Housing gets remittance boost
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THURSDAY, JUNE 30, 2022
Housing gets remittance boost

Real Estate

Rezaul Karim
24 February, 2022, 01:00 pm
Last modified: 24 February, 2022, 04:29 pm

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Housing gets remittance boost

About 20% of inward remittances in FY21 was invested in the housing sector

Rezaul Karim
24 February, 2022, 01:00 pm
Last modified: 24 February, 2022, 04:29 pm
Infographic: TBS
Infographic: TBS

Ziaul Hasan of Munshiganj has been selling sea fish at a wholesale market in Riyadh, the capital of Saudi Arabia, for the past 20 years. He has earned "good money" in the two decades before his business went down dramatically in 2020 when Covid-19 hit the world.

"Fish supply was disrupted and sales dropped by almost 80%, which led me to shut the business temporarily," he said.

"Almost every year before 2020 I purchased arable land in my locality. So, when my business was closed, I thought of investing money in a profitable sector and opted for purchasing plots and flats," said Ziaul.

At the beginning of 2021, he bought three plots in the Apollo Lake City in Keraniganj for nearly Tk3 crore of his hard-earned money from Saudi Arabia. He spent another Tk80 lakh to purchase a 1,100 square-feet flat at the Shanti Villa project of Tamanna Properties in the capital's East Malibagh area.

Ershadul Alam, marketing officer of Apollo Lake City, said in 2020-21 his company sold 250 plots and 40% of them were purchased by the expatriates.

A Tamanna Properties official also said during the same time they sold some 50 flats and expats bought 19 of those.

According to the annual report of the Bangladesh Bank, inward remittance in the fiscal 2020-21 was nearly Tk2,10,610 crore, the highest ever remittance inflow for the country.

Investment figures

Housing sector stakeholders say about 20% of the inward remittances was invested in the housing sector in FY21.

According to a recent study by the Bangladesh Institute of Planners (BIP), this amounts to nearly Tk40,000 crore, which is the highest remittance investment in real estate. In 2019-20 and 2018-19, the amounts were Tk22,000 crore and Tk20,000 crore.

Adil Muhammad Khan, former general secretary of the BIP, told The Business Standard that the organisation estimated the figures from information collected from the National Board of Revenue, various housing companies and related research.

"Accurate data on sector-wise investment from remittance money is not available," he added.

REHAB estimates actual figure to be higher

Alamgir Shamsul Alamin, president of the Real Estate and Housing Association of Bangladesh (REHAB), told The Business Standard that the data in the BIP study is correct.

"In fact, I think the actual figure may be even higher," he said.

"Since 2015, yearly investment in the housing sector from remittance rose 1 lakh crore, which shot up to 1.5 lakh crore last year – essentially boosting the sector," added the REHAB president.

He identified the investment of expatriates as one of the main reasons behind the sudden increase of investment in the housing sector.

Alamgir Shamsul Alamin said that the expatriates bought luxury apartments worth a total of around Tk8,000 crore in FY21 and rest of the money was invested to buy flats and land.

Shahadat Hossain, chairman of James Development and former director of REHAB, said expatriates bought flats and apartments worth around Tk1,000 crore last year and the year before in their various projects – almost three times more than previous years.

Reasons behind remittance investment boost

Policy Research Institute of Bangladesh (PRI) Executive Director Economist Dr Ahsan H Mansur told The Business Standard that the real estate sector presented most investment opportunities during the pandemic because investing in business prospects at this time was risky.

"Besides, investing in real estate is considered much safer. If expatriates make their purchase from credible developers, they can expect the price of a flat or plot to jump twice or close in 10 years," he remarked.

Iqbal Habib, an urban planner and architect, said that the investment procedure in the housing sector is very simple.

"Most expatriates have bought ready flats or ready plots. After signing the purchase agreement, all they need to do is complete the registration. There is less hassle in investing in the sector and naturally the expatriates have invested the most in the sector," Habib said.

Investment locations

According to REHAB sources, about 60% of the housing companies in the country are based in Dhaka and neighbouring areas of Narayanganj, Munshiganj, Narsingdi, Gazipur and Savar. The remaining 40% are located around the rest of the country. The ratio of investment is also the same.

Naimul Hassan, a director of REHAB, said that after the capital, expatriates made most of their investments in Chattogram and Sylhet.

According to Sylhet real estate businesspeople, about 80% of new investments in the housing sector in the greater Sylhet area are made by expatriates.

Citing data from the Directorate of Registration, Naimul said old-flats worth Tk8,023 crore were sold across the country last year and expatriates bought half of those.

'Black money' whitened through real estate investment

NBR Chairman Abu Hena Md Rahmatul Muneem said, "Most of the black money whitened in the last financial year was done through investment in the housing sector."

He said the government received a significant amount of revenue from remittances that financial year – along with a huge amount of revenue from registration of lands and flats by expatriates.

ABM Amin Ullah Noori, chairman of the Rajdhani Unnayan Kartripakkha (Rajuk), told The Business Standard that investment in the country's housing sector is now quite safe due to various initiatives taken by government stakeholders.

"Especially in the capital, Rajuk runs initiatives to make the housing sector people friendly and safe. Expatriates are keen to invest in the housing sector in these areas as there are a lot of civic amenities in the capital and surrounding areas," he added.

Bangladesh / Economy / Top News / Industry

Housing / Bangladesh / remittance

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