INTRODUCTION:

Real Estate and Construction Industry play an important role for sustainable development of a
country. The construction industry is an important sector for physical expansion and economic
development of the country. This sector is well linked with human settlements, employment and
environment it is recognized that the health of the Real Estate Development sector is the
barometer of the national economy.
Real Estate Development in private sector in this country started in pre-liberation days when
Eastern Housing Ltd. In the mid-60 undertook land development project known as Pallabi
Project for housing purpose in the Mirpur area of Dhaka city. Due to the absence of an
appropriate urbanization policy, urban growth and urban development is basically Dhaka
centered.
Now-a- days the population of Dhaka city has been increased at high rates, but the are has been
increased at low rates. There is no magical solution to the present or future housing problem of
the city. Government has made lands available for modern housing by earth filling low-laying
areas of Dhanmodi, Mhammadpur, Mokhali, Cantonment, Gulshan, Banani, Baridhara, Uttara,
Mirpur, etc by his own initiative.
Learning from this experience of Government or utilizing this technology in 80s of the last century
various Real Estate Developer companies were established. People want to have their house
near their working place. They expect that their loving place will be calm, quiet and peaceful, so
looking at demands the people The Bengal One Creation Ltd. Has developed several projects
on which I worked.
OBJECTIVE OF THE STUDY:

To describe the present real estate scenarios in Dhaka.

To diagnose various activities and role of s Real Estate Business in Dhaka.
To understand about the performance analysis of Real Estate Business in Dhaka.
To find out the recent problem faced by the Real Estate Developers in Dhaka.
To identify how the real estate business contribute to solve housing problem.
To investigate the potentiality of real estate business.

METHODOLOGY OF THE STUDY:

In order to find out the Real state business and measure the customer satisfaction level of private
scheduled firm I have used various method to collect and present data. Mainly I used two types of
data for this purpose1. Primary data
2. Secondary data
This report has been prepared through extensive use of secondary data. Primary it is collected
from group of people who are related with this office. The following methods are used in collecting
primary data. These are
I have collected data from the executives, officers and clients with the protested and well
designed questionnaire.

I have gathered data through personal communication with the officers, executives, managers
and clients of the this branch.
I went to every department of four office related this business and observe their activities.
Secondary sources are those which are published or processed materials. I have collected
secondary data from the following sourcesLIMITATIONS OF THE REPORT:
When I developed this report, then I had to face some problems, which disrupted the fulfillment of
this report. There were several constrains while preparing this report. Only three months were not
sufficient to visit all the desks of the division. Some desks were remained unvisited moreover
some officers in desk were found non-cooperative. In course of my internship I faced a number of
problems, which may be termed as the limitations of the study. These are as follows:
i)

I could not spend sufficient time required to make an in-depth study on such an

important subject because of office time constraint.

ii)

Sometimes it was very difficult to get sufficient help from the employees of The

Probashi Palli Ltd due to their limited executive hours.

iii)

They did not give us exact information for maintaining their secrecy.

iv)

It was very difficult to get the actual information. In many cases, the questionnaire

had to be explained elaborately to the respondents.

v)

Sufficient records, publications were not available. The constraints narrowed the

scope of real analysis.

vi)

Sufficient information was not attainable because officers were very busy with their

day-to-day work; they could hardly provide enough time.

vii)

Last but not least lack of time has also limited the scope for the research work.

HISTORICAL BACKGROUND OF REAL ESTATE BUSINESS IN BANGLADESH:

Real estate business, especially apartment project was started in the late 70s in Dhaka city.
Ispahani Group is the pioneer in this sector. But early 80s with the inception of Eastern Housing
Limited, the business started flourishing. Now this is a booming sector of the economy, more than
350 real estate developers are now active in this business.
Among the vital reasons behind mushrooming of this business are scarcities of open in the
important areas of the city, hazards of purchasing land and constructing building and rapid
increase in population. For those reasons people are switching to the developers to get well
constructed ready made apartments. Decrease in bank interest also resulted in increase in
purchasing apartments as a safe investment. Because price of apartments is increasing day by
day and rent of apartment is comparatively higher than rent of other constructed flat. Ease of
remitting foreign currency by expatriates also helped this sector to grow at a higher pace.
WHAT IS REAL ESTATE?
In our everyday life, we use real estate in some manner; we make use of real estate resources to
provide shelter, comfort, convenience, and privacy, a place of work, recreational facilities and

related services. In an estimate real estate represent more than 40%of national wealth. Therefore,
the manner in which the resources of this magnitude are used has an important effect on the well
bring of our people, the success or failure of business firms and the general prosperity of the
country.
The term real estate as commonly used has two meanings- 1) it is a name given to the
commodity reality which includes not only land but also all human improvements placed on the
land (2) it is the name given to the business engaged in by those persons who conduct
commercial transactions in real estate.
The basic component of reality as a commodity is land. It means not only the surface of the earth
but also the property rights and interests that attach to ownership of reality, including subsurface
minerals. Thus the real estate means acquirement of land and building which is called inherent
right. The men who are the owner, user, maker, financier or marketer of the property have some
rights to the property.
SIGNIFICANCE 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 M.
Shahjahan Mina in his recent paper, Urban Housing Problem in Bangladesh has shown that
there was an unmet demand of 175562 housing unit in 1973 and we would need to replace at
3609813 housing units in 1985. Mr. Giasuddin Ahmed in his recent paper Housing deficit in
Bangladesh. Has shown that the housing unit would be deficit annually about 50 lacs . If we
accept broadly the estimate prepared by Prof. M. Shahjahan Mina and Mr. Giasuddin in Ahmed
the question arises as to the strategy, which needs to be adopted to implement a sound housing
policy. So from the above scenario we can easily perceive the importance of the real estate
developers in our country.
So particularly the main reasons of mushrooming of this business are rapid increase in urban
population, scarcity of open space in the important areas of the city, and purchasing land building
construction decrease in bank interest rate, rent becoming alternate return from investment.
INCREASING POPULATION GROWTH RATE AND HOUSING NEED:
Bangladesh, the 8th most populated country in the world, is over burden with its huge population
and alarming growth rate. It has been projected that total population of Bangladesh would reach
141 million by year 2000 with urban population of 37 million i.e.; 26% of the total population. The
total population size of Bangladesh was 111.4 million in 1991 and it stood at 129.25 million in
2001. The population density of the country in the two reference years was 720 and 832 per
square kilometer. Bangladesh is one of the most densely populated countries in the world and it is
estimated that the population of the Country will nearly double by 2050. The number of
households in 2001 was 25.36 million, of which 19.44 million were in rural areas and 5.92 million
in urban areas. The average size of a household was 4.8. The male-female ratio was 103.8. In
1991, the child-women ratio was 742 and the dependency ratio 102. The growth rate of the

population was much lower than 1% during the period between 1801 and 1931. Records showed
a relatively high growth rate in 1941. This could be the result of a gross over enumeration of
population pushed politically by both Hindu and Muslim religious groups. Also, there was a
negative growth of population during 1941-1951, caused by large-scale migration after the
independence of Pakistan. The population growth rate was considerably higher after 1951. The
rate

was

1.93%

during

I95I-1961,

2.61%

during

1961-1974,

2.35%during1974-

1981,and1.48%during1991-2010
1.59% (2002 EST.)
Birth rate: 25.12 births/1,000 population (2010 EST.)
Death rate: 8.47 deaths/1,000 population (2010 EST.)
Net migration rate: -0.75 migrant(s)/1,000 population (2002 EST.)
Year

1801

1851

1901

1921

1941

1961

1981

2010

Population

4.5

0.3

8.9

3.3

2.0

0.8

9.9

29.5

Source- Population, 1801-2010 (in million)

The growth rate in urban population is higher in Bangladesh compared to Asian less develop
region and world standard. The growth in urban population has been concentrated around fore
major cities, namely Dhaka, Chittagong, Rajshahi, and Khulna. The situation of excessive urban
population was in a very serious housing crisis all over the country, the poor economic situation
and income inequality in the country is reflected in the quality of the housing stock. It was
estimated that close to half of all housing units in the country (3.3 million in 1993) were made of
temporary materials and needed replacement within a 1 to 5 year period. Approximately one third
of all houses in urban areas were constructed outside of the formal regulatory system, mostly on
land to which the homeowner does not have a formal title. A 1993 survey of Greater Dhaka
showed that there were 2,100 slums, which comprised 3 million people.
Table A shows some characteristics of the housing sector compiled from different Studies
conducted by the Center for Urban Studies.
Housing Sector Characteristics of Bangladesh
Total number of dwelling unit: Bangladesh 19,020,489. Rural 15,474,566. Urban
3,545.923
Par capita floor space: Bangladesh 54.9 sq.ft Rural 53.5 sq.ft Urban 62.3 sq.ft
Occupancy level in 1991: 5.48 PP/dwelling unit
Proportion permanent structures in 1991: Rural 21 percent Urban 46 percent
Proportion pf rental units in 1993 Rural 5% Urban 40% Dhaka 65%
With a population of approximately 124 million people and a land area of 147,570 square
Kilometers, the gross density of the country is around 860 people per square kilometer, amongst
the highest in the world. In the older parts of Dhaka there are 500 dwellings per hector and in
urban slum areas there are more than 2000 persons per acre in single story Housing. While
overall population growth has decreased considerably to 1.6 percent per year, the urban growth

rate continues to be high (although decreasing compared to previous decades) and is estimated
at approximately 4.2 percent per annum.
Table-1 Rate of household formation by locality, 1960-2010
Locality

1960-1973

1973-1981

1981 -2010

Bangladesh

2.1

2.1

2.6

Rural

l.$

1.3

2.0

Urban

6.2

8.9

I 5.7

Source: Population census 2010

The total urban population is estimated at 24 million people or close to 20 percent of the total
population. Metropolitan Dhaka is by far the largest urban area with a population of 8 to 10 million
people, 30 to 40 percent of the total urban population. Estimates of the requirements for housing
in urban areas vary from 550,000 units to 300,000 annually for the next twenty years depending
on the number of backlog and replacement units incorporated in the estimates. In a survey, an
estimate of the requirement for new urban housing based only on new household formation
between 1980 and 2000 and showed figures of 200,000 to 300,000 per year. Rural housing
requirements for new houses are in the order of 3.5 million annually if a two percent rate of
household formation is assumed.
INCREASING NEED FOR HOUSING:
The ever-increasing urban population directly and indirectly creates
Pressure on the existing housing options, which manifests in the form of escalating land prices
and increasing house rent.
The need to own a house is predominant in the psyche of most middle and upper income group.
To build or acquire a house at DhakaCity is a life long dream for them. Owning a house in
DhakaCity provides a sense of security, besides for some people, it is also a status symbol; it
provides a sense of achievement and self-fulfillment.
DEMAND FOR HOUSING:
The need for housing is a fact that is seldom questioned. However there is a wide gap between
the need and viable demand. It is argued that in an aid dependent country with a per capita
income of roughly US S 325 per annum the majority simply cannot afford their own dwelling.
Even if they had accessed t0 institutional borrowing. Servicing of debt for most of them would not
be a viable proposition. Their argument has its merit; however there are still those who would be
able to afford the investment. The fact that the increasing demand for housing can be indirectly
substantiated by the volume of applications received by RAJUK for plan approval and the number
of plans approved between 1991 and 9% .
It should be noted that owing to the escalating cost of land and demand for urban dwelling there
is an increasing trend for construction of apartments to spread the land cost per dwelling.
Therefore, if the number of units per plan is factored in, there is definitely an increasing trend.

Many individuals view housing as a form of secured long-term investment, which provides steady
inflation, adjusted earning. With the price of property increasing perpetually, it also ensures high
capital gain in tile long run.
The Real Estate and construction industry plays an important role for sustainable development
of a country- The construction industry is an important sector for physical and economic
development of the country. It provides physical expansion and economic development. On the
other hand, living space in the city is one of the fundamental needs of all in habitants. The inability
of the development sector to meet the increasing demand of housing led the private sector
developers to come into the real estate business.
Real Estate Sector also plays an important role for sustainable development of countrys
economy. Through providing for human settlement, generating employment to skilled and unskilled workers and supporting the backward linkage industries, the privet sector real estate and
housing industries in-put to the GDP is around 10%- 12% on average. Contribution of the real
estate sector to the government exchequer is more than Tk.500 million per year approximately.
However, due to lack of policy support and regularity measures, this potential sector may face a
serious setback in the coming years. Absence of time befitting national housing policy and
inappropriate embargoes imposed by the Government is pushing this growing sector into a
doldrums.
It is our view that one of the reasons behind this negative scenario is the misunderstanding of this
sector by the successive governments. Instead of receiving encouragement and nurturing, this
sector has been progressively quashed by regressive policies and lack of coordination between
concerned agencies.
Some of the current problems prevailing in the housing sector are listed hereunder along with
remedial suggest.
HOUSING STATUS IN THE CITY OF DHAKA:
Housing is an enormous problem for DhakaCity. Only 15% of the 9 million inhabitants of the city
own their house. 18% live in flats provided by the employer, 34% in rented accommodations, 18%
in slumps and 20% is floating about 90% of the dwellings of the city are privately owned. Dhaka
is the hub of all sorts of activities and therefore the pressure of human inflow into Dhaka and
consequently on housing is ever increasing. The density of population in DhakaCity is about
15,000 people per square mile with substandard facilities and by the year, 2025 population per
sq. mile will be nearly 32,000. In that case, the city of Dhaka will be in great distress if proper care
is not forthcoming. In 1995, most of the areas in DhakaCity did not have enough supply of water,
gas and electricity. Price of land in this city has increased nearly 200 times on an average since
1974. A 1982 survey showed that about 70% of DhakaCity people were lower middle to lower
class but only about 20% of the lands was in their possession. Remaining 80% was in the
possession of the affluent class. Due to rapid rise in land prices most of the land will remain
beyond the purchasing power of the middle and lower class people for all time to come. Annual

demand for additional housing units in Dhaka is 100,000 units whereas the total new units built
(both in the public and the private sector) annually is between 15,00000,000 and there is a clear
gap of about 80,000 units, which is alarming. Swamps of between 10-15 feet depth surround
Dhaka and it is highly expensive to construct buildings through filling these low lands. Residential
plots within DhakaCity cost between Taka 20-30 million per bigha. On the other hand, the cost of
residential flats ranges between 1500-2000 Taka per square feet. Thus, about 60% of the city
people are unable to buy either a flat or a piece of land.
TREND OF POPULATION GROWTH IN BANGLADESH:
Year

Population (in million)

Growth

1974

76.4

2.26%

1981

89.91

2.48%

1991

111.4

2.35%

2010

123.1

1.48%

Rate

Table: 2
Source: www.bdl.com
TREND OF POPULATION GROWTH IN DHAKACITY:
Year

Population (in million)

Growth Rate

1974

1.68

1981

3.43

14.88%

1991

6.9

10.11%

2010

9.9

4.34%

Table: 3
SOME POLICY DECISION OF THE REAL ESTATE FIRM:
Real Estate firms had to take certain vital decision in order to better market their products these
policy decisions are discussed below:
a) Identifying the location: Perspective buyers of the estate property consider the location
before taking a final and improvements are stationary, the surrounding neighborhood or the
community in which the property is situated is in a constant state of flux and movement. Changes
in the immediate environments have a significant effect upon property values.
In determining the location, the firms under study consider whether the land is situated in nearby
residential or non residential area then they evaluate the distance of educational institution,
market place or shopping centre, hospital and above all communication network to and from the
side. As a whole the firms try to select such a site which can be attractive, by the prospective
buyers. Besides these, the firms want to be sure about the genuineness of the ownership right of
the land.
Fixed the price of the property:

Fixing the price of the Real Estate property is very complex compared to any other business. The
Real Estate firms under the study determine the price in there methods.
Land price + construction + margin is the widely used method of pricing following by the real
estate firms in Dhaka city. About 75% of the firms are using this pricing policy. It is to be noted
here that land and construction costs is calculated at cost price. That is why the form changes
higher margin under this method and that range 75% to 100%.
Land price increased tremendously in Dhaka city. The following table exhibits the increased rate
of land price during 1974, 1990 and 2005 in different areas of Dhaka city:
Rate of land price inflation in Dhaka city

Area

1970

1990

2010

Baridhara

25

600

8000

Gulshan

25

600

6000

Banani

25

600

5000

Mohakhali

25

600

5000

Dhanmondi

25

600

5500

Azimpur

17

600

3000

Mohammadpur

25

600

4000

Shantinagar

20

600

4000

DOHS

20

500

5500

Shyamoli

17.75

500

5500

Uttara

20

300

2500

Cantonment

20

300

2500

Kamalpur

17.5

400

4500

Sayedabad

17.5

400

3000

Gendaria

10

400

5000

Bahsabo

300

1500

Kalyanpur

17.5

300

1500

Mirpur

10

200

3500

Source: T. M Housing problems and Apartment Development in Dhaka city.

Ascertaining the cost of construction per square feet including the land price is another method
used in fixing the selling price of the apartments. Thus the price of apartment very with its size. At
the moment firms using this method have been fund selling the apartment @ tk. 15000-2000 per
spare feet. This method is getting popularity and followed by about 17% of the real estate firms.
Under this method firms can face the competitive situation effectively.

Price escalation with land and construction is a method followed by only 8% of the firms in Dhaka
city. In this method the firm charges relative low percentage of profit.
c) All the real estate firms in Dhaka city take resort to advertisement as a measure of promotion.
Newspaper and magazine are the media generally used by the firms. The advertisement cost is
very low compared to the total cost involved in the business
PRESENT CONDITION OF REAL ESTATE BUSINESS:
With the passage of time, new concept evolves hence new business formed accordingly.
Bangladesh is not an expectation of that. As population grows geometrically, more and more
people need shelter to fulfill their basic need. It is an impossible task for the government and
general people to solve the task alone. And this need give the birth of real estate business.
During 1970s there were fewer than 5 company engaged in real estate business. In 1988 it
become 42 working only in Dhaka and now in 2008 there are more than 320 companies engaged
in this business.
Now in Bangladesh real estate is one of the most promising and progressive business trends. Its
growth rate is increasing day by day and therefore contribution to GDP is also rise remarkably.
Not so far, in 1980s the contribution of real estate is GDP were not so remarkable enough to
mention. But within 10 year of time, it has charged the situation drastically. In 2006- 2007 real
estate developers were working in our country. But in 2008 more than 320 company working in
this sector.
Where real estate business had no remarkable contribution to the GDP couple of years ago, now
in Bangladesh the contribution of real estate developers to the economy are the following.
REHAB ACTIVITIES:
REHAB organizes its major annual event, REHAB Housing Fair, each year in Bangladesh for the
members, financial institution, building material providers and above all, the potential clients. Due
to the political turmoil in the country, REHAB was unable to hold the Housing Fair planned for
November 06. However, the grand, yearly event will now be held in the third week of February,
2007. Besides, REHAB had already organized a few Housing Fair in New York and London
during the past years. These fairs proved to be vary rewarding for the REHAB members from the
business point of view, and these also served to enhance its reputation. With the requesting
support and encouragement from its members and other stake holders, REHAB will continue to
uphold the sprite with its was conceived that of providing shelters with modern amenities for the
citizens of Bangladesh and render social service to our society.
THE SPRITE OF REHAB:
In third world countries, urbanization is an outcome of population growth and inadequate
development. Migration of the people from rural areas towards the cities also increases when
their means of livelihood gradually diminishes. Bangladesh is one of the least developed
countries of the world, where the basic needs of the people are not addressed effectively. At the
present, with the constitution of our country being extensively and exhaustively discussed by

people at all levels, the crucial issues like shelter for all, which is one of the basic rights of all
citizens, still remain on the back bummers. To all intent and purposes it is not possible for the
movement alone to ensure shelter for its people. Therefore, the role of the private sector
developers becomes critical. In Bangladesh, Real Estate business stared its journey in Dhaka
sometime in the late seventies. During this sector, with Eastern Housing and property
development leading the way. In 1988 there were 42 such firms in Dhaka and now, in 2007, there
are 289 companies dispensing similar service.
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. REHAB is a class A member
of the FBCCI. In recent years, REHAB has played a pioneering role in drafting the new Building
Rule 2006, which has already come into effect since the beginning of this year. The Rule, known
as Dhaka Mohan agar Imaret Nirman Bidhimala2006 was formulated keeping in view the rapid
growth of Dhaka city. To this effect, series of meeting and seminars were held and finally the
Government was persuaded to approve the formation of the Nagar Unnayn Committee
comprising of experts and officials from all related Government department under the
chairmanship of the secretary, Ministry, of Public works. The Nagar Unnayan Committee started
functioning from December 06. Besides, REHAB has also developed the code of conduct for its
members. The code of conduct is a policy guideline to ensure the interest of our members and
valued clients so that the name and fame of REHAB continues to flourish in our society.
FORMATION OF REHAB:
With the number of companies increasing gradually, various problems and difficulties concerning
the grousing sector cropped up, which required proper attention. To solve these problems and to
protect the interests of all property developers, it was necessary to from an association for the
unhindered evolution of the real estate sector. Accordingly, in 1991, with only 11 members, the
Real Estate Housing Association of Bangladesh was formed. The objective if REHAB was to
promote the real estate development in the private in Bangladesh.
REHAB SECRETARIARIAT:
REHAB has its own office premises (2100 sft.) in the NationalPlaza situated in a beautiful location
just opposite to Pan Pacific Sonargaon Hotel and adjacent to Sundarban Hotel. Address of
REHAB Secretariat:
Real Estate Housing Association of Bangladesh (REHAB)
NationalPlaza: 6th Floor, 1/G Free School Street, Sonargaon Road
Dhaka -1205. Bangladesh
REHAB has a strong Secretariat with high professional and technical staffs and outsourcers
consultants. Some of the services of REHAB secretariat 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

protect 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
Conduct seminar and training
Organize Housing Fairs in Bangladesh and abroad.
SOME EXAMPLES OF HUMANITARIAN ACTIVITIES OF REHAB:
(1)

REHAB denotes TK. 1 0, 00,000 to the Prime Minister Relief fund;

(2)

REHAB denotes TK. 10, 00,000 to the opposition leaders relief fund;

(3)

REHAB denotes for Tsunami Victims in Sri Lanka.

(4)

It contributes a lot to the society;

(5)

Euro Builders project is being, implemented by the REHAB with the help of European

commission.
(6)

REHAB denotes for the professional engineers Training.

(7)

It organizes International trade fair.

(8)

It carries on some social well-being activities.

(9)

It organizes discussion, meeting, seminar and conferences.

(10)

REHAB meets the British high commissioner.

QUALIFICATION:
Save as provided herein in the regulation contained in form B third Schedule of The Act and Trade
Organizations Ordinance 1961 under Section-8 all such amendments incorporated vide Govt.
order No. MC/ABA-6/CA-4/20021421 dt. 31.7.2002, shall apply to the Association.
MEMBERSHIP:
The members of the Association shall consists of persons, firms, companies and corporate bodies
engaged in Real Estate Development and Housing Industry who apply to the Association for
Membership in the manner herein provided and whose applications are accepted by the
Executive Committee.
A) The Association shall have only one class of members called General Members. The Annual
Subscription of the members shall be Taka.25, 000
B) The Admission Fee to Association for members shall be Taka.25, 000i
C) Every candidate for Membership shall sign and deliver to the General Secretary, duly proposed
by a member and seconded by another application in the prescribed Form together with the
Admission Fee and the Annual Subscription.
D) The decision of the Executive Committee for or against any candidate for admission as a
member of the Association shall be final. The Committee may admit

or decline to admit a candidate as they may in their discretion think fit. The Executive
Committee shall not be bound to give any reason for refusing admission of any
candidate.
E) A candidate thus elected by the Executive Committee, shall forthwith become a
member of the Association, subject to all rules and regulations of the Association.
F) Members representing firms or other body, whether corporate or not, shall be severally. As well
as jointly liable for payment of all subscriptions and dues in respect of their membership.
G) A list of members shall be kept in a register which shall be set forth the names and addresses
of the members for the time being and in which all changes in membership from time to time
taking place be recorded. The Register shall also show the trade and industry in which they are
engaged together with the names of the authorized representatives.
NOTICE
A notice may be served upon any member either personally or by sending it through the
Registered Post at such members registered address. Any notice sent by post shall be deemed to
have been served at the time when the letter containing the same would be delivered in the
ordinary, course of post.
ECONOMIC SIGNIFICANCE OF REAL ESTATE BUSINESS IN BANGLADESH:
Being one of the three basic needs of a human being, residential real estate and its financing
have a dominant role in the national economy particularly for the reasons mentioned below.
Firstly, due to our chronic poverty people of our country, except a very significant part, dont have
sufficient income to generate savings after meeting all of their requirements.
Secondly, real estate provides a long-term security for individuals. They also feel more secure to
stay in their own house. Moreover, the tangible nature these real estate has always a strong
appeal for many people due to the fact that it is one of the most safe kind of investment. Thirdly,
after liberalization of Bangladesh, movement of people from rural area to urban areas for better
facilities increased tremendously. Consequently, pressure came from housing accommodation to
provide the needs of rapidly growing cities, and due to the migration of rural people towards urban
areas resulting over crowded condition, increased value of land, shortage of space in the urban
areas, high level of rent in the cities etc. People are now more interested to purchase land in the
urban areas. Finally, to improve the working ability and the efficiency of work force of the
economy, better housing facility is one of the important weapons to motivate. Better housing
facility can also be termed as one of the criteria of high standard of living. In the above
circumstances importance of constructing adequate number of house can not be exaggerated.
Bangladesh House Building Finance Corporation as the main institutional source of housing
finance came into existence in 1973 as the successor of HBFC established by the then central
Government of Pakistan in 1952. The main objective of HBFC was to provide financial assistance
for construction of new houses, repairing and remodeling of old houses in the cities. On the other

hand, the National Commercial Banks (NCBs) are required to extend housing credit facilities up to
5% of their total demands.
FINANCING PATTERN OF REAL ESTATE BUSINESS IN BANGLADESH:
Real Estate forms a significant part of an economy which is understood as assets having fixed
location consisting land and buildings plus property rights representing income and income
potentials. Real estate resource is defined in terms of its physical characteristics represent the
fixed location and physical, legal and economic characteristics. Physical existence represents the
fixed location and physical existence having a long duration.
Legal characteristics represent certain legal rights in the property obtainable through purchase or
other contractual agreement. And finally, economic characteristics represent its ability to serve the
needs of the people, i.e., to generate income in terms of monetary return or direct use. The real
estate resources may be classified as residential real estate, commercial real estate, farm and
rural real estate. Our interest in the commercial real estate. It goes without saying that the growth
of such real estate takes place in the society primarily to meet the accommodation needs of
human being. In broader sense the use of such real estate is essential to the members of the
society because it provides them shelter; comfort, convenience, privacy, place of work,
recreational facilities and other related services.
PROBLEMS OF REAL ESTATE FINANCE IN BANGLADESH:
Bangladesh is the eighth largest country in the world in respect of population. According to the
report published in UNDP Human Development Index 1995 Bangladesh ranks 146 among 173
countries that reflect low expectancy, low education attainment and low GDP per capita. There is
a great imbalance of population distribution over the country regarding the Division. The
population distributions regarding the six divisions are shown in the following table:
Division
Barisal
Chittagong
Dhaka
Khulna
Rajshahi
Sylhet
Total

Population(million)

Density

8.51

640

25.18

746

40.59

1304

31.47

682

15.18

912

8.29

658

129.24

876

The variation is quite uneven being highest in Dhaka. Among the districts Dhaka is the most
urbanized district of the country with 29.76% of its population living in the urban area.
The situation of excessive urban population has resulted in very serious housing crises all over
the country especially in the capital city. Due to the high rate of population growth and migration of
rural people to urban areas the need for residential houses in cities has increased tremendously.

The growth of house building on the other hand could not keep pace with the demand in urban
areas.
1. In real sector only 1 % of the residential houses are of the permanent type, 15% semi
permanent and 84% temporary type, in the urban sector the corresponding figures for permanent,
semi permanent and temporary houses were 22%, 24% and 54% respectively.
The growth of the urban population has concentrated around four major cities mainly Dhaka,
Chittagong, Rajshahi and Khulna. If the population continues to grow, to provide additional shelter
for additional number of people we need more housing units. The various causes including the
high growth rate of demand for urban housing units, less affordability of people, lack of
government effort and lack of private initiative to construct residential building etc. called
institutional finance for housing sector. As a result the real estate business emerged for the
growing urban population and turning out the Dhaka city as a Mega city. It will not be so far that
Dhaka will be declared as one of the Mega cities in the world.
Real estate as a business in the economy of Bangladesh is a recent phenomenon and mainly
concentrated in Dhaka city. As a business real estate is still to be shaped in our county like that of
other competitive businesses. Such business is neither governed by any regulations nor getting
any facility from the government. The business has certain peculiarities that are not found in other
types of business.
PROBLEMS OF REAL ESTATE BUSINESS:
The task of marketing is not an easy one, mainly fro such for such fixed asset, which cannot be
replaced, again, now we are living in a very fast changing world. The demand of the people is
also
changing frequently and the result is a difficult position for every company to meet the changing
customer demand. In case of marketing and other function the companies marketing each
department faces the following problems:
Lack of customer faith:
The most difficult job for the marketing executives to create faith on customers mind. They always
hesitate to make such purchase decision. They hardly believe the company and its projects for
the following reasons1.
2.

There is no direct government supervision in these sectors. So, they feel increase to make purchase
from the company.
There is no proper government policy to guide the business of this sector.

Lack of knowledge of customer regarding house:

So, it takes time to make the customer understand for the marketing personnel.
Failure in Commitment:
Sometimes the company fails to hand over the plot or flat within the specified period for several
reasons like shortage in raw materials, legal buildings, delay in preparation of necessary papers
etc.
Political Instability:

It is another major problem in marketing. Due to political unrest, construction and development
works delayed which delay the whole project. For this, the hand over date is also extended. It
reduces the goodwill of the company and customer faith.
Natural climate:
Natural climate like heavy rainfalls, flood, storm, earthquake, etc; always delayed the project
works. So, unfavorable natural calamity is one of the main problems of this business.
Competitors:
Competitors change their policies frequently. For this reasons, change in policy occurs regularly,
which involves huge cost.
Government Apathy:
Government provides no initiative for this business. Which is also considered as another major
marketing problem. Through it is a fast growing business it is not yet considered as an industry.
Bureaucratic Retard ness:
Red Taoism in approving plans by the RAJUK and other delays by the responsible authority.
1.

Miscellaneous: Disturbance of illegal collectors of subscription, corruption, from government and non
government bodies.

Lack of implementation of plan:

The National Housing Policy of 1993 proposes a comprehensive approach to both the public and
private housing finance system. But unfortunately a well concaved plan, if not implemented is of
no use, it doesnt give any benefit. There is an institution style National has two primary roles. To
play, these being, financing the housing finance companies and regulating the housing of these
companies.
STEPS TO BE TAKEN TO REMOVE PROBLEM:
The above presentation, analysis and observation certainly give us a direction towards the
improvement of the institutional arrangement for housing finance. Since the institutional sources
can meet even less than 3% of our urban housing need, to help the individuals and to alleviate
the urban housing problems, the following steps may be recommended

The should be a sound housing policy keeping in view the need of the middle class and

lower meddle class urban people. The credit policy of the financing institutions as well as BHBFC
should be redesigned to meet the middle and lower meddle class as the major target group. The
maximum ceiling of loan and construction rate per sift should be increased, viable repayment
schedule be introduced and initial investment requirement be reduced. The loan policy should be
redesigned in such a way that the borrowers can get the sanction and disbursement of adequate
amount of loan to complete to house in time. Moreover, the corporations function should not be
confined within the lending operation rather it should take initiative to construct apartment
buildings of different size in different areas of the cities and than allot the apartment on the long
term lease basis among the customers who dont have any house or apartment in the cities.
Since the people of our country are of different alternative types of mortgagee for house building

lone has become essential to make the access for different groups of house building lone market
easy and convenient.

To alleviate the financial crisis, the corporation should take initiative to raise fund from private

investor, domestic, and international financing institutions etc. through the sale of common stock
and bonds. The government should also give separate management to allocate fund for BHBFC
in its five year plans. To improve the recovery situation the corporation also should strengthen the
motivational measures. The corporation should invite the defaulters in the head office and gold
discussion with them to identify thei8r problems intensively. The unintentional defaulters might be
given some concessions in the from of lower interest rate and time extension. But the
international defaulters should be handled strictly. Legal action in the from of auction sale of the
mortgage property should be execute for them immediately.

The nationalized commercial banks and scheduled banks also should redesign their loan

policy, particularly in respect to maximize loan amount, repayment period, interest rate etc.
Repayment period should from 20 to 26 years. In this respects the BHBFC and other nationalized
commercial banks should frame and follow more or less similar policies. What is more important
for the nationalize banks is that they should give more emphasis in housing sector as a priority
sector like other sector of our economy. There should be specific quota for house building loan to
be sanctioned and be disbursed by the commercial bands like in other sector of economy.
Moreover, establishment of one or mere house building banks in private sector would help the
development of a competitive real estate financial market as well as would help the real estate
customers access to the financial market to meet their demand for house building loan.
Conclusion:
In a world, where a better quality of life is becoming increasingly available to growing numbers of
people, The Bengal One Creation Ltd has a vision of bringing these new standards of living to the
people of Bangladesh. Having been established at the time of the birth of the nation, it is
appropriate that the group reaffirm its commitment to this at the down of the new millennium.
During the past quarter of a century, The Bengal One Creation Ltd has come of age right along
with Bangladesh. The Bengal One Creation Ltd has grown to become one of the largest
constriction conglomerates in the country-ever expanding, diversifying, setting trends, breaking
record and rising standard. Now there are a number of good real estate companies in our country.
Before they provide loan on residential or commercial construction of building but now they also
invest in land development.
The demand of this type of construction has an increasing trend, which is also support by the
huge increase in population but less supply of land. So, real estate has a bring future in our
country. Although the residential demand of real estate business fall because of non-maintenance
of stipulation by different real estate companies. But the turn to single family from join family will
also show on increasing demand of apartment business. Bangladesh government should provide
some benefit to these real estate companies to expand their business in large scale so that the

country can properly utilize its wasteland and reduce some of its housing problem. By providing a
house to member of each in income group it will lessen the inequalities of income distribution in
the economy. But the sector itself has to be made strong otherwise, the people the economy and
above all the country will be devoid of all its benefits.
Recommendation:
1

THL should increase more skilled manpower to do its activities more efficiently, so that

many of the employees do not have to take mental pressure to handover the projects in time.
2

Adopting the latest office automation is very important for delivering swift customer service

as well as continuing smooth activities.

3

Maintaining internal quality management through training to its employees.

Inclusion of more subjects based on the effective design and construction and marketing in

the Training courses of the THL Training in order to develop expertise.

5

The authority of THL should give more emphasize on modernization of customer service.

It should open a customer care window to update the information about their projects

completion.
7

THL should appoint a sufficient number of women employees to deal with woman clients,

professionals or officials & open Women desk to consult with the women because most of the
women clients booking their flat for their family.
8

To follow the RAJUK plan for a safe, secured, environmental accommodation. To give the

security of apartment buyers that the project will be handover in time and the materials will be
used same as the contract is made.
9
10

THL needs venture capitalist from idle asset holder.

To establish and develop a market drives leadership and lays great emphasis on securing of

quality business.
11

Through pragmatic and market friendly policies to continue increase in volume of business.

12

Product / Service expansion

13

Provides highest level of satisfaction to customers and appraise feedback by questionnaire.

14

REHAB needs to establish a common market place where buyers both home and abroad will

find all products in a single location.

15

Project type, Land area, Consultant, No of apartments, Size of apartment, Total car parking

should mentioned specifically.

16

General terms and conditions should be mentioned clearly.

17

The estimated cost and estimated sales revenue should appropriately measured because it

will give the idea about pricing that will give revenue and will give the business a clear position.
18

Profit maximization should not be the motto.

19

DAP implementation should be in mind for future generation.

20

To keep in mind the middle class customers and prepare the apartment for them.