Prospects of Real Estate Sector in

Bangladesh

Introduction

Residence is one of the basic needs of human beings. The right to live in one’s own is a
fundamental right of people and it is internationally recognized. The demand of housing in urban
areas in developing countries like Bangladesh is dramatically increasing due to natural increase
and its fast growth rate. Rural people are migrating not only to find jobs but many wealthy
people are moving to urban areas like Dhaka city for the fulfillment of their expectations of
better of their future generation, and for enjoying the modern facilities of the city life. This has
resulted into a serious crisis all over the country especially in the major cities of Bangladesh. In
recent time, the private real estate firms have taken initiatives by ensuring maximum uses of land
in a planned way. In this system it is possible to accommodate more people in a comparatively
small place.

Objectives of the study report:

Every study must have its objectives. Again the objectives should be specified and well defined.
So the main objective of this study is to analyze the problems and prospects of Real estate sector
in Bangladesh.

Bearing the above view in mind, I have notified the following objectives for my research.

1. To identify the problems and prospects of Real estate sector in Bangladesh

2. To analyze the SWOT of real estate company.
3. To analyze the present real estate business situation.
4. To develop project
5. To develop marketing mix & strategy

Methodology:

Academic journals, white papers, industry portals, government agencies, trade

associations, industry news and developments
Purpose of real estate business

The purpose of our real estate business is, obviously, to earn profit, but the promoters and the
equity holders are ware of their commitment to the society to which they belong. A chunk of the
profit is kept aside and/or spent for socioeconomic development through trustee and in
atomization of art, culture and sports of the country. We want to make a substantive contribution
to the society where we operate, to the extent of our separable resources.

Vision of Real Estate.    

 Application of modern information technology in business activities, offering high standard

clientele services and proper coordination of business is the core of their vision.

 Mission of Real Estate.

With a view to achieving objective of the real estate sector, their sincere and al out efforts stay
put unabated. Respected clients and stakeholders are attached to us for our transparency,
accountability, social commitments and high quality of clientele service.

Objective of Real Estate.

Bring Modern facilities to the doorstep of general public through diversification of their service.
They try to maintain their quality of the product. They try to maintain their commitment to the
client.

 Professionalism.
 Transparency.
 Service.

Business goal of Real Estate.

To patronize, sponsor and encourage games and sports, entertainment and other social activities,
alongside providing the best services to the clients.

Growth & development of Real Estate.

Real Estate business carried out all traditional functions, which a real estate performs such as
installment, discount, festival, offer, trade & commerce & industry. Real estate business earning
amount are increasing day by day.
Factors associated with and affecting present condition
Varied factors are associated with and changing the current state and pattern of development of
real estate growth. Physical aspects like variation in size of the apartments, size of plots, price
and rent of residences in different location and socio-economic condition of the dwellers, land
tenure ship pattern, car ownership pattern, level of satisfaction of apartment owners with services
provided by real estate developers, problems faced by apartment owners, factors working behind
apartment purchase decision, willingness to purchase second apartment etc. affect the current
pattern of apartment development in different location of the city.

PRESENT CONDITION AND TREND OF REAL ESTATE INDUSTRY

The growth of apartment development in Dhaka was sluggish until the latter part of last decade
in the 20th century. In 1997 the apartment development got a boost and was growing until 2007
when the caretaker government assumed the power of the state and the overall business in the
country was on the decline. Till 2010, 1275 developers were identified among them 29% were
non-REHAB members, and they shared only 12% of the market based on the number of projects.
Most of the non-REHAB private developers could develop one or two projects and then
disappeared. According to REHAB, there are 1018 developers functioning till 2017.
Most of the concentration of the apartment has been in the planned residential areas, such as,
Uttara, Dhanmondi, Gulsan and Khilkhet and Basundhara Residential Area, which have gone
through vigorous apartment developments. Siddeshwari is where the earliest development took
place, predominantly in the mid-1980s. Eskaton and Shantinagar also displayed similar growth
pattern in a lesser extent.

PHYSICAL ASPECTS:

The size of the residential apartments varies extensively. Nearly half of the apartments are found
to be between 1000 square feet to 1600 square feet. Only a very small proportion (2%) of the
residential apartments is less than 700 square feet. Although apartment size is an indicator of the
income group, this barely represents the reality in case of Dhaka as the apartment price largely
depends on the land price. Nearly half of the plots have their size ranged between 3 to 5 kathas.
From the year 2000 to 2010 apartment prices have increased at an annual average rate of 14.4%
according to a 2012 report. Intuitively, the increase of apartment price has been of different
degrees in different parts of the city. Baridhara, the diplomatic zone of the city, went through the
highest price increase while Banasree, Mirpur, Maghbazar, and Shyamoli have had the lowest
growth of apartment price. Baridhara is the highest per square apartment price in 2017, which
was about BDT 22,000. It means a typical 1200 square feet apartment would cost more than
BDT 2.5 crore in Baridhara. Such a residence in Gulshan and Dhanmondi is cost more than BDT
1.75 crore. In Mirpur and Shyamoli, on the other hand, the price of the same size apartment is
nearly BDT 70 lac.
Overall Scenario of Real Estate Business in Bangladesh:

Dhaka City, born during the Moghul Empire and grown with the British rule, is expanding
rapidly. From the beginning of the 20th Century its growth and latter development is marked
with sheer lack of proper and far-reaching planning. The impact is now being felt at the end of
the century. Dhaka City is undergoing terrific growth phase throughout the last two decades.
While there are so many real estate developers in the market, there are also very few of them
who have maintained the quality, safety and customer preference. It is customary in the country
that the first day quality and impression is lost after a while when people start getting a bit of
familiarity. This happens due mainly to lack of professionalism. Sometimes the consumers here
are in a fix to choose a particular brand out of many. A good number of real estate companies are
working under one umbrella association named ‘Real Estate and Housing Association of
Bangladesh’ (REHAB). Almost 83 Companies are at present affiliated with this association,
while more than 200 companies are working independently. BTI took a leading role in the
formation of the industry association and is one of the founder members of the REHAB.

HOUSING IN THE CITY

High population growth and rural-urban migration intensify the problems of urbanization in
Bangladesh, as in all developing countries. For Bangladesh the problem is further aggravated by
limited land supply in urban areas, lower land utilization and lack of proper policy and planning
of land-use. The ever growing urban population is creating an increasing demand for space. This
rapid influx of population to the (capital) city results in sky rocketing land prices and provides
the stimulus for construction of tall buildings (Rahman, 2001). During the period from 1981 to
2000, the greater Dhaka population grew at an average rate of 5.5% from about 3.44 million to
10.0 million. During the same period the built up area increased from 104 sq. km (39% of the
city area) to 150 sq. km. (55%). By the year 2015 the expected population of the city is
forecasted to be as high as 15.7 million. It is expected that Dhaka will become one of the ten
largest cities of the world by the year 2020 with a population as high as 20 million (Rahman
2001). To make provision for accommodation and comfortable living of this large population
transformational development of Gazipur, Kaliakoir, Savar, Tongi, Narayanganj, Keraniganj and
Purbachal will be required.

People from all socio-economic backgrounds in Dhaka face housing problem of one type or
another. While the urban destitute need rehabilitation, the slum dwellers need slum upgrading.
The low-income families are in need of low cost flats or plots and the middle and upper income
families are complaining that the cost of a decent plot or a decent flat is going beyond their
means.

LIFE CYCLE STAGE OF THE REAL ESTATE INDUSTRY

The life cycle can be used to observe the behavior of many concepts in business; it is best
applied to products and industries. Industry Lifecycle is a concept relating to the different stages
an industry will go through, from the first product entry to its eventual decline. Liu and Chen
mention of five stages in the industry lifecycle. They are:

(1) Early Phase-Alternative product design and positioning take place establishing the range and
boundaries of the industry itself.

(2) Innovation Phase- Product innovation declines, process innovation begins and a "dominant
design" arrive.

(3) Growth (Cost or Shakeout) Phase - Companies settle on the "dominant design", economies
of scale are achieved forcing smaller players to be acquired or exit altogether. Barriers to entry
become very high as large-scale consolidation occurs.

(4) Maturity Phase - Growth is no longer the main focus, market share and cash flow become
the primary goals of the companies left in the space.

(5) Decline Phase - Revenues decline; the industry as a whole may be supplanted by a new one
(Liu, Chen, 2011).

The real estate industry of Bangladesh entered Innovation Phase in the first half of last decade
after growing over Early Phase in almost two and a half decade since its inception in 1970.
Immense growth opportunity lies ahead of this industry that can only be achieved with adequate
legislative and regulatory support of the government.

CONTRIBUTION OF THE REAL ESTATE SECTOR TO THE NATIONAL GDP

Gross Domestic Product (GDP) is a measure of all goods and services produced in the economy.
The Real Estate sector contributes directly and significantly to overall production activity and
thus to GDP. The two line items in GDP directly associated with the Real Estate sector are
residential fixed investment and housing service. Residential fixed investment consists of value-
put-in-place of new housing units, brokers ‘commissions on the sale of existing residential
properties, and expenditures related to improving and additions to existing units. Housing service
is a component of personal consumption expenditures, purchased by residents in Bangladesh,
usually in the form of rent for tenants or as rental equivalence for homeowners. And not the
value of an investment in a long-lived asset (home). Rental equivalence or implicit rent is the
amount of rent that homeowners could charge if their homes were leased to others instead of
living in the homes themselves. Because implicit rent is not a market transaction, such as the
payment to a landlord from a renter, it is estimated by measuring the change in market rents for
rental housing units with similar characteristics and in similar locations as the homeowner units.

All economic activity produces a ―”Keynesian’’ multiplier effect. A home purchase usually
results in further spending in other sectors of the economy. The income earned by the
landscapers is re-circulated into the economy as they spend, generating another round of income
and purchases. The degree of multiplier depends on the degree of monetary policy
accommodation and the ―crowding out effect.

The sector wise share of Real Estate, Renting and Business Service sector to the national GDP of
the country is as follows:

Year GDP Contribution (%)

2001-02 8.63
2002-03 8.48
2003-04 8.3
2004-05 8.12
2005-06 7.87
2006-07 7.64
2007-08 7.49
2008-09 7.34
2009-10 7.2

Table 1: Share of Real Estate, renting and business services to the national GDP

GDP Contribution (%)

9
8.63
8.48
8.5 8.3
8.12
8 7.87 From
7.64
7.49
the
7.5 7.34 above
7.2
figure,
7
it is
seen
6.5
that
6 sector
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
wise
GDP Contribution (%) share
of Real Estate, Renting and Business service sector has a downward trend. But that does not
show the real picture. To better understand the growth scenario, a comparison is made between
overall GDP growth and GDP growth of the Real estate, renting and business service sector.

COMPARISON WITH OVERALL GDP GROWTH

The following table shows the comparison between overall GDP growth and growth of Real
estate, renting and business services.

Basically, the total volume of Real Estate, Renting and Business service sector increased every
year, as seen from the last column, a positive growth every year. But, compared to overall GDP
growth, this sector expanded in a slower rate. That is why in overall GDP the contribution of this
sector has a downward trend.

Year Size of GDP Overall GDP Real Estate, Real Estate, Real Estate,
(In Crore Tk) Growth (%) renting and renting and renting and
business business business
services (% services (In services
of GDP) Crore Tk) Growth (%)
2001-02 225,261 4.42 8.63 19440 --
2002-03 237,101 5.26 8.48 20106 3.43
2003-04 251,968 6.27 8.30 20913 4.01
2004-05 266,974 5.96 8.12 21678 3.66
2005-06 284,673 6.63 7.87 22404 3.35
2006-07 302,971 6.43 7.64 23147 3.32
2007-08 321,726 6.19 7.49 24097 4.11
2008-09 340,197 5.74 7.34 24970 3.62
2009-10 360,845 6.07 7.20 25981 4.05

Table: Comparison between overall GDP growth and growth of Real estate, renting and business
services

CONTRIBUTION OF THE REAL ESTATE SECTOR IN PROVIDING SHELTER, SOLVING

HOUSING NEEDS OF URBAN POPULATION
 Urban Housing Markets are increasingly significant in shaping the economic and social well-
being of many citizens. A substantial variation exists across neighborhoods in the type of
housing available, the quality of public services, the level of tax burdens, and the quality of life
generally. Consequently, households confront important tradeoffs between different types of
housing, neighborhood characteristics, and accessibility to place of work. Since housing
expenditures are a large component of every household's budget, the availability of housing and
its price assume considerable importance. Moreover, housing markets play a central role in the
process of metropolitan development, both affecting and reflecting other forces at work in this
sphere. Urban development patterns, in turn, are crucial to our future welfare in many ways.
High population growth and rural-urban migration intensify the problems of urbanization in
Bangladesh, as in all developing countries.

It must be emphasized that the economic costs of any failure in the housing markets can be
enormous and severely harmful to prospects for economic growth. Inefficiencies in the housing
markets can generate not only an inelastic supply of new dwellings but also insufficient market
transactions with respect to housing demand and any future run-up of housing prices, which can
further develop into asset bubbles. Such problems in the housing markets can easily affect the
rest of the economy. In particular, there are three broad consequences of housing market failures.
First, if housing transactions absorb too much capital because of overvalued house prices, then
the growing demand for capital from the housing market can generate a “crowding-out effect”
that leads to increasing overall interest rates and absorbed savings, which may reduce the
economy‘s stock of productive capital. Second, the scarcity of housing, the low liquidity of
housing assets and/or their excessive price can delay needed structural changes by imposing
severe restrictions on labor migration. Finally, scholars have widely recognized that collapses of
housing bubbles are commonly associated with significant disruptions to the domestic financial
system and the real economy.

CONTRIBUTION OF REAL ESTATE SECTOR IN DEVELOPMENT OF DIFFERENT

LINKAGE INDUSTRIES

In this section, the yearly production data of the prominent linkage industries are analyzed to see
the contribution of the Real Estate sector over these industries.

 GLASS AND GLASS PRODUCTS:

The yearly production data on Glass and Glass products of Bangladesh as under
 Year Quantity (Gross) Value (in 000 TK )
2004-05 3919435 973476
2005-06 4106179 956975
2006-07 4066389 947702
2007-08 4006812 939401
2008-09 4009630 940076
2009-10 3857904

Table 4: Yearly production data on Glass and Glass products

Now, to see the trend of production quantity, the following graphical representation can be used:

Quantity (Gross)

4150000

4100000

4050000

4000000

3950000

3900000

3850000

3800000

3750000

3700000
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Quantity (Gross)

From the figure, it is clear that the production quantity of Glass and Glass products certainly
have an upward trend. But there is some remarkable variation in some year‘s value.

After 2004-05, the production, the production increased by a large amount. Afterwards, the
production of glass and glass products seems to maintain almost an equal level due to stable
condition of real estate business. But we can see a decrease in Production in 2009-10; this can be
due to the current conditions prevailing now and then was not very favorable to real estate
business. As a result, decrease in production occurs. So, we can conclude that real estate is a
contributing factor in the production of Glass and Glass Products.
  CEMENT

The yearly production data on Cement industry of Bangladesh as under:

Year Quantity (m. ton) Value (in 000 TK )

2004-05 2942692 11977885
2005-06 3210761 14967718
2006-07 3438964 18443250
2007-08 3922428 24419076
2008-09 2852587 17686049
2009-10 2877203

Table: Production data on Cement industry

Now to see the trend of production quantity, the following graphical representation can be
observed:

Quantity (m. ton)

4500000

4000000

3500000

3000000

2500000

2000000

1500000

1000000

500000

0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Quantity (m. ton)

Figure : Production of Cement over years

We can see the production of cement is increasing up to year 2007-08, and afterwards it is
decreasing. In the increase of production of cement, emerging real estate business may have a
significant effect. Also when production began to decrease it may be because of the adverse
conditions that real estate facing from 2008 that decreased the demand of cement in the
construction of buildings and as a result production also decreased.

PROFILE INFORMATION OF ALL THE RESPONDENTS

In this survey, data were collected from 676 respondents. There were 8 different sampling frames
based on occupation of the respondents and 5 different sampling frames based on monthly
personal income. This section summarizes the profile information of all the respondents.

 Age of the respondents:

Figure: Age of the respondents

 Gender of the respondents:

Figure: Gender of the respondents

 Education of the respondents:

Figure: Education of the respondents

 Area of residence of the respondents:

Figure: Area of residence of the respondents

Some basic information regarding the respondents is summarized below:

 Average monthly personal income of the respondents: BDT 51,454.55

 Average monthly family income of the respondents: BDT 96,460.67
 Average family size of the respondents: 4.18
 436 of the respondents have either a flat or a house or a plot in Dhaka city.
 Among these 436 respondents, 59 stated that a portion of their total investment for the
flat or house or plot was covered by foreign remittance from their family members.
 Foreign remittance covered around 31% of the total investment of the respondents who
have used foreign remittance as a source of fund.
 Amount of remittance used to purchase a flat or house or plot ranges from BDT 20,000 to
BDT 2,00,00,000.

PRESENT MARKET DEMAND ANALYSIS:

Based on the consumer survey part of this study, the demand for flats and houses in Dhaka were
estimated. While estimating demand, we have considered the 30,000 plus monthly income group
people as a potential client. Here, three different source of population was used to estimate the
demand. The

following table shows the estimated demand for flats and houses in upcoming three or five or ten
years.

Population of Dhaka 14,251,000 (CIA 10,298,888 (SBS, 11,875,000 (Census

World fact book) Dec, 2011, BB) 2011)
Avg. no. of member 4.5 4.5 4.5
in a household
Total household in 3,166,889 2,288,642 2,638,889
Dhaka
Total household in 410,112 296,379 341,736
Dhaka who have
30,000+ income
Total 30,000+ 635,674 459,388 529,691
income group people
in Dhaka

Demand for houses

14,251,000 (CIA 10,298,888 (SBS, 11,875,000 (Census

 World fact book) Dec, 2011, BB) 2011)
Total demand to 40,429 29,217 33,688
build home in 3 yrs.
Total demand to 82,765 59,812 68,966
build home in 5 yrs
Total demand to 132,602 95,828 110,494
build home in 10 yrs

Demand for flats

14,251,000 (CIA 10,298,888 (SBS, Dec, 11,875,000 (Census

World fact book) 2011, BB) 2011)
Total demand to build 105,331 76,121 87,770
home in 3 yrs.
Total demand to build 126,944 91,740 105,779
home in 5 yrs
Total demand to build 96,877 70,011 80,725
home in 10 yrs

Table : Estimated demand for Flats and houses in Dhaka in upcoming 3/ 5/ 10 years

 Comparing the three population sources, it is estimated that demand for houses in
upcoming three years is around 30,000 to 40,000; in upcoming five years demand is
around 60,000 to 80,000; and in upcoming 10 years demand are around 95,000 to
130,000.
 In case of flats, estimated demand in upcoming three years is around 75,000 to 100,000;
in upcoming five years demand is around 90,000 to 125,000; and in upcoming 10 years
demand are around 70,000 to 95,000.
 For houses, demand is increasing in the long run; i.e. people are more interested to build
houses in 10 years.
 For flats, demand is more in medium and short run; i.e. people are more interested to
purchase flats in 5 years, then in 3 years.

APARTMENT PRICE HIKE TREND IN DHAKA CITY

The apartment price mainly depends on two parameters:

 Price of the land, and
 Construction cost of the apartment

Increase in land price and price of the construction materials automatically results in increase
of apartment price. In this section, the price hike scenario will be analyzed.

In the first decade of 21st century, the percentage increase in per square feet price of
apartments is very high, particularly in Baridhara, Dhanmondi, Gulshan, Banani, and
Shamoli area.

Compared to the price increase of the earlier decade, price rise is almost exponential in this
decade. The following figure shows the price hike trend of apartments in Dhaka city from
1990 to 2010.

Figure: Price hike trend of apartments in Dhaka city from 1990 to 2010

 After 2005, average price of apartments increased almost exponentially.

 Housing Access and Affordability

The rapid growth of city population has led to a phenomenal increase in housing demand
in the city. The housing market of the city consists of five tenure groups – owner
occupied, private rental, rent free, squatters and slums. Physically, housing has extended
from makeshift arrangement and permanent houses. Dhaka City has a very high
proportion of poor population (65%) and as such affordability of housing is significantly
affected by the income distribution. The access of poor to housing is constrained by high
land and material prices. In one study, it has been observed that the first quintile of city
household has zero affordability to housing; the second quintile can afford Tk. 140 to Tk.
300 per month; the third quintile can afford Tk. 300-400 per month; the fourth quintile of
household can afford Tk. 480 to Tk. 600 per month and the fifth quintile of household
can afford Tk. 1000-2500 per month. Only 3.85% of household can afford above Tk.
2500. The affordability indices of Dhaka City imply that the govt. has to play the role of
both provider and facilitator/enabler for different income groups.

Current State of Tall Building in Bangladesh

The history of tall building in Bangladesh is only four decades old. Broadly speaking two types
of high-rise buildings are constructed in terms of use type: Institutional buildings including
government & commercial office buildings, hotels etc. Residential buildings particularly for
middle and high income groups.  The trend that started in 1963 with the construction of 11-
storied WAPDA building at Motijheel, the Central Business District (CBD) of the capital city
Dhaka has currently gained a tremendous momentum. Although tall buildings are being
constructed in few numbers in other cities of the country, almost all the existing and under-
construction tall buildings of the country are located in the capital city. In Dhaka, there are about
120 such notable buildings clustered mainly at the Motijheel commercial area and in places like
Eskaton, Mohakhali and Banani. If one compares the number of tall buildings in the capital city
with the size of the greater Dhaka with a present population of about 10 million, the insignificant
proportion of the tall buildings with respect to the overall scenario becomes evident.It is evident
from the figure that a steady increase in the number of tall structures has taken place in the recent
years. Whereas in the sixties and seventies, on n verge five high rise buildings were constructed
in Dhaka City, in the eighties about twenty tall buildings were constructed. Construction of tall
structures attained its peak in the nineties, and, in the last five years about 50% of the total
present number of all tall buildings of the capital city has been constructed. The trend of going
high is still there.

Prospects and Problems of Tall Buildings

It is almost inevitable that high rise construction will increase in future in Bangladesh. In fact, in
a fast growing metropolis like Dhaka where, land is scarce and land value is high, there is no
other obvious option but to go for tall structures. In a country where expatriate consultants and
contractors are being inducted in almost every field of technological activity, it is interesting to
note that all the tall buildings in Bangladesh have been planned, designed and constructed by
local architects and engineers. But high rise buildings, both commercial and residential; of
Bangladesh have already revealed their merits and demerits in the very short time that they have
been serving the community. Some of the advantages of tall buildings are given below:

However, in the absence of proper urban planning and design, high rise buildings of Bangladesh
are responsible, in many instances, for several problems leading to disadvantages for Dhaka and
other city dwellers of Bangladesh. Some of the disadvantages that the existing tall buildings have
demonstrated due to ill planning are listed below:

  Unplanned tall structure destroys the harmony in skyline

  It put pressures on utility services like water supply, gas and electricity.
  It increases traffic congestion and parking problem.
  It creates problems of light and ventilation for adjacent small structure.
  Fire fighting problem in the building.
  Problem related to inadequate number of lifts.
  Problems due to inadequate parking space.
 Lack of community space.
  Lack of children’s playground.
  Socio-psychological problem.

The ground floor of typical six-story buildings and the ground and/or first floor(s) of high rise
condominium are appeared to be soft story because these stories are not supplied with proper
element such as shear walls and bracing etc. A lesson has repeatedly been learned from many
earthquakes that the soft story is one of the most common causes of building failure.

However, it is understood that in future high-rise building will continue to be a strong urban
influence. It is obvious that Dhaka City is going to have a large number of buildings around 15-
20 story high, both for office as well as residential purpose. However, building regulations must
be maintained to reflect the special needs of these buildings particularly taking into account the
traffic problems, fire safety, vulnerability to earthquake and setback rules.

In addition, stricter enforcement of the rules and better quality control during construction need
to be introduced. Some of the opportunities of planned growth of Dhaka City, using the
experience of other cities, have already been missed during the last three decades. But the high-
rise expansion can still be planned to create a better urban habitat, but this will require the
concerted action of planners, architects and engineers.
Problems and Prospects

MAJOR CHALLENGES IN REAL ESTATE DEVELOPMENT

Real Estate developers have to face several challenges while providing affordable housing for
inhabitants of the city. High land price, high price of construction material, unplanned and
haphazard development of the city, high apartment price, high home loan interest and high
property transfer and registration fee, etc. impose challenges to real estate developers.

RISE IN LAND PRICE

The major hindrance of providing affordable housing to all is the high value of land in Dhaka
city. Land value in the city has drastically increased in last the decade showing about a four-fold
increase in the average land value in last ten years. In some of the critical areas of the city, for
example in Baridhara, an average land value is more than BDT 5 crores per katha. The high land
value results in the high cost of housing units, for both purchase and rent. With the increase of
population in Dhaka the housing demand is also getting an upsurge, thus further increasing the
value of housing units. Consequently, the settlement area of the city is expanding and people are
getting more inclined at the outskirts. As a result, the surrounding areas of the city are also
experiencing a rise in the land price.

INCREASING COST OF QUALITY CONSTRUCTION MATERIAL:

The housing problem of the city is further aggravated due to the price hike of construction
materials. The price of construction materials is consistently increasing, thereby increasing the
construction cost and apartment price. Unplanned development of the city Unplanned and
haphazard development of the city creates challenges for real estate developers to determine a
suitable location for residential development. Haphazard development of commercial land use in
residential areas, deterioration of transport facility and road network creates a continuous
challenging situation for real estate developers while providing housing facilities in those areas.

HIGH APARTMENT PRICE:

The consequence of the land value increase coupled with the price hike of construction materials
is the increase in apartment price. The apartment price went through a sharp rise since 2000. In
the last ten years per square feet, apartment value has nearly tripled. In places like Baridhara, an
apartment of 1400 square foot now costs nearly BDT 03 crore. In Gulshan and Dhanmondi the
same 1400 square feet apartment will cost approximately BDT 2 crores. In middle-income areas
like Shyamoli a 1000 square feet apartment costs around BDT 55 lac. Without a bank loan, the
middle-income people are often unable to buy a decent apartment in the city.

HIGH HOME LOAN INTEREST RATE:

The apartment value in Dhaka is too high to afford by the middle and low-income people. To
help people through buying apartments the governments in most of the countries have arranged
house loan with low interest. The interest rates for house loan in other countries is relatively
more economical than that in Bangladesh. Even in the neighboring countries like India and
Pakistan, the house loan interest rate is 75% of the price in our country.

HIGH PROPERTY TRANSFER AND REGISTRATION FEE:

In addition to the high apartment cost and loan interest, charges pertaining to property transfer
and registration impose an extra burden to the buyers. Such expenses include Gain Tax (4%),
Stamp Duty (3%), Registration Fee for the central government (2%) and City Corporation (2%)
and fees for Sub-registers (0.5%) which together account for additional 11.5% cost of an
apartment. Besides, the buyers have to pay Advance Income Tax (Tk. 2000 per sq. meter) along
with a (1.5 – 4.5) % VAT which further worsens the affordability of the buyers.

GAP BETWEEN DEMAND AND SUPPLY OF HOUSING:

During the period 2001-2011 population growth rate migration rate in Dhaka city was 3.96% and
2.49% per annum respectively. The Huge gap between demand and supply of housing units still
prevails which leads to the development of informal settlements. Private real estate companies
can contribute in constructing more than 15000 units out of annually supplied total housing units.
The private real estate sector is now playing the leading role in the supply of serviced housing
units. According to structure plan (draft) by the year, 2030 housing demand in DMDP area is
expected to be 1,260,000 units per annum as per RAJUK. Supply of housing unit is needed to be
increased to a large scale to cater the overgrowing demand. To reduce this massive gap between
the demand and supply of housing private real estate sector has excellent prospect and the huge
scope of contribution shortly.

If decentralization of economic sectors can be made possible from the central city to smaller
urban sub-centers in the city periphery, population pressure can be reduced in the central city,
and suburban towns and satellite towns can develop. Demand for housing and new infrastructure
may also be shifted to these places. The private sector can even play a leading road in providing
affordable housing in suburban towns.

NEW DIMENSIONS OF TRANSPORTATION SECTOR

At present the public transport system of Dhaka city is unable to manage the traffic pressure
efficiently. By the year 2030 with a substantial increase in population and number of vehicles,
some trips are expected to be tripled in DMDP area which may worsen the current traffic
condition. To improve the deteriorated traffic condition of Dhaka city through introducing
efficient public transport system RDP (Regional Development Plan), consultants have proposed
5 MRT and 3 BRT routes within DMDP area. Among them, construction work of MRT-6
(Uttara-Motijheel) and BRT-3 (Gazipur-Airport) have started. According to the structure plan,
transit-oriented development is proposed along BRT/MRT stations which may create a vast
scope of urban development in the corridor areas if implemented. Introduction of MRT, BRT
routes will also reduce the significant challenges faced due to deteriorated traffic conditions in
Dhaka city and create locational advantages in the corridor areas of this routes. This may lead to
considerable prospect for real estate industry shortly.

CONCLUSION
The Real Estate sector contributes to the need for housing- one of the five requirements of
human life but at the same time is playing a significant role in economic development of the
country. The operation of the real estate business in Bangladesh is unique to the world. It is a
blend of different housing cultures from different nations experienced by professionals whose
construction companies had gathered expertise from working in other countries. At present, real
estate sector is playing the leading role in case of providing dwelling units, but still, this sector
has enormous scope to flourish in the housing market of Dhaka city. Proper implementation of
planning policies can create great prospect for this sector shortly. To sum up, real estate sector
can contribute a lot reshape the future of urban living in Dhaka city.