CCC’s low rent rates cause revenue shortfall, re-evaluation planned

Highlights:

• Low rent for shops causing massive revenue losses
• Monthly rent remains below Tk10 per square foot
• Rents not increased for years facilitating ‘third parties’
• CCC owns around 3,500 shops in Ctg city
• Authorities planned to re-evaluate the rent
• Increasing lease rates for other properties also proposed

The Chattogram City Corporation (CCC) owns 22 shops in a shopping complex adjacent to SN Market in Riazuddin Bazar. These shops are rented at Tk8.25 per square foot, with a small shop costing only Tk375 per month.

In comparison, similar-sized stalls in the surrounding areas, owned by private individuals, have monthly rents ranging from Tk5,000 to Tk10,000.

The CCC owns around 3,500 such shops throughout Chattogram city. Despite collecting advance payments or development fees, the monthly rent for these shops and stalls in shopping complexes remains below Tk10 per square foot.

Officials say the city corporation has been collecting rent for these shops at rates significantly below the market price for years, leading to a substantial shortfall in revenue.

There are allegations that some third parties with political connections have been exploiting this situation by collecting rent from the city corporation and then sub-letting the shops at higher rates.

In response to the situation, authorities have planned to re-evaluate the rent and lease rates for the city corporation’s properties.

The issue was discussed at a coordination meeting held last Wednesday, with the aim of increasing the city corporation’s revenue.

According to data from the Real Estate Department of Chattogram City Corporation, the city corporation currently has over 70 markets and shopping malls. Of these, only five or six are closed, while the rest remain operational.

Previously, rental contracts were renewed every five years with a 10% increase. However, in 2023, the renewal period was shortened to three years, and the rent was increased by 10%. Despite this adjustment, the rates remain significantly below the current market price.

Even after the recent increase, some market rents are still very low. For example, the monthly rent at Zahoor Hawkers Market is Tk4.13 per square foot, while Amar Chand Road Market and Riazuddin Bazar Hawkers Market charge Tk8.25 per square foot. At Abdul Ali Shopping Arcade, the rent is Tk8.25 per square foot on the first floor and Tk6.50 on the second floor.

According to data from the city corporation, rental and other income from its properties in FY2023-24 amounted to around Tk60 crore, falling short of the target of over Tk101 crore. For the current financial year, a new income target of more than Tk115 crore has been set for this sector.

At the latest coordination meeting, it was noted that if property valuations are properly updated, income from this sector could potentially increase to Tk150 crore-Tk200 crore.

Rezaul Karim, land officer at Chattogram City Corporation, told TBS, “There are discussions about reviewing short-term contracts, including shop rents. We will engage in talks with the traders.”

CCC Chief Executive Officer Sheikh Muhammad Tauhidul Islam said, “The coordination meeting included discussions on boosting income from shop rents or leases. There is also the consideration of adjusting rates to reflect current market prices. The chief revenue officer has been assigned to oversee this review.”

Decline in revenue due to movement

Chattogram, like the rest of the country, experienced turmoil from mid-July due to the quota reform movement and the subsequent mass uprising that led to the overthrow of the Awami League government on 5 August.

Following a month of curfews and government collapse, Chattogram City Corporation’s revenue has declined.

Mayor Rezaul Karim Chowdhury and several councillors have gone fugitive since the government’s fall, further impacting revenue collection.

As a result, the local government ministry has transferred administrative and financial responsibilities to the city corporation’s Chief Executive Officer (CEO).

According to the CCC, revenue decreased in all nine sectors during the first one and a half months of the financial year.

In response, CCC Acting Chief Revenue Officer Mohammad Ashraful Amin sent a letter to tax officials last Wednesday, urging them to implement measures to boost revenue collection at the field level.

CCC CEO Sheikh Muhammad Tauhidul Islam stated that the reduction in revenue could hinder salary payments and development project implementation. He has instructed increased supervision to address the issue.