AN ANALYSIS

ON

CAUSES OF DEGRADATION OF REAL ESTATE SECTOR DUE TO NEGLIGENCE OF

DEVELOPER’S AND AUTHORITY

SUBMITTED BY

Rasel

Reg: 08897

ID: 1908012

SUBMITTED TO

Md. Abdur Rahim

Assistant Professor

Department of Law and Land Administration

Patuakhali Science and Technology University

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CAUSES OF DEGRADATION OF REAL ESTATE SECTOR DUE TO NEGLIGENCE OF
DEVELOPER’S AND AUTHORITY

INTRODUCTION

The concept of real estate sector in Bangladesh is not so long. It is a modern concept especially

in Bangladesh. The real estate sector playing a vital role in Bangladesh. Its also playing a vital

role in the context of our economy. The real estate business has been running for three decades in

Bangladesh. But the sustainable system and sufficient legal footing have not yet been formed real

estate business and practice. So, an integrated policy is needed to make this business stable. 1

Although the real estate sector is not so long started in our country but nonetheless corruption

has not spared this sector. Corruption is increasing day by day due to the negligence of our

corrupt unscrupulous developers and the authorities with them. As a result, this sector is getting

destroyed before it started, before it making our nation developed. Government should take

initiative step to stop corruption im this sector. As we see in recent times only for negligence of

developers and lack proper investigation of the authorities, developers are getting big chance to

do corruption, they are using poor quality materials, as a result the building they develop is not

earthquake tolerant, not even environment friendly, and becomes dangerous for living.

Government must take initial steps to stop negligence and corruptions in this sector at least for a

stable developed country. And developers also should be concern about this sector and avoid

negligence.

1
Dr. Mahbub Bin Shahjahan, A Text Book on Real Estate Law and Urban Development (first published 2018)
preface, shams publication, (1st edition )

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HISTORICAL BACKGROUND OF REAL ESTATE

Bangladesh's first real estate company was Eastern Housing Limited (EHL), which was

established in 1964.This year, the country's first real estate housing project was launched at

Pallavi in Mirpur, Dhaka. However, the real estate industry in Bangladesh has been steadily

growing since the 1970s, with the number of developers increasing from five in 1980 to 42 in

1988, creating a middle class. From 1990 to 1992, Bangladesh experienced economic changes

due to a change of government, and the real estate market fell into recession due to a decline in

investor interest.

Real Estate and Housing Association of Bangladesh (REHAB) was established in 1991 with the

aim of standardizing industry practices and increasing consumer confidence. Millions of people

benefit from home ownership and rental opportunities, and the industry has a positive impact on

the economy. From 2004 to 2006, the real estate market in Bangladesh witnessed a significant

increase in investment and supply attracting both investors and new entrepreneurs.

However, from 2006 to 2008, the real estate sector experienced a downturn due to the changing

socio-political scenario. As a result, there has been a decline and many inexperienced real estate

agents have left the business. During 2009-2010, the corporate sector experienced a resurgence

in investment and a subsequent boom, but unfortunately this period of growth was short-lived.

In 2012, the real estate business in Bangladesh experienced a significant downturn, which was

further exacerbated by the political instability in the following year, 2013. As a result, many real

estate companies are struggling to attract customers despite falling housing prices. Additionally,

many buyers canceled their reservations due to unpaid installments.

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However, this sector contributed about 08% to the country's GDP in 2014, and when 08% to the

country's GDP in 2014, and when interconnected industries are taken into account, the total

contribution reaches about 12%.[8] Eventually, the situation gradually improved in 2016.[6]

In mid-2018, the Government of Bangladesh introduced home loans for government employees

at a 5% interest rate2 and also reduced real estate property registration costs in 2019. 3 These

initiatives resulted in a positive trend in the real estate business of Bangladesh.[6] The sector has

contributed 7.8% to the country's GDP in this year, amounting BDT 1.415 trillion. 4 In 2020, the

real estate market value in Bangladesh was BDT 50,000 crore with 15-17% of the market share. 5

In 2021, the demand in the real estate sector is on the rise.[6] Around 1,50,000 Crore

Bangladeshi taka was invested in this sector.6 Considering the previous real estate history in

Bangladesh, the highest number of flats were sold in 2021, surpassing the 10,000 mark. 7

Consequently, this sector contributed around 8% to the GDP in Bangladesh and employed 3.5

million people in this year.8 In 2023, the real estate industry in Bangladesh is still growing, but it

2
Abdur Rahim Badal, Government employees to get home loans with 5% interest rate (2018) BDNEWS24.COM <
https://bdnews24.com/economy/government-employees-to-get-home-loans-with-5-interest-rate > accessed 18 Jan
2024
3
Doulot Akter Mala, Govt to cut property registration cost (2019) < https://thefinancialexpress.com.bd/trade/govt-
to-cut-property-registration-cost-1559447825 > accessed 18 Jan 2024
4
Fe Online Report, Real estate housing sector's share in GDP 7.8pc: Survey (2019) FE <
https://thefinancialexpress.com.bd/economy/bangladesh/real-estate-housing-sectors-share-in-gdp-78pc-survey-
1569230267 > accessed 18 Jan 2024
5
Rejoanul Haque "Real Estate Sector of Bangladesh: Covid 19 and ITS Aftermath". 1 st pub 2020,
6
Rezaul Karim, Rapid urbanization boosts housing in district towns,(2022) TBS <
https://www.tbsnews.net/economy/industry/rapid-urbanisation-boosts-housing-district-towns-409494 > accessed 18
Jan 2024
7
Dhata Tribune, Flat sales cross 10,000-mark for the first time"( 2021) DT <
https://www.dhakatribune.com/business/real-estate/315240/flat-sales-cross-10-000-mark-for-the-first-time >
accessed 18 Jan 2024
8
Nurnaher Begum, Mohammad Shahriar Siddiqui, Md. Ahsan Ullah And Sadia Sultan "Movements of residential
prices in Bangladesh"(2021) TFE < https://thefinancialexpress.com.bd/views/reviews/movements-of-residential-
prices-in-bangladesh-1610984847 > accessed 18 Jan 2024

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is facing some challenges, such as the limited availability of land.[7] The sector has contributed

7.93% to the country's Gross Domestic Product (GDP) in the fiscal year of 2023.9

In Bangladesh, the problem of urbanization is further aggravated by limited land supply in urban

areas, lower land utilization and the lack of proper planning and land use policy. Due to

globalization, the urbanization process is also increased. The ever-increasing urban population is

creating an increasing demand for shelter. Article 25 of the United Nations' Universal

Declaration on Human Rights (1948) has clearly stated that-

"Everyone has the right to a standard of living adequate of the health and well-being of himself

and of his family, including food, clothing, housing and medical care and necessary social

services, and the right of security in the event of unemployment, sickness, disability, widowhood,

old age or other lack of livelihood in circumstances beyond his control.

Dhaka City born during the Mughal Empire and grown with the British rule, is expanding

rapidly. Born during the Mughal era and growing under British rule, Dhaka city is rapidly

growing. Since the beginning of the 20th century, its growth and subsequent development has

been characterized by a complete lack of adequate and extensive planning. Its influence is now

being felt at the beginning of the new millennium. Dhaka city has experienced tremendous

growth over the past two decades.

Real estate business, especially housing projects, started in Dhaka city in the late 1970s.But

starting in the early 80s, the company began to grow and prosper. In the 1990s, this industry

developed into an important part of the economy. The original real estate concept in Bangladesh

9
Md Abu Talha Sarker, “The power of real estate" (2023) TDS < https://www.thedailystar.net/supplements/real
estate-home-loan/news/the-power-real-estate-3333861 > accessed 18 Jan 2024

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probably originated when Eastern Housing Limited implemented its first residential land

development project known as the 'Pallavi' project in the Mirpur area of Dhaka city. In the 1970s,

there were fewer than five companies in this business. 10

In 1988, there were 42 such developers in Dhaka, but in 2012, around 1,081 companies were

listed on REHAB, with over 300 unregistered companies engaged in this business. And at

present, the concept of real estate is getting expanded not only around developing apartments but

also model cities, shopping malls, major infrastructure, commercial set-up with elaborate view of

high profit margin.

So, the concept of Real Estate is not so long, and it is a modern densely populated in Bangladesh.

Bangladesh is one of the most countries of world with regard it is the 139th smallest country of

the world, but it is eighth most populated country of the world. 85% of the people lives in the

rural area. According to the United Nations report of the world population prospectus in the year

2050, the population of Bangladesh will be about 254 million and will be considered as the

seventh populated country of the world. So, population is increasing tremendously although land

is fixed. The economy of Bangladesh is based on agriculture. But recently the scenario is

changing, and people are moving from village to town. It is not feasible to expand the

accommodation of the people horizontally, but it is possible to expand vertically. At present, with

the expansion of economy and mounting movement of people from rural and mofussil areas to

the sprawling city of Bangladesh, housing and residential accommodation pose a really

challenging sector. The role of Real Estate companies is very much important to manage it. But it

is a matter of regret that though real estate companies are doing their business in urban areas,

they are not interested to expand their business in rural areas as they face some difficulties there.

10
Ditto, Page:2

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Similarly, Government by its different organizations e.g. RAJUK, JatiyoGrihayonKortipokkho

(National Housing Authority) etc. is trying to solve this housing problem of huge population.11

11
Ditto, Page:2