As the coronavirus crisis continues, it may not be wrong to say that the world is probably heading towards a recession. The global economy is all set to take the hit from the calamity and according to the International Monetary Fund (IMF), this is the worst economic crisis since the Great Depression of the 1930s. Share markets in many countries are currently in freefall due to the crisis. The impact of the coronavirus catastrophe on the economy is visible. All the major business sectors including real estate are facing difficulties. Although the real estate sector is sturdier than other markets, the effect of coronavirus on real estate has slowed down the real estate and development sector of Bangladesh.
That is to say, the crisis has affected different parts of the real estate sector differently. Here is how the industry is dealing with the ongoing turmoil in Bangladesh.
The fear of the coronavirus has taken over the minds of people from every walk of life. In effect, people have become reluctant about a lot of things including engaging in economic activities such as property dealing. Property owners, on the other hand, are also getting affected due to the threat of getting infected. In most countries, the owners are only permitting a limited number of viewers and that too under certain conditions. Some of them are pulling their property off the market altogether in fear. In Bangladesh, however, the effect of coronavirus on real estate has not been worsened that much, but the property owners are becoming less inclined to property viewing than before. Which is only natural amid this crisis. Although the ongoing situation is supposed to affect the primary property market in a big way, in reality, that is not the case. Since these properties are newly constructed and do not have any occupants, the effect is relatively less severe as property transaction is still feasible.
Secondary properties or the rental properties of Bangladesh, on the other hand, are facing or will be facing a monumental challenge due to the calamity. Before the crisis, the process was simple, and finding a future tenant before the current tenant moves out was the norm. But in this current scenario, this becomes difficult as well as troublesome, to say the least. The fear of contamination is leading tenants to be reluctant to invite outsiders inside their apartments.
Furthermore, as the process of moving somewhere else is not so easy, both parties are facing difficulties due to the possibility of getting infected by the virus. This puts tenants in a difficult position where deviating from an existing commitment is not an option for them. The pre-existing standard procedure was to provide an eviction notice month(s) in advance from both landlords and tenants so that there is enough time for the other party to find a replacement. And due to the current situation, the process of finding a new tenant or new home is getting more and more difficult by day’s end.
Construction sector and its subsidiary Industries
The construction sector and its subsidiaries, on the other hand, are staring at an uncertain future due to the coronavirus pandemic. Although the future is unpredictable, if the current situation continues, the ongoing crisis will undoubtedly take a huge toll on the construction industry. Except for a handful of government development projects, currently, both the construction and real estate industries are at a standstill. Workers from all sorts of industries, including steel, cement, and construction industries, are standing on the edge and with that, the fate of hundreds of businesses is hanging over an uncertain future.
The Steel industry has come to a complete halt due to the shortage of raw materials. Almost 90% of raw materials which were usually imported from the US, Canada, Italy, the UK, and Australia are in complete lockdown state. As a result, the small-to-mid-sized steel factories are on the verge of shutting down. The cement industry is also taking a major hit due to the current situation of the country. And the loss that is caused by the pandemic is expected to be aggravated even further as the production and the supply of raw materials continue to be affected by the coronavirus crisis.
According to an estimation, the construction sector could lose about $400 million over 1 year due to the Coronavirus. Which, suffice to say, can cause havoc to our country’s economy. All current development projects are suspended until further notice and the fate of construction workers are on the line. All that remains to be seen now is how long it will take Bangladesh to gain back its economic stability.