Sky-high apartment prices don't deter the rich

The saying "there is no place like home" may not be such a heart-warming thought these days.

It is fairly clear now that with a squeeze on finances caused first by Covid-19 and now by rising inflation under the Russia-Ukraine war effects, consumers are being cautious about making the biggest investment of their lives – buying a home.

Moreover, price tags of apartments have shot up to the stratosphere because of abnormal price rises of all construction materials making it even more difficult for limited-income people to purchase apartments.

Sales of regular apartments have now fallen to the lowest lowest compared to the last few years.

But sales of luxury apartments are immune to the financial shocks as the well-off's rush for their dream homes continues.

Around 12,000 unsold apartments

According to the Real Estate and Housing Association of Bangladesh (REHAB), at the moment, around 12,000 ready apartments have remained unsold in Dhaka alone. There are 20,000 more apartments unsold in Chattogram and other parts of the country.  Some 85% of the unsold ones are ordinary apartments.

The inventory of such apartments is worth around Tk1,50,000 crore, the REHAB says.

Some Tk16,000 crore worth of apartments were sold in January-September this year, half the amount from last year. Of the amount, Tk6,000 crore went to luxury apartments in the form of sales contracts, according to the Directorate of Registration. 

Sheikh Md Anwarul Haque, assistant inspector general of Directorate of Registration. Sources of the Bangladesh Institute of Planners (BIP) told The Business Standard that this year luxury home sales will be equal to last year's.

Source: Price chart of a real estate company sent to a client

Sales brisk for pricy apartments

According to Bangladesh Institute of Planners, around Tk12,000 crore was invested in luxury apartments last year.

Such apartments are designed to make living experience in luxury homes extraordinary. Such homes come with features such as playgrounds, greenery, swimming pools, gyms, manicured lawns and high tech security systems. 

These apartments come in sizes ranging between 2,000 and 5,000 square feet, while the size of a duplex apartment is 7,440 sq-ft. 

Luxury apartments, built in upscale areas of Dhaka city, such as Gulshan, Banani, Dhanmondi, Baridhara, and Uttara, now cost between Tk5 crore and Tk35 crore based on quality and square footage. 

Prices of such homes rose 30-50% owing to soaring costs of construction, according to real estate companies.

Yet, sales of luxury homes have not been dented as money does not appear to be an issue to the buyers – mainly rich businessmen, expatriates, politicians and bureaucrats. 

Seeking anonymity, a real estate company official told TBS that they have sold 200 out of its 400 ready apartments and half of them were luxury apartments. 

But sales of normal homes were very low, he said. 

Amalendu Biswas, general Manager and head of Sales at Rangs Properties Limited, said they saw good sales of their luxury apartments in Gulshan, Banani, Mirpur and Uttara projects.

Few takers for regular apartments 

Khairul Alam Chouhan, managing director of Rimi Development, said they have 43 normal apartments unsold with buyers hardly showing any interest.

The company took on a project to construct four buildings containing 72 flats in the capital's Madhya Badda area in 2018 and the work was completed in June this year, he noted.

Shihab Ahmed, senior general manager and head of Sales & Customer Services at Shanta Holdings Ltd – a top real estate company in Bangladesh, told TBS that this year their sales are not as expected. 

"Our sales have slowed down. But we hope the situation will improve soon," he said.

REHAB President Alamgir Shamsul Alamin (Kajal), said real estate companies have submitted a list of ready apartments for sale in the capital to them. 

The apartments have now become a burden for them because buyers are few and far between, he noted, adding that slashing their prices have not impressed buyers either.

Abdul Qayyum Chowdhury, president of the REHAB, Chattogram region, said there are about 500 housing companies in Chattogram. Many of them are in trouble with about 4,500 ready flats.

Shafiul Alam Chowdhury Nadel, president of Sylhet Apartment and Real Estate Group, said expatriates invest the most in the housing sector in Sylhet. But that is not happening because of the global economic downturn. 

As a result, there are about 3,000 ready apartments waiting for sale in Sylhet. However, sales of luxury apartments are going very well, he added.

"Real Estate heading for stagflation"

Economist Dr Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh, told TBS that the real estate sector is heading for stagflation all over the world because of the impacts of Covid-19 and the Russia-Ukraine war. 

Limited-income people in Bangladesh too are grappling with soaring prices of everyday products. So they now worry more about food than housing, he noted. 

But rich people have not faced any such problems and continued buying luxury apartments, he added.