Introduction:

Real estate and construction industry play an important role for sustainable
development of a country. The construction industry’s an important sector for
physical expansion and economic development of the country. This sector is
well- linked with human settlements and employment. It is recognized that the
health of the real estate development sector is the barometer of the national
economy.

The Real State is one of the fastest growing and thrusting sectors in
Bangladesh. Infrastructural development is highly important for a country to
rise as a developed nation and to ensure housing facilities for the citizens of the
country. But inspite of compared to the importance of this sector, there have
been studies which are far below the required number on the real estate sector
and its accessibility to financing.

Definition of real estate: The real estate business helps fulfill one of our most
basic needs: shelter for many people this shelter is a house. But real estate is
more than just shelter and houses. It includes apartments, condominiums, co-
operatives, farms, retail stores, office building, shopping centers and many
other types of property.

Real estate is “Property consisting of land and the buildings on it, along with its
natural resources. Such as crops, minerals, or water, immovable property of this
nature, an interest vested in this, (also) on item of real property, (more
generally) buildings or housing in general. Also the business of real estate the
profession of buying, selling or renting land, buildings or housing.
(wikipedia)

Real estate is a broad term to than refers to:

i) Residential new homes and existing (resale) homes.
ii) Commercial shopping centers and offices
iii) Industrial and manufacturing buildings and property.
iv) Vacant land and farms.
Also Known as: Housing, land, commercial, property.
Example: Everyone who owns their own home owns real estate.
(about.com)

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Objectives of the Study:
The study centers on the following objectives-

a) Overall:
The objectives of this report is to learn about the problem and prospectus of the
real estate industry in Bangladesh perspective. This report allowed us to
combine our bookish knowledge with real life practice among the construction
companies in Bangladesh.

b) Specific:
 To identify the necessity of housing.
 To find out the government role for planned urbanization.
 To evaluate the overall situation of real estate business.
 To have an understanding of the activities of the company.
 To understand the marketing objectives, product, place, price, promotion.
 To identify the problems faced by the real estate companies.
 To find out the problem of this sector development and others.
 To describe the present real estate scenarios in Bangladesh.
 To diagnose various activities and rule of real estate business in BD.
 To understand about the performance analysis of real estate business in BD.
 To find out the recent problem faced by the real estate developers in BD.
 To identify how the real estate business contribute to solve housing
problem.
 To investigate the potentiality of real estate business.

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Methodology of the Study:
In order to find out the real estate business and measure the customer
satisfaction level of private scheduled farm we have used various method to
collect and present data.
Mainly we used two types of data for this purpose-
i) Primary data
ii) Secondary data.
This report has been prepared through secondary data. Secondary sources are
those which are published on processed materials. We have collected
secondary data from the following sources- internet, newspaper, annual reports,
online and printed articles, Journal’s and previous research papers on real estate
sector.

Objectives of real estate:

The objectives of real estate finance based on it’s own. It’s vision and mission
which is: expanding its real estate activities through the diversification and
geographical spread in both sides (local and regional levels) to reduce the risk,
increase profits and revenues through establishing strategic partnerships to
meet the market needs for the real estate in different finance services.
i) To offer finest apartments in excellent locations to the clients.
ii) To provide sound construction with aesthetic design to the clients.
iii) To install best possible fittings and fixtures.
iv) To satisfy clients by expert- oriented service.
v) To help solving the residential problem of the cities.
vi) To perform social responsibility for a happy future.

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

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Reasons for real estate business developed:
The main reasons why real estate business developed in Bangladesh are as
follow:
a. Scarcity of open space in the important areas of Bangladesh/Cities.
b. Hazards of purchasing land.
c. Hazards of construction of building.
d. Rapid increase in population in BD.
e. Decrease in the rate of bank interest.
f. Price of land and apartments is increasing day by day.
g. Rent of the apartments is comparatively higher that the rent of privately
constructed flats.
h. Open Market Economy; Remittance of bring currency is very easy.
i. Service facilities such as garbage disposal, central satellite TV connection,
apartments services saving time, roof top facilities, lift and so on.

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Problems of Real estate:
1) Roof leaks: The no. 1 culprit through a home inspection is a roof leak, says
Reggie Marston, President of Residential Equity. Management. Home
Inspections in Spring field, Va. That’s because a home inspector doesn’t go
onto the roof to check on its condition, he explains. Instead, an inspector
generally examiner the roof from ground level with binoculars or looks out
higher windows to get a view of looks out higher windows to get a view of
roofing below. Inspectors will rote torn of missing shingles and rail pops
that may or may not indicate a full fledged problem. To guarantee that you
are buying a house with a durable roof, Mars ton suggests hiring a licensed
roofing contractor to provide a full evaluation.
2) Faulty appliances: Part of a home inspection is checking that all major
appliances are functioning properly. Mars ton says that this is the second
most likely flaw to be overlooked in a home inspection. To confirm that all
appliances work, a technician will fun them through one or two cycles to
make sure there’s no trouble, such as a leaking refrigerator or a smoking
dryer.
3) Damaged siding and windows: Real estate contrast are structured so that
major systems, such as electrical and palming, are reviewed and obligate
that seller to fix only deficiencies to complete the sale, Mars ton says. But
other imperfections that fall outside of the contract’s purview may go
unimpaired. For example, Mars ton says he has noted damaged siding or old
windows that the seller is not required to fix but that could develop into a
much problem later.
4) Heating, Ventilation and air conditioning: Heating, ventilation and air
conditioning systems (HVAC) are one of the top problems that home
inspectors can miss, says Mark Vuncannon, a broken with Aller. Tate
Realtors is Asheboro, N.C. He syas technicians may be reluctant to run the
air conditioning in extreme cold or to check the furnace in blistering heat.

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5) Under the carpet: Inspectors look for evidence of significant wear in plain
view but the things that can’t be seen pose a risk, say’s chobee hoy, owner
of chobee Hoy Associates Real estate in Brookline, Mass., She says she
recommends shadowing an inspector to address the concerns you have
about the house and probe what is under some moldy carpet or is lurking
behind paneling, adding that buyers can seek sellers’ permission to remove
superficial facades for the inspector to take a deeper look.

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Increasing population growth rate and housing need:
We know that – Bangladesh is the 8th most populated country in the world, is over
burden with its huge population and adorning growth rate. The population growth rate
has given.
Year Population Growth Rate (%)
1941-1951 1.93%
1951-1961 2.61%
1961-1974 2.35%
1974-1982 1.48%
1981-2001 1.59%

Importance of real estate in Bangladesh:

A realistic as well as accurate approach for the assessment of housing demand
would be by taking into account the prevailing income distribution available
for financing shelters.

Professor Mr. Shahjahan Mina in his recent paper, “Urabn Housing Problem in
Bangladesh” has shown that-

Year Demand of Housing Growth

1973 175562
1985 3609813

Again, Mr. Gias Uddin Ahmed in his recent paper “Housing deficit in
Bangladesh” Has shown that.
The housing unit would be deficit annually about 50 lacs.

So, We can see that, needs to be to implement a sound housing policy. So form
the above scenario. we can easily perceive that importance of real estate
developers in our country.

REHAB: REHAB means Real estate and Housing Association of Bangladesh.

REHAB organizes its major annual event. REHAB Housing fair each year in

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Bangladesh for the members- financial institution, building material providers
and above all the potential clients.

The Sprite of REHAB:

In third word countries urbanization is an outcome of population growth and
inadequate development. Bangladesh is one of the least developed countries of
the world, where the basic needs of the people are not addressed effectively.

Present Scenario:
REHAB is the only recognize organization for real estate development in
Bangladesh most of the Developers operating in the country are members of
the association.

In recent years REHAB has played a pioneering role in drafting the new
building rule 2006.

REHAB has a strong secretariat with high professional and technical staffs and
outsourcers. Consultants some of the services of REHAB secretarial are
outlined below.
 Contribute and participate in the planning and policy making of housing
sector.
 Development public awareness for highlighting the objective of REHAB is
to project the interest of the customer and development as well.
 To provide support to the foreign investment to invest directly in the real
estate sector of Bangladesh and in its linkage industries on a joint venture
basis.
 Press and publication.
 Customer service
 Social welfare.
 Some examples of Humanitarian Activates of REHAB.
a. REHAB denotes Tk. ... 10,00,000 to the prime minister relief fund.

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 b. REHAB denotes Tk... 10,00,000 to the opposition leader’s relief fund.
c. REHAB denotes for sunami victims in Srilanka.
d. It contributes a lot of the society.
e. “Euro Builders’ Project is being, implemented by the REHAB with the
help of European commission.
f. REHAB denotes for the professional engineers Training.
g. It organizes International Trade fair.
h. It carries on some social well-being activities.
i. It organizes discussion, meeting, seminar and conferences.
j. REHAB meets the British High Commissioner.

Real estate to Real Economy in Bangladesh:

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 Graph- 1: Growth of Bangladesh Real Estate Sector.

From 1994-95, Over the last 10 years, Bangladesh real estate sector grew at an
average of 3.64% reaching the peak at 3.83% in 1999-00. Though it had a fall
in 2000-2001, there was recovery in 2001-02. For the last five years this sector
grew impressively and showed a smooth rising trend.

The comparative scenario of GDP shows a steady 6% growth for Bangladesh.

According to the real estate experts, as GDP of Bangladeshis still below that of
other south Asian countries, Bangladesh has more to grow which can be
fostered by continuous increase in the share and growth of real estate sector in
the country. This contribution of real estate and construction in GDP of

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Bangladesh was 16.20% in 1994-95, which became 16.69% in 2000-01 and
17.22% in 2004-05. This share slowed down to around 8% in FY 2008 (Graph-
2). It was probably due to the high price barrier for larger portion of population
to buy real estate apartments. It was also almost saturation of the already
existing high end population market.

The housing real estate business’s untapped potential is quite evident from the
real estate apartment penetration in the neighbouring countries of Bangladesh
(Graph-3).

A Positive Notation for Bangladesh Market:

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The Positive trend of global expansion in the real estate sector in the
neighboring countries also shows a possibility of such growth Bangladesh. In
Bangladesh before 1985, people in Dhaka city never thought of buying an
apartment for living. Before 1995 People thought twice before buying an
apartment. But in the last couple of years, interest in buying apartment has
increased rapidly. The boom in Bangladesh real estate market took place
between 1988 and 1991. But it faced full in 1991-1992 gaining rise again 1993-
1994. From 1995-1998 there has been not so high growth but the market was
stable from 1999-2004 it has been growing rapidly caused by huge household
demand, lack of enough land rapid organization etc in Dhaka city.

The present rate of urbanization is 5-6% annually. About 25% people of

Bangladesh is now living in urban areas and 34% will be living by 2015. The
main reasons for positive expectation have been presented evidently in the
following points-
i) Increasing urbanization.
ii) High rate of house rent inflation.
iii) Inadequate and costly land
iv) Targeting the middle class.
v) Encouraging remittance flow.

i) Increasing urbanization: Statistics and studies show that in 2000-2015,

urban growth rate is expected to be at an average of 3.7% for BD. India, one of
the most attractive markets of global real estate is expecting 4.9% growth of
urbanization. Thus in south Asia BD holds the 2 nd position is term of
urbanization rate and proportion of urban population. This scenario tells that as
India is a rapidly growing real estate market in the world, Bangladesh also may
attract more real estate than before.

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Table- 18 Urban Projected Annual Average
Growth Rate Population Growth (million) Growing (%)
Projection (%) 2000-2015
Bangladesh 9 25 34 3.7
India 21 28 36 2.7
Nepal 5 12 18 4.9
Sri Lanka 22 24 32 3.1
(Source: Making Cities work, Urban Fact sheet. USAID)
Housing Real Estate Sector in Bangladesh:
Table: 2 : Urbanization Date of Bangladesh In (‘000)
1970 1980 1990 2000 2010 2020
Urban Population 5,059 12,713 21,750 34,354 52,223 74,432
% Urban 7.6 14.9 19.8 25.0 31.1 37.7
Urban Annual Growth 7.8 5.8 4.7 4.3 3.7 3.0
Rate
Area Dhaka 1,474 3,257 6,621 12,519 19,393 N/A
Based Chittagong 693 1,332 2,265 3,651 5,389 N/A
Khulna 325 632 973 1,442 2,081 N/A
Rajshahi 108 238 517 1,035 1,676 N/A
Source: Rural and Urban Development Case Study- Bangladesh, Oxford Policy
Management, June 2004
By 2010, Dhaka is estimated to have about 20 million people that show about
55% growth from 2000 (Table-2) with this amount of people Dhaka is
estimated to be the 5th largest city in the world by 2015. This 1 st Urbanization

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needs enough accommodation and housing supply, which is expected to create
a huge market fore the real estate sector in Bangladesh.

ii) High Rate of house Rent inflation:

House rent has been increasing in Bangladesh since 1990 at a high rate.

Although inflation rate is declining in the long term (Graph-5), the rate of
increase in house rent is still higher when compared with the real income
growth especially of the middle income group in Bangladesh. In 1990 and 1995
the inflation rate in house rent was around 25%.
The declining inflation rate in house rent can be the result of increased supply
by the private real estate suppliers. government initiatives, and self housing
schemes. Though in the recent times this inflation has been a little bit lower,
still in 2004, statistics shows an increase of house rent at about 10% in the
country (Graph-5).
According to the real estate Participants, the inflation in the house rent in
encouraging people to by apartments not bearing the increasing expenditure of
house rent. A secant study conducted by Consumers Association of Bangladesh
(CAB) shows that house rentals in Dhaka have more than doubled (249.62
percent) in the last 17 years, finds the study. The increase was around 17% in
2007 and 16% in 2006.
iii) Inadequate and costly land:
Researches indicate that only 30% population in Dhaka city has occupied
already more than 80% of residential areas with human settlements and

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supportive infrastructure. Economists and real estate experts state it as highly
significant because in this way land is becoming increasingly inadequate to
provide individual housing fulfillment. For huge demand and in adequacy of
land, price of land is very high in the urban area according to the real estate
participants. This is making more people inclined to build and share
apartments.

iv) Targeting the middle class:

Studies, reveal, only in Dhaka City 5% of the population belongs to the high-
income group. Thus 45% of the total population falls into the middle-income
group and rest 50% in the low income group. Economists and real estate
participants see the middle-income group as a huge market for the real estate
sector. Builders have started building apartments for middle-income class of
600-900 sft. The large unsatisfied middle- income class is expected to be
boosting market for the real estate business.

v) Encouraging remittance Flow:

The Government of Bangladesh has declared the foreign remittance inflow
through banking sector as tax-free and any purchase of fixed assets by Non-
Resident Bangladesh is will not require, producing any Tax identification
Number or TIN. It increased remittance inflow to Bangladesh in the recent
years. According to the economists, non-resident Bangladesh is are vital
investors for the real estate sector in Bangladesh as they are continuously
supporting it.

Financing Market in Bangladesh:

Dhaka is the prime market for housing finance. Bangladesh is still experiencing
a weak financial system that hinders saving and investments, here economic

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development. The housing sector, which is highly financing dependent, is
particularly affected.

Source: Scheduled Banks Statistics 2001-2006.

Graph- 6 Shows the trend of advances given by all banks including

Nationalized Commercial banks, Private Commercial Banks, Foreign
Commercial Banks, Specialized Banks Commercial Banks etc.

The state-owned Bangladesh House Building finance corporation (BHBFC) is

burdened with bad loans, and loan disbursement has tended to be low in recent
years. Delta-BRAC Housing come into this market as private- NGO
collaboration, but its interest rate is as high as 16 percent which is higher than
even that of BHBFC by one percent. The major Financing organizations for
housing are BHBFC and the commercial Banks.

The interest rate structure of the leading housing finance corporations has been
shown below 
Dhaka and Chittagong Other Districts
Below 1,50,000 Above 1,50,000 Any amount
BHBFC
13% 15% 10%

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 Any District Any District and Any amount
DBH Below Above IDLC 14%
2,00,000 2,00,000
15.25% 15.75% 15%

Govt. Approach to Housing Finance Availably:

According to international law- adequate housing should include at least the
elements of security of tenure availability/access to services such as safe
drinking water, energy for cooking, lighting, sanitation and waste facilities,
adequate space and protection, access to employment and various social
services, affordability and accessibility of the disadvantaged etc.
The government should provide a number of incentives to boost the real estate
sector of the country. Evidently the government is encouraging more
unaccounted money to be invested in this sector.

Findings and Conclusion:

The real estate sector is growing and shows tendency of future growth. The
GDP share and growth of real estate and construction is growing. This indicate
a hopeful future for this sector. Rise in house rent, increasing demand for
housing, getting easy financing facility repaid urbanization, in adequency of
land and many other factors are creating huge scope for this sector to grow. As

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a result aggregate demand for housing and apartments has show increasing
trend and is expected to increase further. Though inadequate, supply of
apartments with the number of real estate developers also has shown rising
trend and suggests future growth. On the whole this study finds a very
promising positive tone of growth provided this sector is given proper attention
and facilities. It has certainly become very necessary to satisfy the increasing
housing demand and minimize the supply gap in the country.

References:
1. Bangladesh Bank 2001-2006, Scheduled Banks, statistics.
2. Oxford Policy Management, 2004, Rural and Urban Development Case
Study- Bangladesh, June.
3. Real estate and Housing Association of Bangladesh (REHAB), 2004,
Annual Report.

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4. en.wikipedia.org/wiki/real-estate
5. realesate.msn.com/articile.aspx
6. www.about.com
7. www.mytimes.com
8. www.realestatebd.com

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