Bangladesh property market rebounds, capital flight slows

| Update:
02 February 2022 14:16:50

Bangladesh’s land transfer market is rebounding strongly even amid corona restrictions with several financial factors, including a pause in capital flight, driving sales up, officials said.

They are seeing an increase in the volume of land and apartment sales across the country after the end of the coronavirus-induced lockdowns.

Such an increase in land and apartment transfers is also a boon for the Treasury, as a large part of its non-NBR tax revenue target of Tk 160 billion for the financial year 2021-2022 will come from this region.

How the collection increases the revenue target set for land registration in the current fiscal year is likely to be met before the deadline.

Usually, the government earns revenue amounting to about 100 billion taka on average in a fiscal year from 13 areas related to real estate trade.

Areas are registration of transfer deeds including fees, certified copies of documents, stamp fees, withholding tax, renewal fees, land transfer fees and some other fees .

But in the 2020-2021 financial year, an estimated revenue of about Tka 123 billion was derived from land ownership transfers, according to statistics from the state-run Registration Directorate.

They earned revenue by handing in over 3.47 million deeds which was 82% of the government’s previous fiscal non-NBR tax revenue target of 150 billion taka.

Of the revenue, 93.39 billion taka came from registration purposes while the remaining 29.53 billion taka came from local government tax.

In the previous fiscal year, 2019-2020, the revenue was 78.48 billion taka earned through the remittance of 2.55 million deeds across the country.

Normally, the country sees sales of about 3.0 million deeds a year, but the pandemic that emerged here in March 2020 has severely affected the land property business like other sectors, according to officials engaged in sales and transfers.

When contacted, Inspector General of Registration (IGR) Shahidul Alam Jhinuk admitted the jump in land sales, saying sales revenue had increased significantly in recent times.

Behind the recovery of the sector, he sees several factors, such as the economic recovery after the covid shocks, the increase in remittance flows and the drop in registration costs.

He says a significant number of expatriate Bangladeshis, who contribute a large share to annual land transfers, have returned home with cash due to the pandemic.

Since there were not many vibrant areas to invest in during the covid period, this community chose land ownership for their investment. And that has had a positive impact on the sector, he adds.

Speaking to the FE, the former chairman of the Bangladesh Registry Services Association (BRSA), Dipak Kumar Sarker, cited two reasons that contributed to the increase in revenue.

Government offices were closed for days due to government restrictions soon after the pandemic hit the region. Once the offices resumed operations, people began to flock to the offices in large numbers to avail the services.

“Another reason is the strong economic recovery – and some sectors are seeing huge growth even during the covid period, which has also had a positive impact on sales,” says Mr Sarker, also Khulna District Registrar.

Seeking anonymity, a deputy registrar says the pandemic is not only hitting the country’s economic activities but also discouraging the scale of capital flight.

In times of covid, he adds, people with good undisclosed sums of money have chosen the realm of land conveyancing to launder their “dark money”.

“These buyers do not show the actual price of the land beyond the minimum land value when registering to avoid additional costs. Thus by doing so he/she can launder a huge volume of undisclosed money” , he explains about the why of the push towards the real estate market.

A post-lockdown surge in the real estate or real estate market in developed countries, including the United States, is also reported.

“There has been a huge demand for houses there. We want to change our old house but we can’t find a new one at an affordable price, huge price hikes have taken place,” says an expat Bangladeshi in Pennsylvania, who is back on vacation. .

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Penny D. Jackson