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A Brief Review on Real Estate Sector in Bangladesh 1


At present real estate sector (RES) is one of the booming sectors in Bangladesh. Day
by day as time passes on, this sector is becoming healthier since the substantial
growth of population is creating a tremendous housing problem and due to the
increase in demand of commercial spaces this sector has come into being. This sector
provides an integrated and planned package to resolve these problems.

1.1 Purpose

This report briefly reviews on the RES in Bangladesh in recent years and recommends
for both the real estate developers and the government policy of Bangladesh on RES.

1.2 Scope

The RES has so far spread its wings over Dhaka, Chittagong, Khulna, Rajshahi and
Sylhet. This report focuses only on the flourishing of real estate business in Dhaka
and the real estate developers which are members of Real Estate & Housing
Association of Bangladesh (REHAB) especially the prominent ones.

1.3 Limitations

This report has been prepared based on secondary data. Concentration of real estate
business in Dhaka may not reflect equal urgency in other cities mentioned earlier.
This report does not include some of the problems created by illegal and unfair
practices of very few of the developers, which is damaging the image of this sector.

1.4 Assumptions

Recommendations of this report are based on the assumptions that REHAB will
prevail and RES will keep on flourishing rather than recede or retard.
A Brief Review on Real Estate Sector in Bangladesh 2



The concept of RES is developed to resolve the residential facility which is a big
problem in a densely populated country like ours. Especially the cities where
unavailability of land tends to rise the tendency of high rise apartments rather than
private dwellings.

2.1 Existing Housing Situation of Dhaka

At present the housing condition of urban area in Bangladesh, in general, is quite

unimpressive. In all metropolitan cities, there is acute shortage of housing supply and
the backlog is continually on the increase. Inadequate supply of dwelling units for
middle and low income people and high rental value are among the most severe
challenges afflicting urban living in Dhaka. At present in our country the annually
required shelter varies from 3 lakh to 5.5 lakh units. Bangladesh will need to construct
approximately 4 million new houses annually to meet the future demand of the next
20 years. Now Dhaka needs 50,000 new houses annually to accommodate its growing
population. But the existing annual supply is only 20,000 units. So there is a huge
backlog and it is increasing every year.

2.2 Why Real Estate Sector?

In Bangladesh, the rate of urbanization is very high further aggravated by high

population growth rate and rapid rural-urban migration. The current trend of urban
growth in this country is about 5%-6% per annum. This will change and increase
demand for habitat. At present 28% of the population of Bangladesh live in urban
areas, which will be 34% in 2025. The present estimated population of Dhaka is 10
million and estimated growth rate is 4.7% per annum. All these people need shelter.
To satisfy the housing of this huge explosive population Dhaka has attempted to
expand vertically. Here comes the need of real estate sector. They have been playing
very important role in providing housing regardless of high, middle and low-income
people since the past two decades.

2.3 Real Estate Development

In our country real estate business started in Dhaka in late seventies. The Eastern
Housing of Islam Group is the pioneer in this business. During 1970s there were
fewer than 5 companies in Bangladesh engaged in this business. In 1988 there were
42 such developers working in Dhaka and now in 2005 there are about 250 companies
A Brief Review on Real Estate Sector in Bangladesh 3

engaged in this business. From the early 1980s the business has started to flourish and
in 1990s it has reached its peak. Towards the end of year 2000 there was slight
downfall in real estate sector. In 2003 this sector started showing growth again. To
strengthen the role of real estate sector some pioneer real estate companies together
built up an association named REHAB in 1991. At present it has 100 members.


As the RES developed, necessity of an association arose sharply. REHAB is the

outcome of that need. REHAB resolves the dissimilarities among the real estate
developers and tries to maintain a standard thus pulling all the developers in the
same vessel.

3.1 Formation of REHAB

Real Estate development in private sector in this country started in pre-liberation days
when Eastern Housing Ltd. in the mid 60s undertook land development project known
as “Pallabi Project” for housing purpose in the Mirpur area of the Dhaka city. The
concept of apartment development started in the late part of the 70s when Free School
Property Development Ltd. started development of ownership apartment in the
Siddeswori and Moghbazar areas of the Dhaka city followed by Eastern Housing Ltd.
During the 80s a number of companies came into existence and engaged in ownership
apartment development.

With the number of companies increasing gradually and various problems concerning
the housing sector having cropped up requiring early solution, necessity was strongly
felt for the formation of a trade association of the Real Estate business. The real estate
developers met together in a meeting held on December 12, 1991 at the Conference
Hall of the Dhaka Chamber of Commerce and Industries and formed an association
under the nomenclature of Real Estate and Housing Association of Bangladesh or
briefly REHAB.

On December 12, 1991 a 7-member Ad-hoc committee was formed with Maj. Gen.
(Retd.) Amzad Khan Chowdhury as President, Mr. M.S. Alam as General Secretary
and Brig. (Retd.) A.H.M. Abdul Momen, as Treasurer amongst others with the task of
forming a constitution for the new association. The Memorandum and Articles of
Association of REHAB was due at the earliest possible time. Government approval to
the formation of REHAB was received in June, 1992. In October, 1992 the
Association was incorporated with the Registrar of Joint Stock Companies,
A Brief Review on Real Estate Sector in Bangladesh 4

Bangladesh as a trade association and in November, 1992 REHAB was enlisted as an

“A” class member of the Federation of the Chambers of Commerce and Industries
(FBCCI) with 5-members representing REHAB in the general body of FBCCI.
Thereafter election of the first Executive Committee comprised of the following:

1. Brig. (Retd) A.H.M. Abdul Momen - President

2. Dr. Toufiq M. Seraj - Senior Vice President
3. Mr. Iftekhar A. Khan (Pintu Khan) - Vice President
4. Mr. M.S. Alam General Secretary
5. Lt. Col. (Retd) Mahtabuddin Ahmed - Treasurer
6. Mr. Arshi Haider - Member
7. Mr. Nasrul Hamid - Member
8. Mr. Meer Showkat Ali Member
9. Mr. A.K.M. Sahidullah Member
10. Mr. Chowdhury Md. Shafi - Member
11. Mr. Manjurul Ahsan Chowdhury - Member

3.2 Its Achievement

The following past achievements of REHAB need to be mentioned especially

Government’s declaration of construction of residential building on commercial basis
as an “Industry” and the recognition of developer companies as “Industrial Units” by
the Investment Board for availing various facilities as an industry like other industrial
units under the Income Tax Act. Unfortunately the matter yet remains unresolved in
spite of constant persuasion.

3.3 Present Performance:

Followings are the important performances of REHAB:

(i) REHAB held series of meetings with the Honourable Works Minister, Ministry
of Works and the Chairman, Rajdhani Unnayan Kortripokkha (RAJUK)
highlighting problems of the private sector housing and seeking their solution
and have been successful in resolving most of the problems.

(ii) It met the members of the press number of times for general discussion on the
problems facing the housing sector and sought their co-operation in projecting
the views of the REHAB through the respective newspapers. The response of
the press has been satisfactory.
(iii) It met the Chairman and members of the National Board of Revenue (NBR) for
appraising the adverse effects in the increase of the rate of value added tax
(VAT) and the collection procedure of annual income tax (AIT). Decision of the
proposals submitted to the Government by REHAB in this regard is awaited.
(iv) REHAB was represented in the formulation of the Multi-Storied Residential Plot
Construction Policy, 1998 of the Government.
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(v) Round Table Conference on High Rise Building attended by senior Government
officials, educationists, experts, elite, intellectuals, members of the Press and
members of the Executive Committee of REHAB.
(vi) Sub-Committees have been formed in REHAB to attend to various problems of
the housing sector with a view to find out remedial measures and recommend to
the authorities concerned for appropriate necessary action.


REHAB by its name has the function not only to control and govern RES but also
some influences in government policy making about housing that favours the overall
objectives of RES. In a sense it can be said that REHAB acts as an arbitrator in
between developers and the Government of Bangladesh.

4.1 Declaration of Housing as an Industry

To obtain recognition for the Housing Sector as an industry, efforts of REHAB have
met with partial success but there is hesitation in its implementation for lack of
necessary regulating orders. REHAB is pursuing the matter with authority concerned
but there appears to be inhibition in the mind of the authority concerned to the
issuance of regulating orders. However, REHAB will keep up its efforts.

4.2 VAT

Vat was to be recovered at the rate of 15% of the cost of an apartment. But REHAB
took up the case with NBR and succeeded in convincing the NBR with all facts and
figures to affect actual deduction of 1.98% of the price of an apartment. This is
because VAT is being paid at various stages of material procurement. VAT has been
enhanced since July, 1999 to 3%.

In fact in the process of working out the VAT enforcement, there developed a good
understanding between NBR and REHAB.
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4.3 Financial Policy for Housing Sector

REHAB succeeded in this respect in a limited way in that it could convince the House
Building Finance Corporation (HBFC) about a close cooperation between the
developers and the HBFC. After few meetings the HBFC Board and REHAB
succeeded in enlisting its members with HBFC for financing the projects by offering
loan to prospective buyers through simplification of procedure and shortening the
period of processing of loan advance. REHAB made efforts but failed to convince the
authority concerned to set aside as percentage of total loan advance by schedule banks
for apartment purchase. The observation of the authority was that no directive could
be given in the days of liberalization. But it is emphasized that housing or shelter is
one of the basic needs and the Government must take appropriate steps to ensure easy
access to financial assistance to its citizens.

4.4 National Housing Policy

Representatives of REHAB were invited to participate in the formulation of National

Housing Policy during 1993. It can be said with satisfaction that the recommendations
of REHAB were quite constructive and were given due considerations in the policy.
However, it is stated that REHAB must be represented in any discussion relating to
housing sector, but many a times this has not happened.

4.5 Ministry of Public Works and RAJUK

The REHAB members have met Ministers & Officials of the Ministry of Public
Works and RAJUK many a times to put forward its views on policy guidelines on
housing, expansion of housing sector targeting the low and low-middle income group
through distribution of developed land by Government, compulsory membership of
all developers of REHAB and uniform transfer modalities of land and apartment by
Ministry of Public Works and RAJUK. A determined effort of REHAB have
succeeded in some cases but there still remain some problems which are neither at all
conduced to the growth of housing sector nor appropriate to offer opportunities to all
for some kind of shelter. However, REHAB's efforts are continuing to convince
authorities concerned to be pragmatic and rationales in viewing REHAB's
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RES as an industry needs to accomplish its objectives. And the objectives are oriented
towards its diversified market. It should be accomplished within certain boundary
limits. Under this circumstances a general agreement among the numbers of
developers and customers is in practice.

5.1 Objectives

a) To offer finest apartments in excellent locations to the clients;

b) To provide sound construction with aesthetic design to the clients;
c) To install best possible fittings and fixtures;
d) To satisfy clients by expert-oriented service;
e) To help solving the residential problem of Dhaka City;
f) To perform social responsibility for a happy future.

5.2 Market

Real estate business especially apartment projects has started in late 1970s in Dhaka
City. But from early 80s the business started to grow and flourish. At present, more
than 250 companies are active in business but 95% business is still dominated by top-
10 companies. Present market is growing at the rate of 15%.

5.3 Reasons for Development of the Industry:

The main reasons why real estate business developed in Dhaka City are as follows:
a) Scarcity of open space in the important areas of the city
b) Hazards of purchasing land
c) Hazards of building construction
d) Rapid increase in population of Dhaka
e) Decrease in the bank interest rate
f) Increasing price of land and apartments
g) Increasing remittance of foreign currency
h) Security
i) Service facilities such as garbage disposal, central satellite TV connection, roof
top facilities, elevators and so on
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5.4 Market segmentation

The market of real estate business is highly segmented. This segmentation is mainly
based on the location, price of the land, and size of the apartments. The segmented
areas are:

a) Segmentation - I :Baridhara, Gulshan, Banani, DOHS, Uttara

b) Segmentation - II :Dhanmondi
c) Segmentation - III :Segunbagicha, Shantinagar, Kakrail, Malibagh, Kalabagan
d) Segmentation - IV :Mirpur
e) Segmentation - V :Old Town of Dhaka City
f) Segmentation - VI :(For office building) Motijheel, Dilkusha, Fakirapool DIT
Extension Road, RK Mission Road, Shahidbagh, Kawran Bazar, Pantha Path etc.

Places in Dhaka City where residential and commercial projects have been

Dhanmondi; Gulshan; Banani; Eskaton; Siddeshawari; Panthapath; Baridhara;

Elephant Road; Mirpur Housing Estate, Mirpur; Dilkusha C/A; Kakrail Rd.;
Malibagh; Lalmatia; Indira Road; Pallabi, Mirpur; Old Airport Road; Farmgate; Inner
Circular Road; Mohakhali; Ashulia, Savar; Kalikair, Gazipur.

5.5 Types of Building Structure

The development projects for apartments and residential purposes range from Duplex
Home, Triplex Home, Penthouse, Luxury Home, Furnished Apartment, Unfurnished
Apartment, to Condominium and Vacation-Resort Property. Commercial projects
include Agro Farm House, Warehouse, Commercial Space, Industrial Space, Office
Building, Commercial Showroom, Exquisite Office, Industrial Park, Factory, Lofts,
Shopping Center, etc.

5.6 General terms and conditions of allotment

1. Application for allotment of apartments should be made on the prescribed

application form duly signed by the applicant along with the earnest money. The
company has the right to accept or reject any application without assigning any

2. On acceptance of an application, the company will issue allotment letter to the

applicant and both parties will sign an agreement which includes all terms and
references of ownership including the payment schedule and based on which the
applicant shall start making payment as per the schedule of the project. Allotment of
apartments is made on first come first serve basis.

3. Payments of earnest money, installments, car parking cost, additional works and
other charges should be made by bank-draft or pay-order directly in the name of the
respective company against which the receipts will be issued. Bangladeshis residing
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abroad may remit payments in foreign currencies by telephonic transfer (TT) or

demand draft (DD) in the name of the company.

4. Payments of installments and all other charges are to be made on due dates
according to the schedule. The company may issue reminders to the allotted, but
notwithstanding the issue of reminders, the allotted must adhere to the schedule to
ensure the timely completion of construction.

5. The company may arrange HBFC/Bank loan (if available) for allotted ones
according to the existing rules and regulations of the authority concerned.

6. Delay in payments will make the allotted liable to pay delay charge (amount varies
from company to company) for every 30 days on the amount delayed payment. If the
payment is delayed beyond 60 days the company shall have the right to cancel the
allotment. In such an event, the amount paid by the allotted will be refunded after
deducting the earnest money (and after allotment of the canceled apartment.)

7. Connection fees/charges security deposits and other incidental expenses relating to

gas, water, sewerage and electric connections are included in the price of apartments.
The company will make those payments directly to the authorities concerned on
behalf of the allotted.

8. Limited changes in the specifications, design and/or layout of the apartments and
other facilities may be made by the company considering overall interest or due to
unavoidable reasons.

9. The company may cancel an allotment for non-payment of installments in disregard

of reminders and after final intimation to the allotted by registered post at the address
given in the application form.

10. The allotted shall be required to sign an agreement with the respective company
for safeguarding the interests.

11. The possession of the apartment shall be duly handed over to the allotted on
completion and full payment of installments and other charges and dues. Till then the
possession will rest with the company. If the project is completed before the stipulated
time, the allotted shall have to make full payment before taking possession.

12. The allotted will become shareholders of total acres of the scheduled land of the
project which is equally divisible but undivided and not demarked. After all the dues
and installments are paid by the purchaser according to the requirements and schedule
of payment and after the completion of the construction, the vendors shall execute a
registered sale deed in favor of the purchaser transferring share of land of the project
in the demised apartment.

13. After taking over of apartment of the project, the allotted must consult the
company prior to undertaking any structural or layout changes within the apartment
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complex. Failure to do so will be at the sole risk of the allotted.

14. Company shall not be liable if the completion period of the construction projects
is affected by unavoidable circumstances beyond the control of the company, like
natural calamities, political disturbances, strikes and changes in the fiscal policy of the
country etc.

15. For the purpose of effective management and maintenance of the building the
purchaser of the apartment shall form and constitute a cooperative society under the
Co-operative Society's Act 1940. The society shall be entrusted with the management
and maintenance of the building. The rules, regulations and by laws of the co-
operative society relating to management and maintenance of the building shall be
binding upon all the purchasers/owners of the apartments.


To fulfill the need of housing problem several business organizations have involved in
RES. Here only the discussion is focused on those business organizations which are
associated with REHAB.

6.1 Name of the REHAB members

There are 141 members in REHAB. Their names are enlisted bellow.
Name of the members:

1. Aangina Construction Ltd. 13. ANZ Properties Limited

2. ABC Real Estates Limited 14. Apartment Design Development
3. Abode Properties Ltd. (Pvt.) Ltd,
4. Advanced Development 15. Arcadia Property Development
Consultants Ltd. Ltd,
5. Advanced Development 16. Artisan Apartments Limited
Technologies, 17. Asset Developments Holdings
6. Agrani Apartment Ltd, Ltd,
7. Al-Hassan Developers Ltd. 18. Assurance Developments
8. Alam's Real Estate Limited, Limited,
9. Amicus Corporation Limited 19. Atlantic Developments Ltd,
10. Amin Mohammad Foundation 20. Avenue Builders Ltd,
Ltd, 21. Banani Property Development
11. Amin Mohammad Lands (Pvt.) Ltd,
Development Ltd, 22. Bangladesh Development
12. Anwar Landmark Ltd, Company Ltd.
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23. Bashati Consortium Ltd, 70. Japan Garden City Ltd,

24. Basic Properties Ltd, 71. Jib Constructions Ltd,
25. Bay Developments Ltd, 72. Kashba Housing Private Limited,
26. Bay Tower Limited 73. Keari Limited,
27. Blue Bonnet Ltd, 74. Ks Engineering Technology,
28. Borak Real Estate (Pvt) Ltd, 75. Kusholi Nirmata Limited,
29. BRAC Concord Lands Limited 76. Latif Real Estate Ltd,
30. Building Development And 77. Living Plus Limited,
Design Ltd, 78. Livingstone Limited,
31. Building For Future Ltd. 79. M Properties
32. Building Technology Ideas Ltd, 80. M-Ark Realtors Limited,
33. Century Realty Limited, 81. Mega Builders Ltd.
34. Charuta Homes Ltd, 82. Metro Makers Developers,
35. City Axis Ltd, 83. Momen Real Estates Limited,
36. Concord Condominium Ltd, 84. Morphosis Developments
37. Concord Real Estate , Limited,
Development Ltd, 85. Mtc Properties Ltd. Multiplan
38. Concord Real Estate, Limited,
39. Building Products Ltd, 86. N. M. Housing Ltd, Nagar
40. Confidence Builders Ltd, Builders Ltd.
41. Configure Engineers & 87. Nagar Homes Ltd,
Construction Co. Ltd, 88. Nandan Kanon Housing Ltd.
42. Corolla Properties Limited, 89. Navana Real Estate Ltd,
43. Crescent Holdings Ltd, 90. Neer Ltd,
44. Development Entrepreneurs Ltd, 91. Neptune Properties,
45. Dhaka Shelter (Pvt) Ltd, 92. Neptune Land Development Ltd,
46. Dom Inno, 93. New Generation Construction
47. East West Property, Co. Ltd,
Development (Pvt.) Ltd. 94. Noboudoy Housing Limited,
48. Eastern Housing Ltd, 95. Northern Foundation Limited,
49. Ena Properties, 96. Oriental Real Estate Ltd,
50. Equity Property Management 97. Pacific Housing Limited,
(Pvt.) Ltd, 98. Palli Properties Pte. Limited,
51. Everest Holdings Technologies 99. Paradise Development
Ltd, Constructions Ltd,
52. Family Living Ltd, 100.Parvin Properties Technologies
53. G. K.Builders, Ltd,
54. G. M. Properties Ltd. 101.Praasad Nirman Ltd,
55. G.M. Real Estate Company (Pvt.) 102.Property Development Ltd,
Ltd, 103.Queen's Garden,
56. Globe Construction Limited, 104.Rangs Properties,
57. Gold Hunt Development Co. , 105.Realta Homes And Apartments
58. Grameen Bangla Housing Ltd,
Limited, 106.Reliance Development
59. Green Delta Housing And Associates Ltd,
Development (Pvt.) Ltd, 107.Remco (Pvt.) Ltd,
60. Habitat Builders Limited, 108.Ridge Park Holdings Ltd,
61. Hassan And Associates Limited, 109.Riead Properties Ltd,
62. Hamid Real Estate Consruction 110.Royal Properties (Pvt.) Ltd,
Ltd, 111.Rupayan Housing Limited,
63. Happy Homes Ltd, 112.Rupayan Real Estate Ltd,
64. Hi-Tech Associates Ltd, 113.Russel Lodge Holdings Ltd,
65. Hivertech Limited , 114.Sagufta City Developers Ltd,
66. Ideal Home Builders Limited 115.Samycon Properties Ltd,
67. Intimate Home Builders Ltd, 116.Shahjahan Group,
68. Ionic Builders Ltd, 117.Shahjalal Property Ltd,
69. Jamuna Builders Limited, 118.Shamsul Alamin Real Estate Ltd,
A Brief Review on Real Estate Sector in Bangladesh 12

119.Shaptak Grihayan Limited,

120.Sheltech(Pvt.) Ltd.
121.Sheltech Towers Apts.(Pvt.) Ltd,
122.Shinepukur Holdings Ltd,
123.Siza Development Company Ltd,
124.Sky View Foundation Ltd,
125.South Breeze Housing Ltd,
126.SS Builders And Developers Ltd,
127.Suvastu Development Limited,
128.Sumona Private Limited,
129.Swadesh Properties Ltd,
130.Tamanna Real Estate Ltd,
131.Tanin Kunja Housing Prokalpa,
132.The Civil Engineers Ltd,
133.The Structural Engineers Ltd,
134.Tropical Homes Ltd,
135.Union Construction,
136.Union Development
&Technologies Ltd,
137.Unitech Holdings Limited,
138.United Pacific Builders Ltd,
139.Urban Design & Development
140.V.I.P Properties Ltd,
141.Western Developers Ltd
A Brief Review on Real Estate Sector in Bangladesh 13

6.2 Brief Description of Some REHAB Members

Among the 140 members of REHAB only a handful is prominent in RES. Some are in
the leading position, some have flourished newly, some are struggling to settle their
position in the market and some are diversified. Here are discussed four types of

6.2.1 An early established developer

• Building Technology & Ideas ltd. (BTI)

Building Technology & Ideas ltd. (BTI) is one of the pioneers in the field of Real
Estate Development in Bangladesh since 1984. It all started with Forum Apartments
at Indira Road. Since 1984, BTI has developed high quality residential complexes and
in nineteen successful years they have completed more than 50 projects and handed
over all most 1,000 homes to the owners. In 1984 “Apartment Living” Forum
Apartments was one of the first 6-storied apartment complexes in the metropolis with
a lift, generator and other modern amenities. Since then, BTI has developed many
residential landmarks. Park Plaza developed by BTI in 1986 was the first high rise
apartment complex in Banani. Scenic Villa was one of the first luxury apartment
complexes in Baridhara. Olympia Tower was one of the first apartment complexes in
Dhaka which used hollow clay bricks for maximum insulation and design cost

Understanding the changing nature of the Real Estate sector BTI took a leading role
in the formation of the industry association and is one of the founder members of the

In 1998 BTI became the first Real Estate Developer and indeed also the first
Construction Company of Bangladesh to be awarded with the internationally
recognized ISO-9001 certification for quality in the "Design and Construction of

Several joint venture projects are being negotiated with foreign companies for the
lateral expansion of the metropolis. These include Satellite Townships, Infrastructure
Development Projects, and Industrial Parks. The company is investigating
diversification into the Leisure and Recreation industry and Hotel and Tourism
A Brief Review on Real Estate Sector in Bangladesh 14

6.2.2 A leading developer

• Advanced Development Technologies Ltd (ADTL)

Advanced Development Technologies Ltd. is one of the leading real estate companies
in Bangladesh. It specializes in developing luxury apartment complexes in prime
locations of the city. The overseas Corporate & Liaison Office in Bangladesh of
Bangladesh-British Chamber of Commerce (BBCC)-UK was established in 2001 at
the Corporate Head Office building of ADTL

ADTL is now known as Chamber's Regional Head quarter in Bangladesh while its
Chairman has been appointed the First ever Regional President Bangladesh. It is also
an active member of REHAB.

The company has achieved a yearly turnover of taka 600 million with a compound
growth of 60 percent. ADTL has tried to provide accommodations suitable for small
families while creating scope for development of residential lands in the vicinity of
the capital city. Efforts are underway to cater to the needs of clients in every market

At present, ADTL has 70 apartment building projects at hand in the most prestigious
areas of the city such as Gulshan, Banani, Baridhara, Dhanmondi and Uttara. Twenty
five completed apartment buildings have already been handed over to its clients.
Another 15 apartment buildings will be handed over very soon.

6.2.3 A diversified real estate developer

• Bashundhara

In the year 1987, 'Bashundhara' was launched, initially as a real estate developer,
moving in later years into other areas, including manufacturing. Over the past two
decades, the challenges in the fields of urban housing and civic amenity provision
have been unprecedented.

Housing plans were tailored to focus on the affordability limits of fixed-income

groups and their specific amenity needs. Their efforts brought tangible gains in many
directions in the last two decades. They expect to come up with new housing and
apartment projects in the near future.

Now a day they are expanding their horizon to cover manufacturing and the provision
of services. Bashundhara is now a leader in many fields with several enterprises
involved in a diverse array of manufacturing. The Group’s concerns are currently
engaged in the manufacture of a wide range of products, such as – cement, all blends
A Brief Review on Real Estate Sector in Bangladesh 15

of tissue paper, newsprint, pulp, duplex board, various kinds of paper and allied
products, MS rods, LP gas, gas cylinders, GI pipes, pavers, hollow bricks, and others.
Bashundhara is also a pioneer in LP gas bottling and marketing. Bashundhara has just
completed construction of South Asia’s largest shopping mall-cum-recreation centre,
located in the hub of Dhaka.

6.2.4 A flourishing developer

• Navana Real Estate Ltd.

Navana Real Estate Ltd. (NREL) was formed in late 1996 to cater the boom in Real
Estate Development in Bangladesh. NREL within a short span of time turned out as
one of the most trusted companies in this sector and has already been working in
various numbers of apartments, commercial and land projects. The motto of NREL is
not only to deliver apartment or land ahead of schedule but also to maintain the
highest-grade construction quality that is trying to gain trust and respect in customers.


The developers follow certain pricing mechanisms and thereby follow some unique
guidelines for the convenience of both consumers and their selves. These mechanisms
and guidelines are adapted in a manner which makes it rational. In this regard both
mechanisms and guidelines are depended on certain factors.

7.1 Available Approaches to Use for Pricing Real Estate Product

Pricing is the most crucial factor of marketing strategy that moves a product from the
producer to the consumer. Real estate as a product is not an exception in this regard.
So it has to be priced according to the general pricing strategy used for any other
product. In general selling price is to be fixed by adding a certain percentage of mark
up with the total cost of production and other expenditures like promotion, office
overhead etc. In case of cost estimation of any product a company needs to estimate
the variables and fixed costs and both of these are tangible. So they can easily
determine the selling price for a particular product as per their expected profit margin.
A Brief Review on Real Estate Sector in Bangladesh 16

To estimate the cost of a real estate product, a company needs to consider some
tangible and intangible components of cost which signifies its special pattern of
pricing like other kinds of products.

Available Approaches for Pricing Real Estate Product

Sales Comparison Approach
• Cost Approach
• Income Approach

7.1.1 Sales Comparison Approach

It involves selecting properties that have been sold most recently and that are most
comparable to the property which is intended to be priced. Adjustments are made for
dissimilarities in terms of attributes like size of dwelling place, amenities which is the
appraiser attempts to keep at a minimum in accordance with the concept of
comparability. This approach is based on the principle that buyer should be willing to
pay the same price for identical properties. By adjusting the sell price of comparable
properties for dissimilarities, the appraiser tries to make properties that have been
recently sold as identical as possible to the subject property. Adjusted price of the
comparable properties can be used to price the subject property.

When using this method the appraiser estimates the value of a property by comparing
the selling price of a property similar to and approximate to the property being
appraised. Because the two properties are alike, the appraiser adjusts the values of
similar properties for dissimilarities. These differences are isolated and adjustments
are made by the appraiser based on his or her judgement and knowledge of market
conditions, which is established on what the market value is for each major attribute.

Items those are needed to be adjusted by the appraiser in this course of action are:
1) Time since the comparable property has been sold
2) Location
3) View
4) Design appeal
5) Quality of construction
6) Age of the property
7) Condition
8) Size of rooms
9) Quality of interior features
10) Functional utility
11) Types & conditions of major system such as central heat & air
12) Selling or financing concessions

By taking all the above criteria into consideration the appraiser fixes the price of the
A Brief Review on Real Estate Sector in Bangladesh 17

7.1.2 Cost Approach

When using the cost approach, the appraiser estimates the value of the improvement
site and determines the cost of improvement. Appraiser also takes into account if any
devaluation of land has taken place or not. To estimate the land value the appraiser
uses the sales comparison approach and also checks the price of land with the local
land registry office to get the price which was used to register a land selling
agreement. In estimating the improvement cost the appraiser considers all material
cost, transportation cost and all related labor cost.

The cost approach usually provides the most reliable estimate when comparable
properties are newly constructed and require very few adjustments for depreciation.
Appraisers also consider the cost approach when only a few transactions involving
comparable properties exist and the sale comparison approach is difficult to use.

7.1.3 The Income approach

This approach involves estimating the market value of the property by determining
the rate of return on investment by an investor. In this method, the appraiser attempts
to establish a relationship between the sale price of the property and monthly income
generated by the property. The appraiser typically uses sale of a rental property
similar to the subject property and determines the ratio of sale price to monthly
income and uses this ratio to estimate the sale price of the subject property.
Out of these three approaches appraisers are heavily depend on sale comparison and
cost approaches to estimate the value of the property.

7.2 Pricing Guidelines

Bangladeshi real estate companies follow guidelines which are a blend of the above
approaches. The overall pricing guidelines of local real estate firms are stepwise as

• To select a property that is mostly identical in terms of attributes with the

subject property.
• To isolate the attributes of the subject property that are different from the
comparable property
• To determine the probable selling price of the subject property by considering
the value of the comparable property as a standard
• To forecast the potential cash flow stream from the subject property based on
the determined selling price
A Brief Review on Real Estate Sector in Bangladesh 18

• According to the potential income stream local developers determine the

budgeted cash flow to complete a particular establishment.
• Developers target a particular segment of the market in which a particular
establishment belongs to. They select a particular income group as their
potential clients for an establishment in a particular area.
• To select appropriate structural design for the property to be developed and to
estimate the construction cost required to develop that property as per the
designed structure. To estimate the construction cost they use historical record
of cost for the identical type of construction and the current market price of the
materials to be used to develop the designed structure.
• With the above consideration developers determine the construction cost per
square foot.
• They distribute the budgeted office overhead and promotion expenditure
related to a particular establishment among the per square foot sellable space.
By adding this two expenditures with the core construction cost and total cost
per square foot is to be determined.
• They add a certain percentage of profit mark up with the total cost per square
foot and selling price per square foot is determined.

7.3 Determinant of Pricing

Developers consider some factors to price their products.

7.3.1 Area: It is a crucial variable for pricing a property. In our country its
significance is more important than any other country. Depending on the area price
fluctuate incredibly.

Table I: Comparison of deferential price based on area

(Broad Classification)

Area Price (taka per square foot)

Dhanmondi 2400
Uttara 1550
Gulshan 2200
Banani 1900
Mohammadpur 1700

Source: REHAB
A Brief Review on Real Estate Sector in Bangladesh 19

7.3.2 Plot location: This variable affect the pricing decision of developer to a great
extent. Within a particular area based on the road number or sector price of flat
building varies accordingly.

Table II: Comparison of deferential price based on plot location


Road No. Price (taka per square foot)

3/A (old) 2400
3/A (new) 2092
10/A 1900
26 1999
Source: REHAB

Table III: Comparison of deferential price based on plot location

Gulshan –2

Road No. Price (taka per square

105, CEN(F) 1995
111, CEN(H), 3000
90 3422
Source: REHAB

7.3.3 Size: As the norms depending on the size, price of apartments varies by a direct
proportion. In some cases this proportion does not remain constant.

7.3.4 Facing: Facing of the apartments is also an important variable in the pricing
pattern of those apartments. Like south facing or north facing flat of a particular
apartment building differs hugely in price:

Table IV: Comparison of deferential price based on plot facing

Face Price (taka per square

South face 3000
North face 2500
Source: REHAB
A Brief Review on Real Estate Sector in Bangladesh 20

7.3.5 View: Depending on the view of flats price can also vary.

Table V: Comparison of deferential price based on plot view

View Price (taka per square foot)

South Facing Lake View 3500
North Facing Lake View 2800
East Facing Lake View 2200
East Facing 2000
West Facing Lake View 2100
West Facing 1900
Source: REHAB

7.3.6 Flat Feature: Flat feature of the apartments is also an important variable in the
pricing pattern of apartments. It consists of the interior design and fittings. The
mentioned factors affect the pricing of the apartments.

7.3.7 Floor: It is also a prominent factor that heavily induces the pricing of flat. The
price decreases as the number of story increases.

Table VI: Comparison of deferential price based on floor

Floor Price (taka per square foot)

1st 2200
2nd 2300
3rd 2400
4th 2450
5th 2350
6th 2250
7th 2100
Source: REHAB

7.3.8 Construction Quality: This includes materials used for construction, roof
design, column design etc. As the buyers are becoming sophisticated day by day this
variable becomes important to the developers at the time of pricing.

7.3.9 Land Owner’s Share: Nowadays most of the apartments are developed by
various real estate firms in the form of joint venture. In this venture land owners and
developers share total number of flats in a particular apartment. In the most of the
cases the ratio of sharing flats is 40:60. In case of lucrative areas this ratio is often
50:50. Besides these landowners also demands a certain amount of cash benefit for
staying away from their own home at the time of construction.
A Brief Review on Real Estate Sector in Bangladesh 21

7.3.10 Existence of Amusement Place: Existence and non existence of amusement

place also affects the pricing of flat building.

7.3.11 Selecting Procedure of Comparable Property: To select a property with

which a real estate firm wishes to compare its new establishment surveys the market
and uses its personal communication procedure. Generally a developer tries to make
product to product comparison in respective of competitor. A developer generally
uses both of its subjective and objective judgments in course of setting attributes,
which are used to adjust at the time of pricing.

7.3.12 Pricing of Car Parking: Car parking is fully independent with the overall
price of any apartment. It is priced as per the current market price. Nowadays it
ranges from 2 to 3 lakh. Any apartment holder wishing to purchase more than one car
parking space has to pay a higher amount than the normal range. It varies according to
the variation of area.

7.3.13 Maintenance & Security: After the hand over of an apartment, its
maintenance is no more a responsibility of a developer. The same is applicable for the
security purpose. These two responsibilities are handed over to the buyers association
of a particular apartment with a hand over of flats to them.

Real Estate - Contribution to the Economic Growth

Over the last 15 years the RES has made significant contributions to many sectors of
our economy. Since 1985 this sector has created homes for over 12000 families in the
metropolitan city. Additionally, thousands of acres of land have been developed into
housing estates where lower middle and middle income families can construct their
own dwellings.
A Brief Review on Real Estate Sector in Bangladesh 22

Table VII: Contribution of RES to the Economy

Contribution to GDP 2002-2003 2003-2004

In Percentage 8.48 8.34
In Taka 19374 20111
Source: Bangladesh Economic Review, 2004

Since 1985 this sector has procured construction materials worth over Tk. 1,000 crore.
It gives employment to about 12,000 construction workers and pays wages to
construction workers amounting to about Tk. 45 crore annually approximately Tk 2
crore is paid annually by this sector towards professional fees for architects and
consultants. The sector employs about 5,000 management staff like accountants, sales
personnel, engineers, supervisors, administrative staff and others and pays
approximately Tk. 25 crore to these people in annul salaries.

The fact that many cement manufacturing industries have now been set up in
Bangladesh is a reflection of the impetus the RES has given to our economy. In the
last decade many steel mills would have shut down had it not been due to the support
of the RES. Several new mechanized construction material manufacturing industries
have recently come up due to the existence of this sector. Today about 200 architects
and consulting engineers are directly supported by this sector; over 500 graduate
engineers are holding management positions in this sector and almost 2,500 diploma
engineers are engaged in this sector.
A Brief Review on Real Estate Sector in Bangladesh 23

Ending Summary

The RES in Bangladesh is a well-established business. This sector is well organized

under REHAB. REHAB is playing a significant role in coordinating Government
policy and developers standards solely to the flourishing of this sector. Though this
sector is small, it is contributing almost 9% in GDP and a major source of


Real estate developers opened a new horizon for the small families and the people of
moderate income. Owning a house in Dhaka city is not a dream anymore. Easy
installments and lower prices compared to build a house made it easier to fulfill lots
of people’s lifelong dream. There are many people who own a piece of land in the city
but can not afford the expenses necessary to build their own home. RES eliminated
these inconveniences.

Recently many developers are showing interest in expanding their activities in other
major cities in Bangladesh. Then people of those cities will also be able to enjoy the
facilities of luxurious apartments at reasonable cost.

Now Real Estate Developers are organized as REHAB and coordinating their efforts
to solve the housing problems for the city dwellers. REHAB is working closely with
the Government to create a sound housing policy for the country that will enable
people have a place that they can call as home. Along the way Real Estate Developers
are creating a lot of job and becoming a major player in our economy by contributing
to our GDP.
A Brief Review on Real Estate Sector in Bangladesh 24


1. Bangladesh Economic Review, 2004

2. The New Nation, April 24, 2004


ADTL- Advance Development and Technology Limited

AIT- Annual Income Tax
BTI- Building Technologies and Ideas
DD- Demand Draft
GDP- Gross Domestic Product
HBFC- House Building Finance Corporation
NBR- National Board of Revenue
NREL- Navana Real Estate Limited
RAJUK- Rajdhani Unnayan Kortripokkha
REHAB- Real Estate & Housing Association of Bangladesh
RED- Real Estate Devewlopers
RES- Real Estate Sector
TT- Telephonic Transfer
VAT- Value Added Tax