Tri-party partnership needed for affordable housing

Shahriar Kamal, managing director of Concord Group, recently spoke to The Business Standard about company's success and its role in driving the growth of the real estate industry in Bangladesh

What is the current state of the country's real estate sector? 

A major component of the country's economy is real estate, as it contributes 8-9% to the GDP. And with the contribution of backward linkage industries, the sector adds about 12% to our GDP per year.

Our GDP growth has been above 5% for over three decades. Per capita income growth rate is also very fast. And in this country of 18 crore people, 65-70% are of working age. Due to the increase in people's incomes, a huge market has been created for homes in the country. But a World Bank study found that 80% of the city's population does not own a home. 

And due to climate migration, a large number of people will move to cities in the next 10 years. As a result, a demand boom can be expected for the real estate sector in the next decade. A huge untapped market is waiting for us if we can provide affordable housing. However, this sector is not progressing equally with the country's economy. The sector also remains neglected in terms of favourable government policies.

What kind of problems is the real estate sector facing? 

The first problem is that of rising construction costs. Construction costs have increased several times in the last two-three years. The price of rod has more than doubled in just two years. The prices of all materials including cement, tiles, and paint have increased by 50-60% in the international and local markets. 

Devaluation of the taka has been another big blow for us. Supplementary duty has been imposed on import of elevators in the last budget. Land and flat registration taxes have also been doubled. This has made it difficult to buy new land as well as reduced the sale of old flats. Now no one is buying old flats due to high registration costs. As a result, the opportunity to buy new flats by selling old flats has diminished.

Another big problem is the new DAP, which has reduced the space significantly while constructing buildings as per the floor-area ratio. Buildings of more than four to five floors cannot be built in some areas as well. 

Affordable housing will not be a possibility due to scarcity of land and high prices in Dhaka. If this happens, many real estate firms will shut down. People's dream of owning a home will also be unattainable.

I think the DAP should be revised. In addition to liveable cities, the DAP should be formulated with affordable housing in mind. Land and flat registration costs should be reduced. A large-scale initiative should be taken to provide people with affordable housing.

Financial institutions and governments need to get involved with private real estate companies. The government will provide the land and utilities, real estate companies will build the apartments, and banks and other financial institutions will finance the buyers. 

How is Concord faring in the market?

Concord is the country's oldest company. We are the real estate pioneers of the country. From the very beginning, our business has been to serve people in the best possible way. So far, we are doing well. After independence, the group also renovated the Banga Bhaban. We also built the first commercial building in Gulshan.

Currently, we are involved on the civil work of the third terminal of Shahjalal Airport, the most beautiful project in the country. Concord Group is the biggest name in not only construction or real estate, but also production of eco-friendly building materials and establishment of theme parks. We are also involved in construction projects outside the country. 

In all, Concord Group is involved in the construction of more than 1,200 projects in the country.

What is Concord doing to provide affordable housing?

Concord is the pioneer of affordable housing in the country. Our Lake City Concord is the country's first affordable housing project. When we started this project around 2000, apartments with modern facilities were priced between Tk6 lakh to Tk12 lakh.

We also arranged finance so that people could own these apartments. Not a single customer of ours defaulted on these loans. The main reason for this was that they bought apartments they could afford.

We create housing with all types of people in mind. Like we are creating aesthetic, open space, green, large and automated buildings. Similarly, we are making arrangements so that middle class people can afford to own houses. We are dealing with apartments ranging from 500 sqft to 10,000 sqft.

Concord is a pioneer on the use of environment-friendly materials in construction. Since when and why did you start this initiative?

We have played a leading role in creating eco-friendly and cost-effective construction materials for buildings. Concord was the first to use blocks instead of bricks in building construction. These hollow blocks are made of sand, cement and gravel.

In the '90s, we started researching the use of blocks in the country. In 1998, Concord Group began commercial block production. Several other companies are now producing blocks commercially.

Initially we used this block in all our buildings. Concord currently manufactures these blocks at five factories. A few companies are buying from us. Blocks have been used instead of burnt bricks in government projects as well. 

There is no alternative to save the environment as 58% of Dhaka's air pollution is due to brick burning. Dhaka has become the most polluted city in the world.