The government in its recent budget introduced a measure that would allow businessmen and firms to invest any 'undisclosed income' to purchase apartments. The realtors are however not very confident that this policy would have any positive impact on the real estate market. Real estate companies also feel that some of the contradictory provisions are discouraging people to take advantage of this policy.
The new budgetary measures became effective on 1 July, 2013, but so far the real estate operators have not seen any impact of the said opportunity. Some real estate companies are yet confident that there will be some positive response regarding this policy in the upcoming months.
The managing director of Sheltech said that many reputed companies expected new customers to purchase flats and plots after the government announced to allow undisclosed income to flow into the real estate sector. The reality was somewhat different due to some legal complexities that discouraged potential investors, he added.
The root of the confusion is section 19BBBBB of Ordinance No XXXVI of 1984 of the Income Tax Ordinance. The section states – "(3) the provision of this section shall not apply where the source of such investment, made by the assesses for the purchase or construction of such residential building or apartment is (a) derived from any criminal activities under any other law for the time being in force or (b) not derived from any legitimate sources." This part of the provision is contradictory to the government's new policy and therefore has created confusion among the potential real estate buyers. The real estate market might not see any positive impact due to this provision, commented Mr. Seraj, Managing Director of Sheltech. Sheltech was able to sell around 15 flats during Ramadan in 2012. Unfortunately, the real estate company was not able to sell a single unit during the 2013 Ramadan.
Among other reasons for a slow real estate market was the recent political and social unrest and instability ahead of the parliamentary elections in December. While the Secretary General of Real Estate and Housing Association of Bangladesh (REHAB) pointed out liquidity crisis to be still a major concern for the sector. Majority of the clients are capable of paying 30 percent of the apartment's purchase price, and have to depend on financial institutions and banks for the remaining amount. He further added that the unresponsive banking policy and high rate of interest were also creating obstacles for buyers to take loans, and he suggested these issues to be looked upon in order to ensure the growth of the real estate sector.
Former President of REHAB, Mr. Probal, also the Managing Director of Building for Future Ltd. said that it was too early to comment of the impact of the policy. He, however, remains optimistic about the positive impact of the policy and said that it would take some time before people decide to take up the advantage of the policy approved by the government.
The new budgetary measures became effective on 1 July, 2013, but so far the real estate operators have not seen any impact of the said opportunity. Some real estate companies are yet confident that there will be some positive response regarding this policy in the upcoming months.
The managing director of Sheltech said that many reputed companies expected new customers to purchase flats and plots after the government announced to allow undisclosed income to flow into the real estate sector. The reality was somewhat different due to some legal complexities that discouraged potential investors, he added.
The root of the confusion is section 19BBBBB of Ordinance No XXXVI of 1984 of the Income Tax Ordinance. The section states – "(3) the provision of this section shall not apply where the source of such investment, made by the assesses for the purchase or construction of such residential building or apartment is (a) derived from any criminal activities under any other law for the time being in force or (b) not derived from any legitimate sources." This part of the provision is contradictory to the government's new policy and therefore has created confusion among the potential real estate buyers. The real estate market might not see any positive impact due to this provision, commented Mr. Seraj, Managing Director of Sheltech. Sheltech was able to sell around 15 flats during Ramadan in 2012. Unfortunately, the real estate company was not able to sell a single unit during the 2013 Ramadan.
Among other reasons for a slow real estate market was the recent political and social unrest and instability ahead of the parliamentary elections in December. While the Secretary General of Real Estate and Housing Association of Bangladesh (REHAB) pointed out liquidity crisis to be still a major concern for the sector. Majority of the clients are capable of paying 30 percent of the apartment's purchase price, and have to depend on financial institutions and banks for the remaining amount. He further added that the unresponsive banking policy and high rate of interest were also creating obstacles for buyers to take loans, and he suggested these issues to be looked upon in order to ensure the growth of the real estate sector.
Former President of REHAB, Mr. Probal, also the Managing Director of Building for Future Ltd. said that it was too early to comment of the impact of the policy. He, however, remains optimistic about the positive impact of the policy and said that it would take some time before people decide to take up the advantage of the policy approved by the government.