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Sunday, May 31, 2015

Sunday, November 18, 2007
Business

Run-up to REHAB housing fair

Construction sector feels pinch as property market slumps

Construction workers cut and lay iron rods.Photo: STAR

The sharp downturn in the property market has been mirrored by a slump in apartment construction, a trend that has hit hard at suppliers of both raw materials and labour.

Steel rods are being stockpiled, paint and cement factories have slashed production and day labourers have been left without work, as the weak demand among apartment buyers has been exacerbated by fears among developers about the anti-corruption drive.

A clear indication of the downturn in construction has been the poor sales of MS rod, a prime raw material used to re-enforce concrete.

Mosleah Uddun Russel, manager sales of Saleh Steel Industries Ltd, said huge quantities of the product are now being stockpiled throughout the country with demand falling by around 40 percent.

"Around 5 to 6 tons MS rod were sold at each of our sales centres during the peak period last year, but this year these shops are selling only 3 to 4 tons," he said.

Cement sales have also fallen according to PN Iyer, managing director of Holcim Bangladesh Ltd, although Iyer hoped they would pick up again as the main building season got underway during the next few months.

Kamal Hossain, manager marketing of Emirates Cement, said sales were down 20 percent so far this year. He said the local construction sector this year consumed around 6.5 million tons of cement against the previous year consumption of 7.5 million tons.

Maizuddin Ahmed, president of Bangladesh Brick Manufacturing Owners Association, said the annual brick requirement is normally around 5,000 crore, but this year demand will drop to 4,000 crore.

Sales of other raw materials like paints, glass, marble, mosaic and bathroom products have also decreased significantly. For example Abidur Raihan, an executive of a multinational paint industry, said the monthly turnover of their company has dropped around 45 percent during the last six months compared with the same period previous year.

Asim Roy, a sales executive of Nasir Glass Industries, said sales of high grade glasses which are mainly used for multistoried business complex and luxury apartment had dropped significantly.

The weakness of the apartment market has a knock on effect on construction, and REHAB (Real Estate and Housing Association of Bangladesh), estimated that apartment sales have fallen 50 percent in the ten months to the end of October.

But according to many in the industry the government's anti-corruption drive has also had a strong impact, with developers worried that by starting new projects they will attract the attention of the authorities. High profile corruption cases against the leaders of some of the country's largest developers, such as Bashundhara and Jamuna groups, has also frightened investors away from the sector.

"It is obvious that the housing industry is facing a snag due to the government strict anti-corruption drives across the country. Only a few new big projects have been undertaken by housing companies during the period," said Kamal Hossain of Emirates Cement.

This has meant that an increasing percentage of construction is being financed by remittances.

With less construction going on, day labourers seeking work are suffering. "I usually hired around 450 to 500 workers per day to supply construction contractors in October-November last year, but this year I can only supply 250 to 300," said Azim Uddin, a labour supplier.

As twenty-two-year-old Bulbul, a day labourer, recenty told Star Weekend, "We don't get the work because apartments are not being built. The rich people must now account for their money and we are the ones to suffer." The annual REHAB housing fair opens in Dhaka on November 20.

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