchase apartments in cities and that would also give a boost to the real estate sector as realtors could sell the apartments which remained unsold.
There are many apartments remained unsold in the sector, he said.
In many countries, banks provide housing loans at less than 3 per cent interest rate but in Bangladesh the rate is too high, he said.
‘Rich and industrialists usually embezzle bank money while low- and middle-income people never do that. So banks can give them loans,’ he said.
He said that the National Housing Authority had taken some projects to offer housing to low-income group of people while Rajdhani Unnayan Kartripakkha remained busy with earning money only through selling plots and flats.
Real Estate and Housing Association of Bangladesh acting president Liakat Ali Bhuiyan demanded that Bangladesh Bank should reintroduce the housing loans with single digit interest rate which was postponed in 2009 so that the sector could retrieve.
REHAB treasurer Sardar Amin claimed that there were 21,000 ready flats remained unsold as banks were not giving housing loans to buyers.
Without single digit interest rate in housing loans the existing stagnation in the real estate sector will not go, he said.
ATM Nurul Amin, a professor of environment and management department at North South University, said that a strong financial mechanism including mortgage financing and low interest rate credit for buyers could encourage people to go for more savings and investment.
The government should also reduce registration fees, stamp duty and other taxes on sales of used apartments to promote the secondary market of the sector as most of the people have no capacity to buy new flats, he said.
DCCI president Muhammad Shahjahan, RAJUK chairman GM Jainul Abedin Bhuiyan, BB deputy governor Abul Quasem, DCCI senior vice-president Osama Taser and Dhaka Samity secretary general Abu Motaleb spoke, among others, at the seminar.

-With New Age input

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