Demand for luxury apartments near nil

Luxury apartment sales have dwindled to almost nil ever since the recent political changeover as people have become cautious about spending amid the ensuing economic uncertainty, according to industry insiders.

Although the demand for luxury apartments was quite high for some years, it plunged after the Awami League government was ousted by a mass uprising on August 5, they said.

They also informed that luxury apartments are mostly bought by high-powered businesspeople or government officials.

Aysha Siddiqua, executive director of communication and brand management at building technology and ideas (bti) Ltd, said it is only natural that those who can afford luxury apartments have become frugal following the regime change.

Pointing out that prices of luxury apartments far exceed the capabilities of middle-class people, she said it would take a long time for sales in the segment to return to previous levels.

Most luxury apartments are being built in the upscale neighbourhoods of Dhaka, such as Dhanmondi, Gulshan, Banani, Uttara and Baridhara.

"The prices of apartments in these areas is beyond the imagination of average people. Only the demand for mid-range apartments remains the same," Siddiqua added.

It should be mentioned that the National Board of Revenue still allows the use of undisclosed income for real-estate purchases, subject to the payment of Tk 6,000 as tax for each square metre of the property.

"But there is no scope to consider the buyers of luxury apartments as black money holders. Rather, they are just honest businesspeople," said Shihab Ahmed, head of sales and customer service at Shanta Holdings Ltd.

He explained that apartments sized between 1,500 and 2,500 square feet are considered as being in the premium category while those above 3,000 square feet are in the luxury segment.

However, the classification can vary depending on the unit's location.

For example, apartments that are at least 2,500 square feet in the Baridhara, Gulshan, Banani and Dhanmondi areas are considered luxury units.

Rabiul Islam, head of brand and communications at Ananta Real Estate Ltd, said there is no denying that the sudden political shift has massively impacted the sale of luxury apartments.

This is because although the situation is gradually stabilising, it is still not completely normal. So, people are taking their time before making large purchases.

"We usually target top executives and government officials as buyers for luxury apartments," he added.

Islam informed that prices of luxury apartments can start from as low as Tk 4 crore and go up to as much as Tk 20 crore depending on size and location.

Aside from people's changing spending habits, the ongoing economic uncertainty has also made banks more cautious about giving loans and this has had an immense impact on sales, he said.

He said that up to 10 percent of all new apartments are in the premium and luxury segments as the demand for these increased over the past few years.

"Many people now want to live in high-quality apartments," he said while adding that about 13,000 total apartment units are being built each year.

Meanwhile, Islam fears that some clients who booked premium and luxury apartments by paying 30 to 40 percent in advance will not follow through on the purchase, especially as a number of them absconded after the political changeover.

Liakat Ali Bhuiyan, senior vice president of the Real Estate and Housing Association of Bangladesh (REHAB), said sales of all types of apartments have fallen due to the sudden political shift.

Against this backdrop, realtors are passing difficult times, he added.

Bhuiyan is optimistic the situation will improve when they organise the REHAB fair next winter.