Eastern Housing's income plummets 14pc as flat sales hit rock bottom

Eastern Housing's profit dropped 14 per cent year-on-year to Tk 135 million in the January-March quarter of FY24, as apartment sales plunged for rising costs of building materials amid runaway inflation.

The lone listed realtor's apartment sales plunged almost 87 per cent year-on-year to nearly Tk 9 million in the third quarter of FY24, while land sales slid 2 per cent to Tk 591 million.

As a result, the overall revenue fell almost 11 per cent year-on-year to Tk 600 million in the quarter, according to an un-audited financial statement published on Monday.

Company secretary Salim Ahmed said elevated registration and other fees had discouraged buyers from purchasing apartments.

The registration tax rate of apartments doubled in some areas.

The company has remained cautious in taking up construction works due to the abnormal price hike of building materials. "We were very much selective while taking apartment projects," said Mr Ahmed.

Inventory [undeveloped lands, ready flats and construction materials] increased 8.5 per cent year-on-year to Tk 113.86 billion in the quarter through March this year, compared to the same period a year ago.

The developer's nine-month profit declined slightly by 2.3 per cent year-on-year to Tk 438 million while revenue fell 3 per cent to Tk 1.64 billion in the period through March this year.

The net operating cash flow, an indicator to show a company's ability to generate cash from its operations, stood at Tk 9.16 in the negative per share for the nine months through March, as against Tk 19.02 for the same period the year before.

The company explained that sales and collection in the apartment segment significantly plummeted during the period under review because of concerns over high registration costs.

Besides, the company received Tk 300 million from the sale of a single apartment project in Banani last year, but this year no such 'unusual' sales happened, according to an earnings statement.

Eastern Housing's diverting focus from building apartments to land development has proved to be a right way to go about business when the prices of construction materials shot up.

Property developers' earnings have plunged as their larger segment of consumers, the middle-class, are running short of savings amid inflationary pressure.

Inflation stayed persistently high at above 9 per cent in the past 13 months through March.

Moreover, the price hike of building materials has led to an escalation of apartment prices by 30 per cent to 35 per cent depending on size and location, as per an assessment by the Real Estate and Housing Association of Bangladesh (REHAB).

In consequence, the demand for apartments fell in Dhaka, Chattogram, and other big cities across the country, according to the REHAB.

Stock Performance

Meanwhile, the stock of Eastern Housing went down almost 3 per cent to Tk 79.6 per share on the Dhaka Stock Exchange on Monday, as the company reported a lower profit.

It peaked at Tk 104 per share in September last year after the disclosure of higher annual profit.

Eastern Housing plunged 15 per cent since the withdrawal of floor price in January although the stock had never remained stuck on floor.

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