428

Division of Building and Real Estate Economics
Department of Real Estate and Construction

Management
KTH, The Royal Institute of Technology
Stockholm, Sweden
Master of Science Thesis Number: 428
Real Estate Market in Bangladesh: Development

and Current Practice
Author
Md. Tarikul Islam
Supervisor
Mr. Hans Lind
Stockholm, April 2008
Master of Science Thesis

Title Real Estate Market In Bangladesh: Development
and Current Practice
Author Md. Tarikul Islam
Department Department of Real Estate and Construction
Management
Division of Building and Real Estate Economics
The Royal Institute of Technology, Sweden
Master Thesis No 428
Supervisor Professor Hans Lind
Keywords Bangladesh, Real Estate Market, Porter Model, Value
Chain, Decision Making, Regulation, Segregation
Abstract
Bangladesh is a small but one of the most densely populated countries in
the world with quite a small and poor economy. Majority of its population
fall in the low income bracket and therefore basic needs fulfillment is the
main concern for them. One of the five basic needs is shelter and state is
supposed to ensure that. But state cant do that due to resources scarcity
and this is the point in which most experts stick on for the development of
the real estate sector in Bangladesh. The sector is dominated by the
private investors, though the government is present in the market
through some housing projects. These private investors are widely treated
as profit concerns, but they are working hard to meet the rising housing
demand in the country too.
Though the pace of growth in real estate business in Bangladesh is a bit
slow now, it has been experiencing an increasing pace throughout the
whole period since its birth in late 70s. In late 90s the sector got the
highest pace since its origin and lots of real estate developers came to the
market to invest. Current low pace can be explained by the irregular
political practice in the country as there is a non political interim
government in power right now. Its widely argued that the situation will
change once the political government comes back in power.
Initially though real estate business was limited to the Dhaka city, now
the sector expands its reach to the outskirts of Dhaka city, surrounding
districts of Dhaka district, and other divisional cities. But Dhaka is still
paying for its indiscipline and random constructions in the city. Traffic
system and the environmental condition of Dhaka city are miserable in
most cases. Therefore experts and mass people are pretty much worried
about the growing constructions activities in the country.
Concerns go for different issues like decrease in agricultural lands
because of rapid urbanization, developers care only profits and involved in
random constructions, environmental degradation, and lack of
II
affordability of poor people to access housing etc. More and more

arguments come in favor of setting a framework by government for the
industry with regulations if necessary. People dont want other areas of
the country to be like Dhaka city due to unplanned urbanization.
Though currently more than 320 companies are operating in the real
estate market, top 15 companies hold 95% of the total market share
according to the opinions of experts and available quantitative
information. So one might argue that the market is rather concentrated.
But there is no entry barrier to the market and the market is open to
anyone to invest. Its not an oligopoly too. Above all there is a large
market segment remaining yet to penetrate followed by ample
opportunities for the potential investors to invest in the market. By Real
estate market the author means constructing and selling new houses or
flats, developing lands and selling them as plots, and buying and selling
old houses or lands.
Currently real estate firms are acting mainly in the divisional cities and
some neighboring districts of Dhaka. In fact the sector has been
developed thinking Dhaka as the target market. But in course of time
when lots of investors came into the market, firms had to expand the
market for their own survival at least. At the same time high population
density increased the demand of housing while the land was decreasing.
These two factors together helped real estate sector a lot to expand.
Land scarcity and the lack of social security are the two major reasons
people think lie behind the development of the real estate sector in
Bangladesh. There are other important factors too for example price of
houses, rapid growth in population, rapid urbanization, and complexities
in buying lands to build houses etc. Though there are varied opinions for
what the sector has been developed in Bangladesh, almost all the
respondents and real estate experts think that the development of the
real estate sector was obvious in Bangladesh mainly to meet the rising
demands for houses across the country. Public sectors failure to ensure
the housing for the total population enhanced the development.
Majority of the population is not satisfied about the current practice of the
sector. They think companies are mainly profits concern and dont care
about the quality of their services.
III
Foreword
Assistance and cooperation of different people in different stages of my
thesis preparation helped me to add more beauties to the report. At the
event of the report submission I sincerely remember all of them and
express my gratitude to them.
At the very beginning I would like remember all the blue collar job holders
in different real estate companies in Dhaka, Bangladesh for their valuable
time to me. Discussions with them provided me a lot of qualitative inputs
that has been added in the report. I am also sincerely grateful to my
friends who helped me to collect the primary data in Bangladesh.
Credit also goes to my peers and teachers at real estate department at
KTH. They always extended their big hands to me in my journey to study
in KTH. They also helped me to be introduced with lots of new aspects of
real estate business operations.
Finally I express my deep gratitude to my supervisor, Mr. Hans Lind for
his patience and flexible thinking. Without the flexibility that he has given
me it would not be possible for me to finish my research works.
Md. Tarikul Islam

Stockholm, Sweden
April 12, 2008
Table of Contents
Sequence Number
Topic
Abstract
1.0.
2.0.
3.0.
4.0.
5.0.
II
Introduction
1.1. Background and relevance of the research: The Context
1.2. Problem definition, aim, and the added value of the
research
1.3. Research Question & the scope of the research
1.4. Theoretical frameworks and the structure of the research
1.5. Methodology
1.6. Chapter Summary
This
2.1.
2.2.
2.3.
2.4.
2.5.
Page
is Bangladesh
History of Bangladesh
Geography of Bangladesh
Demographical data of Bangladesh
Economy of Bangladesh
Chapter Summary
Introduction to the Real Estate Business in Bangladesh

3.1. Real Estate Business in Bangladesh: A brief Overview
3.2. Real Estate Markets in Bangladesh
3.2.1. Barisal: The newest city of Bangladesh
3.2.2. Rajshahi: The education city of Bangladesh
3.2.3. Sylhet: The London of Bangladesh
3.2.4. Khulna: Industrial Zone of Bangladesh
3.2.5. Chittagong: The largest industrial zone of
Bangladesh
3.2.6. Dhaka: The Capital of Bangladesh
3.2.6.1. Brief History of Dhaka
3.2.6.2. Demographics of Dhaka
3.2.6.3. Real Estate Business in Dhaka
3.2.6.4. Products of real estate firms in
Dhaka
3.2.6.5. Market Segmentations
3.3. Real Estate Business in the Outskirts of Dhaka City
01
01
02
03
03
04
05
06
07
09
12
13
16
16
17
19
20
21
23
23
23
24
27
28
30
34
Actors Analysis
4.1. Major Actors in the real estate industry in Bangladesh
4.2. Summary of Actors Analysis
35
38
Analyzing the Decision Making Process

5.1. Decision Making Process
5.2. Fitting theory into the reality (Bangladesh scenario)
5.2.1. Problem Defining
5.2.2. Developing Alternatives
5.2.3. Developing Criteria
5.2.4. Looking at Alternatives
39
41
41
43
43
43
5.3.
6.0.
7.0.
8.0.
9.0.
10.0.
11.0.
5.2.5. Evaluating Alternatives

5.2.6. Selecting the Alternative
5.2.7. Implementation
Summary of the analysis (Decision Making Process)
Market Analysis
6.1. Introduction to the five forces model of Porter
6.1.1. Bargaining power of suppliers (Real Estate
Firms)
6.1.2. Bargaining power of buyers
6.1.3. Threat of new entrants
6.1.4. Threat of substitutes
6.1.5. Rivalry among existing firms
6.2. Applying Porters Model to the Real Estate Market in
Bangladesh
6.2.1. Bargaining power of suppliers (Real Estate
Firms)
6.3. Introducing government in the Porter model
6.4. Summary of Market Analysis
Vale
7.1.
7.2.
7.3.
Chain Analysis
Concept of Value Chain
Applying the concept to the reality
Chapter Summary
44
45
45
46
47
48
49
50
52
52
53
53
56
59
60
62
64
65
67
68
69
Effects Analysis
8.1. Different Types of effects
8.1.1. Direct effects
8.1.2. Indirect effects
8.1.3. External effects
8.2. Summary of effects analysis
70
70
71
71
72
Segregation Analysis
9.1. Defining Segregation
9.2. Reasons of Housing Segregation
9.3. Types of segregations in Bangladesh
9.4. Consequences of segregation
9.5. Summary of Segregation analysis
73
73
74
77
79
Primary Data Analysis

10.1. Personal Information
10.2. Knowledge of the Real Estate Sector
10.3. Property Ownership & Satisfaction
10.4. Customers Recommendation
80
81
83
84
85
Concluded Part
11.1. Conclusion
86
11.2.
11.3.
12.0.
Recommendations
Future Research
88
89
Appended Part
12.1. References
12.2. Appendix
Table of figures
No
2.1.
2.2.
2.3.
2.4.
2.5.
3.1.
3.2.
3.3.
3.4.
3.5.
3.6.
3.7.
3.8.
3.9.
3.10.
5.1.
6.1.
6.2.
7.1.
10.1.
10.2.
10.3.
10.4.
Title
Bangladesh in the Indian Sub Continent
Districts Of Bangladesh
Divisional Cities & City Corporations
Population at different ages
Sector Wise Contributions to GDP
Divisional Cities & City Corporations
Location of Barisal in Bangladesh map
Rajshahi in the map of Bangladesh
Sylhet in the map of Bangladesh
Khulna in the map of Bangladesh
Chittagong in the map of Bangladesh
Dhaka in the map of Bangladesh
Dhaka City Map Showing Different Market Segments
Dhaka city and its outskirts
Neighbouring Districts of Dhaka
Decision Making Process
Porters Five Forces Model
Porter Model Including Government as the sixth factor
Porter Value Chain Model
Sampling of Population
House Ownerships in Bangladesh
Stages of real estate business in Bangladesh
Most valued attributes
Page
05
06
07
08
10
13
16
18
19
20
21
23
29
31
33
40
48
65
67
80
81
82
83
Table of Tables
No
2.1.
2.2.
2.3.
2.4.
3.1.
10.1.
10.2.
Title
Religion Statistics in Bangladesh
Sector wise employment
Remittance flow to Bangladesh
Major economic data of Bangladesh
Total population in different city corporations
Factors affecting real estate business in Bangladesh
Customers satisfaction of real estate products
Page
09
10
11
12
25
82
84
Real Estate market in Bangladesh: Development and Current Practice
1.0. Introduction
This chapter starts with a discussion on the relevance and background of
the research (1.1) to provide a clear understanding about the research.
After the background an elaboration is given on the problem definition,
the aim and the added value of the research (1.2). The research question
and the scope of the research that sets the boundary of the research are
discussed too (1.3). Then after that a brief discussion is given on the
theoretical framework and the approach to the research (1.4). Finally
there is a summary for this part (1.6).
1.1. Background and relevance of the research: The Context
Bangladesh is a small country with a very low per capita income. Here
people still struggle for the basic needs fulfillment. When still lots of
people struggle to have a minimum shelter, real estate products that is
assumed to be very expensive, is kind of extra luxury to the majority of
the mass population. However, real estate sector has been developed and
it is growing with a good pace along with a gradual increase of its
contribution in total GDP. Investments in this sector have been increasing
over time and competition has becoming sharper because of the increased
number of firms as well as stakeholders awareness. Government is trying
to build a proper framework for this business sector.
People who are in the high income brackets are the main customers of
these real estate products. But day by day involvements of the middle
class in the society is increasing. In this circumstance, government is
trying to involve low income people too by suggesting the real estate
companies to plan for housing for these people. As the involvement
increases question of quality and satisfaction also comes to the scenario.
The background of this research is those factors which lead the
development of the real estate business in Bangladesh along with an
analysis of the market. At the same time how people think about the
quality of the real estate products are also considered.
1.2. Problem definition, aim, and the added value of the research
This research is basically a descriptive one with some characteristics of
normative research focusing on the development of the real estate sector
in Bangladesh. At the same time current business condition has been
covered too along with a presentation of customers viewpoints on real
estate business in Bangladesh i.e. what customers think about different
aspects like quality of real estate products. Therefore the research is
aimed at discussing the factors that contributed to the development of the
real estate business in Bangladesh and how the market is performing
now. It also focuses on various affects of the real estate business in
Bangladesh along with an economic explanation of real estate sector in

Bangladesh.
Major values of the research come from its contribution in the knowledge
spillovers system especially in the area of real estate business in
Bangladesh. However the research works finally produce a report which is
an academic requirement. At the same time the research also generates
building blocks for further studies on the subject matter, as it can be a
good starting point from where policy makers can start to go ahead.
1.3. Research Question & the scope of the research
This part talks about the main research question along with sub questions
that might arise to study the major research question. The major
research question is,
Why real estate market has been developed in Bangladesh and
how the business is going on?
To answer this central research question, the following related issues get
importance.
Demographic information of population in Bangladesh

Decision making process of buyers
Real estate market in Bangladesh and the real estate
products
Who are the major players in the real estate market in
Bangladesh i.e. actors analysis
Direct and indirect affects analysis in case of real estate
business
Value chain and segregation analysis
Consumers satisfaction of real estate products
Real estate market is linked with the whole economy. It can affect the
economy to some extent while economic ups & downs also affect it. At the
same time government plays an important role by different policies and
regulations. So its a large area to cover. But in this research the author
does not cover all. Therefore the scope of the research is the following.
Included are:
Economic conditions of Bangladeshi people

Decision making process in real estate buying
Effects of the real estate business in Bangladesh
Mainly residential real estate is covered as commercial real
estate is a not that common in Bangladesh
Dhaka city and its outskirts get the most importance, as this
is the main area where real estate firms are acting.
Excluded are:
Political change in the country.

Land law.
Other businesses affected by the real estate business i.e.
portfolio diversification.
1.4. Theoretical frameworks and the structure of the research

This section talks about the organization of the report. In brief, the
contents of the next chapters are mentioned here.
In the following chapters, overview of Bangladesh & Bangladesh
economy, demographical description of Bangladesh, and real estate
market in Bangladesh are discussed. Finally there are couples of analysis
on the issues like
Market functioning based on the Porter model.

Decision making process of buyers.
Segregation in real estate sector in Bangladesh.
Value chain analysis.
Customers opinions.
Two models of Michael Porter have been used as the theoretical

framework to build up a bridge in between theory and practice. First
model is Porters five factors model which has been used here to describe
the real estate industry of Bangladesh. However in this model Porter did
not include government. But the author found government as a very big
factor in this kind of industry. Therefore author added government as the
sixth factor in Porters model to give an idea how government can
influence the whole industry. Porters value chain model is the second
theory that has been used to look at the value creation process in the real
estate industry in Bangladesh.
The report follows inductive reasoning as the structure. It means that
facts are described first to reach to a conclusion later on. The author
selects this reasoning for better understanding of the market first rather
than reaching to the endpoint first.
1.5. Methodology
Research Design: As mentioned earlier the research is a descriptive one
along with some characteristics of normative research. The report mainly
focuses on the development of the real estate market in Bangladesh while
it also talks about the current market functions and the affects of the real
estate business in Bangladesh. Also it talks about the possibilities about
the times to come.
Sources of Data: Both primary and secondary have been used to
prepare the report.
Primary Data: Primary data comes from the interviewing
people through questionnaire and the informal interviews with
the real estate professionals and experts in Bangladesh. The
author is from Bangladesh and his personal observation,
living, and discussion with the professionals are other main
sources of primary data.
Secondary Data: Secondary data comes from different

published sources like research reports, Bangladesh Bureau of
Statistics, real estate publications, and different literatures on
real estate business etc.
Data Collection: Formal questionnaire (added in the appendix) is used to

collect data from the consumers through face to face interview with a
simple random sampling. In case of experts and real estate employees
the medium is informal interview.
Data Analysis: Data is analyzed from different perspectives like actors
perspective, markets perspective, perspectives of effects etc. These
analyzed data will be disseminated among the related parties i.e. real
estate firms, real estate economists, universities etc., to have a
knowledge spillovers affect.
The research is based on both primary and secondary data where the
researcher tried to explore the Bangladesh market of real estate. Mainly
residential properties in Dhaka and its outskirts have been talked about.
But orientation goes to the macro level too. The main aim of the research
is to prepare a report to meet the academic requirements and the reports
major influence comes from the knowledge spillovers mechanism.
2.0. This is Bangladesh

In this chapter different aspects of Bangladesh will be described. Section
2.1 discusses the history of Bangladesh while geography of Bangladesh
has been described in section 2.2. Demographical information of
Bangladesh has been put in the section 2.3 and section 2.4 focuses on the
Bangladesh economy. The chapter is summarized in section 2.5.
2.1. History of Bangladesh
Bangladesh is a small but one of the most densely populated countries in
the world. It accommodates 140 millions (BBS, 2007) people in about
147570 square kilometers (BBS, 2007) areas. The country is surrounded
by India from three sides and in the south part of the country it has the
ocean Bay of Bengal. In this part the country has the worlds largest
beach named Coxs Bazaar Beach. Bangladesh also shares a small border
with Myanmar in the southeast corner of the country.
Figure-2.1: Bangladesh in the Indian Sub Continent
Bangladesh was colonized by British when it was a part of India. But in

1947 when British had to leave Indian sub continent, Bangladesh become
integrated with Pakistan as East Pakistan. But this integration did not
continue much. In 1971 through an independence war against West
Pakistan, East Pakistan becomes Bangladesh as a new independent
country.
2.2. Geography of Bangladesh
In Bangladesh there are six divisions under which there are 64 districts.
Under these 64 districts there are 481 upazila (police stations/sub
districts) and 4498 unions. There are six city corporations in six divisions
of the country. Dhaka as the capital city of Bangladesh is the most
important city while Chittagong is the main industrial area where
Bangladesh has all the major seaports.
Figure-2.2: Districts Of Bangladesh
In fact six divisional cities got the status of the city corporations and
based on these cities urbanizations is growing up in Bangladesh. People
like to move to the city areas from the rural areas due to the more
facilities in daily life in the city areas. These facilities include availability of
better transportations, access to gas & electricity, access to better
accommodations, job opportunities etc.
Figure-2.3: Divisional Cities & City Corporations

These divisional cities are important because they represent the
urbanization in Bangladesh. They also represent the level of development
in a particular division. Normally all the administrative offices related to
the division are situated in the city.
2.3. Demographical data of Bangladesh
Demography of Bangladesh mainly includes the population demography
which has lots of different attributes. Some of those attributes are
analyzed here.
Total population: Bangladesh is one of the most densely

populated countries in the world and the rate of population growth
could not be controlled until the last couples of years. A recent
estimate shows (July 2007) that the total population in the country
is around 150 million while the total amount was 124.3 million in
the latest census in 2001. The figure for total population was 136.7
& 138.6 million in 2004 & 2005 respectively. The annual growth
rate was 1.42% (BBS, 2007) in both 2004 and 2005.
Age: The average life expectancy in Bangladesh is 65. 01 year (BBS

2007) while the expectancy is 64.5 & 65.7 for male & female
respectively. Among the total population 32.9% falls in 0-14 years
age group, 63.6% falls in 14-64 years age group, and 3.5% falls in
the 65 years and over age group. The median age is 22.2 years for
both male and female.
80+
75 - 79
70 - 74
65 - 69
60 - 64
55 - 59
50 - 54
45 - 49
40 - 44
35 - 39
30 - 34
25 - 29
20 - 24
15 - 19
10 - 14
05 - 09
00 - 04
14
12
10
10
12
14
Figure-2.4: Population at different ages (Source: BBS 2006)
Male/Female ratio: An estimate in 2006 shows that the ratio

varies in different times.
o At birth the ratio is 1.06
o Under age 15: The ratio is 1.06
o 15-64 years: The ratio is 1.04
o Above 65 years: The ratio is 1.16
In 2004 & 2005 this ratio was 105.2 & 105.0 respectively while the
expectation for 2006-20011 is 106.0 (BBS 2007).
Language: Though there are some dialects in different regions,

about 98% of the total population speak in Bangla in Bangladesh.
English is widely spoken too specially in the urban areas. Students
learn English in schools as their second language. In the corporate
area most of the communications are in English now a days.
Dialects are found in Sylhet, Chittagong, Hill Tracts, Noakhali,
Rangpur, and some parts of Barisal.
Religion: Bangladesh is a Muslim majority country and almost

89.58% of the total populations are Muslims. Hindu is the second
majority having 9.34% of the total populations. In addition to these
three other major groups are Buddhists (0.62%), Christians
(0.31%), and Animists (0.15%). In spite of this variety, people live

coherently in the society and thats why UN declared Bangladesh a
Moderate Muslim Democratic Country.
Table-2.1: Religion Statistics in Bangladesh (in %)
Religion
Muslim
Hindu
Buddhists
Christian
Others
Census 81
86.65
12.13
0.62
0.31
0.29
Census 91
Census 01
88.31
10.52
0.58
0.33
0.26
89.58
9.34
0.62
0.31
0.15
Sources: Population Statistics, BBS, 2006
Ethnicity: Though there are some ethnic groups, Bengali is the

dominating ethnic group. 98% of the total population is Bengali.
Other ethnic groups are Chakma, Marma, Garos, Biharis, Oraons
and Mundas.
Education: In case of education in fact Bangladesh is still in the

development stage. Latest data shows that the literacy rate was
51.6% & 47.5% in 2004 & 2001 respectively (BBS 2007). Though
male has the higher literacy rate (57.2% in 2004) than female
(45.8% in 2004), in the last decade female populations made huge
improvements. It might be due to the fact that government now has
a lot of assistance programs to encourage female education in the
country. Currently there are 78 public & private universities
including engineering universities and 42 medical colleges also both
private & public in Bangladesh.
2.4. Economy of Bangladesh

Bangladesh is a small country with quite a small and poor economy. Since
its independence the country has been administered by lots of
undisciplined administrations that could not ensure the maximum
utilization of the available resources let alone finding the new sources of
resources. As a result the country is still a developing country.
Bangladesh is basically an agrarian country. Majority of the population is
involved with agriculture either directly or indirectly. But the contribution
of agriculture in total GDP has been decreasing in the last few years and
currently service is the dominating sector in the Bangladesh economy.
Figure-2.5: Sector Wise Contributions to GDP (Source: BBS, 2006)

But from the labor involvement perspective still agriculture sector has the
dominance in the economy. This sector has the highest level of direct
labor involvement and one of the major findings is that though the
contribution of agriculture in GDP is decreasing, labor involvement is not
decreasing. Rather more and more labor force is being involved in the
agriculture sector. It might happen due to the high level of unemployment
in the country. Service sector involves the second highest amount of
labors. The labor involvement in construction sector is increasing year to
year. It well explains that the sector is a growing sector.
Table-2.2: Sector wise employment (in million)1
Sectors
1995-96
Agriculture, forestry, and fisheries 17.0

Trade, hotel & restaurant
6.0
Manufacturing
3.5
Transport,
storage,
and 2.2
communication
Community and personal services 4.8
Construction
1.0
Source: Statistics Bangladesh, BBS, 2006
1999-00
2002-03
19.8
6.1
3.7
2.5
22.9
6.7
4.3
3.0
5.1
1.1
2.7
1.5
Bangladesh imports more than it exports and therefore it always have a

negative trade balance over the years. It also has huge trade gaps with
different countries including neighboring India and Pakistan.
Item
Trade
Balance ($m)
Years
200001
-2011
200102
-1768
200203
-2215
200304
-2319
200405
-3297
200506
-2879
Table shows the employment by major industries thats is not necessarily the total
labor force.
10
Still the export amount is increasing over the years. In 2006, countrys
total export was 10.5 billion US$ which is 21.6% higher than previous
year. The main item of export is readymade garments, which contributes
75.0% of the total export earnings. EU, USA and Canada are the major
markets for the exporting products. Earlier Bangladesh could export jute
& jute made products and tea to some countries in a large quantity. But
gradually garments sector were getting more and more attention and for
the last couple of years this sector dominates the scenario.
Another most important aspect of Bangladesh economy is remittance.
Lots of Bangladeshi people working abroad send money to their
belongings in the country that with the multiplier affects help the total
economy in greater details. At the same time total amount of remittances
is also increasing day by day for which now a day its commonly believed
that remittance is the backbone of the Bangladesh economy.
Table-2.3: Remittance flow to Bangladesh
Year
2002-03
Number of Employed
Persons
241425
Remittance (Million
USD)
3061.97
2003-04
272633
337.97
2004-05
251699
3848.29
2005-06
286381
4801.88
Source: BBS, 2006

In addition to these, there are other sectors like fishing, forestry, mining,
constructions, electricity & gas, foreign direct investments, and real estate
with different contribution ratios to the total economy.
Real estate sector is one of the newest sectors in Bangladesh. Until the
last couples of years this sector was not that attractive. But currently the
sector has a great investment potential. It happened mainly due to the
growing pace of urbanization and the scarcity of lands in the urban areas.
One study on labor force in 2002-03 fiscal year shows that about 1.94
millions of the total 46.3 millions2 labor force (labor force survey 2003)
are directly involved with the real estate sector in Bangladesh. In 2005-06
fiscal year the sectoral share of real estate in the total GDP was 8.04% at
current price while the share for 2004-05 fiscal year was 8.36% (BBS
2006). The following table represents an overall picture of the total
economy of Bangladesh.
46.3 millions are the available total labor force while the total employed labor force is
44.3 millions.
11
Table-2.4: Major economic data of Bangladesh

Item
2003-04
2004-05
200506
GDP (in Billion TK)

GDP Growth Rate (%)
Per capita GDP (in TK)
Per Capita GDP (in US$)
3329.73
6.27
24628
418
3707.07
5.96
27061
441
4157.28
6.63
29995
447
Sectoral Share of GDP

Agriculture (%)
Industry (%)
Service (%)
Real estate (%)
21.04
26.60
52.36
20.14
27.22
52.63
8.36
19.61
27.91
52.48
8.04
Inflation (CPI, National)
5.83%
6.48%
7.17%
Source: BBS, 2006

Bangladesh, the small but densely populated country that got
independence in 1971, could not create its own base for economy in the
last 36 years. It still has deficit budget and the country almost all time
have trade deficits with other countries including neighboring countries
like India and Pakistan. Though agriculture employs most of the countrys
labor forces, service sector is the leading contributor in GDP. The country
is not pretty much industrialized though the pace of industrialization is
increasing over times. Real estate sector is the result of that increasing
pace of industrialization. Though the sector is less attractive right now,
some people argue that the sector is being settled in fact and there are
still a huge market remaining to penetrate. In their opinion the initial
abnormal profits in the sector is decreasing and thats why some people
say that the sector is loosing attractiveness. In fact the sector is getting
the real shape with the offers of ample opportunities in coming times.
Another argument is that due to the economic bad times currently the
sector is little bit fade, but it will get its real face once the economy gets
its real track back.
12
3.0. Introduction to the Real Estate Business in Bangladesh

Real estate business in Bangladesh started in the late 70s. But the
business got the main attention in late 90s and in the mean time it
experienced a boom too. In the following sections real estate business in
Bangladesh (3.1) and the real estate market (3.2) in Bangladesh are
described. Then after that real estate business in the outskirts of Dhaka
city is described in section 3.3 followed by the chapter summary in
section 3.4.
3.1. Real Estate Business in Bangladesh: A brief Overview
Real estate business in Bangladesh is limited to some designated city
areas till now. These cities are the six divisional cities which also got the
status of city corporations. They represent the level of urbanization in
Bangladesh too. In reality not all the cities have the same level of real
estate business activities. Even some cities do not have it at all. So one
might argue that the real estate sector in Bangladesh has a great
potential in coming days considering the fact that there is still a large
market segment remaining to penetrate.
Now question might arise why there are no real estate activities in the
rural areas. The answer is that in rural areas people build their houses by
own efforts and sometimes with the help of construction workers
especially in case of buildings. There are no architects to design houses in
rural areas because they are not really needed there. Most of the houses
in the rural areas are not buildings. Even when there are buildings they
dont employ any architects or construction firms to build the houses.
Rather they hire construction workers and discuss their preferences with
them and finally reach a decision how to build the house. The same
pattern is present in the small towns in different regions of the country.
Figure-3.1: Divisional Cities & City Corporations
13
The major part of the preference of rural people comes from their
observation of the houses in neighborhood and in the city areas. When
they visit the city areas they get new ideas about housing and try to
implement those ideas in their own house building activities.
Another question might arise about the differences among the cities
based on real estate firming activities-Why there are differences among
cities? In fact development of the real estate business activities in a
particular area depends on a lots of things and the whole process is much
more complex in a country like Bangladesh where
The level of education is variable across the country

People have the differing views on the use of their lands
Affordability and the housing requirements are different
Government dont yet have a housing policy formally
Financial sector is less oriented to the real estate business
development
Preferences for housing is different than that in other countries
Difference in between rich and poor is significant and middle class
diminishes
Like all other developing countries, in Bangladesh land is one of the

crucial factors for a lot of other products which means that there is always
a trade off in case of land use. These trade offs sometimes limit the use of
lands toward the maximum possible welfare for both the landowners and
the country in a macro level. In Bangladesh land can be used in any of
the followings.
As input of agriculture: Bangladesh is an agrarian country and

majority of the total population is involved with agriculture either
directly or indirectly. In most cases agriculture is almost the sole
source of incomes for this large part of the population.
As factor of production: For business firms especially for the Small
and Medium Enterprises (SME), land is one of the most important
factors. In fact costs of the lands are sometimes the largest or the
second largest costs for these firms.
As input in Business Model: This is especially relevant for the real
estate business firms. Land is the most basic factor on which a real
estate firms business model is developed. So it carries an extra
weight when one decides on the business model.
As a result, when a farmer decides about the use of his/her lands, he/she
has to think a lot because of the potential losses arising from the
opportunity costs. But the reality is little bit more difficult in Bangladesh.
Here some people have lands as the only source of income. So when they
decide upon the use of lands they cant think it much really because this
is the only option they have.
14
Educational level is highly variable across the country. So there is a

significant difference in thinking on housing among the people who live in
urban areas and the people who live in rural areas. Therefore there is a
direct link in between educational level and the preferences for housings.
In urban areas the rate of educated people is higher than that of rural
areas. Therefore these urban people are familiar with the newness in
livelihood arising from the technological development in course of times.
It affects their thinking of housing arrangements. But in rural areas the
situation is reverse and the perception is different.
Some people like to have house with large surroundings while some
people think they dont need large surroundings as it hinders the
maximum gains from the land use. In Bangladesh people like to have a
house which might not be a building, but it should have the surrounding
with lots of open spaces, trees, ponds, and tube wells. It requires large
amount of lands as well as large amount of monetary investments which
put the questions on the affordability. Therefore there is a gap in between
the preference and the affordability leading the people to adaptation.
Moreover, now a days one cant even think of this kind of houses in some
city areas like Dhaka due to the scarcity of lands.
Shelter is one of the five fundamental rights of Bangladeshis. But this is
only in constitution and in real life the practice of this part of constitution
is absent in most cases. It happens due to the unavailability of resources
from the part of government followed by lots of slums in Bangladesh
especially in city areas. Until recently Bangladesh government could not
focus on the facts that
There are frauds in the real estate business in Bangladesh

The gap in between rich and poor is widening gradually and
therefore middle class and poor people are facing difficulties
to afford housing
Its surprising but true. However the good thing is that Government have
started to think about the issues and they are focusing on a formal policy
about the real estate business in Bangladesh. At the first step few weeks
back Bangladesh government suggested the real estate firms to think
about the housing for middle class and poor people considering their
affordability. Bangladesh Bank, the central bank of Bangladesh, also
declared a decrease in the interest rate on housing loans. It also said that
gradually it will make the housing finance related issues more flexible.
Availability of relevant financial services as well as access to those
financial services by the mass people is one of the most important issues
in case of real estate business development in Bangladesh. Banks, except
a couple of banks, dont provide housing loans and those which provide
housing loans have strict conditions. These banks charge higher interest
15
rates for housing loans and they sometimes want the loan backed by
something i.e. property as mortgage, which is difficult for a good number
of people. Banks try to explain the situation saying that the scope of real
estate activities is pretty narrow in Bangladesh and they always carry the
potential credit risks coming from the borrowers.
In addition to that there are other factors which we might say common
factors around the world that can affect the real estate activities in a
particular region. These factors includes but not limited to the followings.
Population density of the region.

Rate of urbanization.
Land availability and land use pattern.
Land price.
Income of the people.
Cultural phenomenon.
3.2. Real Estate Markets in Bangladesh

It was mentioned earlier that the real estate sector in Bangladesh is yet
to penetrate all the city areas. So when one talks about the real estate
markets in Bangladesh its a good start to talk about the real estates
markets that are already in presence or expected to be in presence in
those city areas. The following sections describe the real estate activities
in six divisional cities in Bangladesh.
3.2.1 Barisal: The newest city of Bangladesh
Barisal is the newest division of Bangladesh and the main town of the
division, Barisal, got the status of City Corporation. The division has six
districts under its supervision and the city corporation has the lowest
amount of population among all divisional cities.
Figure-3.2: Location of Barisal in Bangladesh map

In this city and its surroundings, real estate activities have not yet been
started. It might happen due to the different reasons. For example,
16
The population density is not high here.

The level of urbanization is very low here. One still can feel the
rhythm of rural life in Barisal.
The scarcity of lands to build house in the city and its surrounding
areas is still low. Thats why people are not yet thinking of efficient
use of the lands they do have. They rather build house in a way to
put as much luxury as they can. But as the city might turn into the
main gathering centre for the people coming from different districts
in near future, there is a chance that lands will be scarce and real
estate business will be started here too.
Though the land price is growing day by day, its still not beyond
ones means.
One of the major characteristics of the Barisal city is that there are lots of
students staying in this city. It has the best and most famous university
college of the southern region of Bangladesh named B. M. College. Almost
thirty thousands students study in this college. In addition to that the city
has six other colleges and one medical college along with lots of other
educational institutions like Textile College, polytechnic institutions etc. A
large number of students come from outside of the Barisal city and the
educational institutions cant provide accommodation to all students.
Therefore students stay in mess or rented apartments. But the condition
of messes are not really good and its pretty difficult to rent apartments as
the landlords dont like to rent their houses to students. So there is
always a need of new apartments for students and it could be one of the
best opportunities for the real estate business firms to penetrate in near
future.
3.2.2. Rajshahi: The education city of Bangladesh
Rajshahi division includes sixteen districts of the northern region of
Bangladesh. In addition to the Rajshahi city corporation, Rangpur and
Bogra are another two mentionable towns from this division. These two
towns get attraction due to the bulky development activities in these
towns in different times. Rangpur came to focus for the huge
infrastructure development by that time government in 80s to 90s and
Bogra had lots of development activities in the last couples of years. Both
cities have lots of educational institutions including medical colleges.
The total population of Rajshahi city is 447031 (BBS, 2006) that are
pretty much low compared to other densely populated cities in the
country. But this city is pretty much important for the country because of
the following two roles.
Rajshahi is the education city of Bangladesh. It has a large number

of educational institutions including universities, medical colleges,
engineering universities, polytechnic institutions etc.
17
The division produces a substantial part of the total agricultural

products in Bangladesh.
Figure-3.3: Rajshahi in the map of Bangladesh

Rangpur and Bogra towns have the more or less same characteristics.
Both areas have their major orientation to the agricultural products
though in Bogra industrialization has got a new pace in recent years.
No one of the above mentioned regions has real estate activities. It
happens due to the following regions.
The population density is not that high and therefore land is not yet
scarce.
Most of the lands are being used as the input of agriculture. So
people live in self made houses normally.
The growth of urbanization is very low in these areas.
Majority of the population are poor in these regions and they dont
afford the expensive houses. As a result real estate business firms
are not pretty much interested in those areas.
But there are great potential for the real estate business in these areas
especially in Rajshahi city. This could be a great market for the firms
which can offer houses for middle and low income people.
As mentioned earlier, Rajshahi is the education city of Bangladesh. So
there are lots of students coming from all over the country stay here for
educational and job purposes. They require houses, but they dont afford
expensive housing. So if any company can offer housing for medium
income and low income people, it might gain from the market
substantially. Students especially can be a very good target market and it
should be profitable business venture. Students are pretty large in
numbers and they come each year. Another fact to consider is the time
period. A company even can think relatively long term. A student in a
university stays minimum five years in the city for completing graduation
only. If he goes for master or PhD then it takes much longer time.
18
3.2.3. Sylhet: The London of Bangladesh

Sylhet is another new division in Bangladesh. The city, Sylhet, has the
second lowest population among all the cities. But still the city has the
great potential for the real estate business. The major factor behind this
is the income level of people. People are pretty much rich in this area and
can be the potential target market even for the luxury real estate
products.
The city has couple of universities and a medical college and therefore a
medium amount of students study here. The only public university here in
Sylhet along with the medical college is the main attraction to the
students. But these institutions admit a small amount of students per
year. So students here cant be a logical target market because it might
not provide the expected return on the investments for the firms.
A small scale real estate business activities have been started in this area
already and the area is getting greater attentions from the investors day
by day. But there are some problems to do business in the Sylhet region
mainly due to the cultural differences.
Figure-3.4: Sylhet in the map of Bangladesh

This region has some different cultures in addition to the mainstream
Bangladeshi culture. They have their own dialect to speak and sometimes
a lot of people cant speak in Bengali clearly. The level of education is also
low in this region, but the situation is improving. Another significant
characteristic is that at least one member of almost every family from the
greater Sylhet region live in foreign countries (mainly England). Thats
why Sylhet is sometimes called the London of Bangladesh. These
migrated people send money to their families and families spend quite a
large amount of money on housing. The people have some kind of ego
that they are from Sylhet and they seem to be united throughout the
world. Its widely believed that they dont like people from other regions.
Therefore its very difficult to do business in Sylhet region if one is not
19
from Sylhet region. One has to be able to speak in Sylheti, the dialect in
Sylhet.
Most of the developers and builders who are doing real estate business
here are from Sylhet which limits the scope for others to enter into this
area. At the same time some migrated Bangladeshis from London invest
in the real estate sector in this market and they are pretty much favored
by the local people. So this market has narrow offers for the firms not
owned by the people of Sylhet or not originated from Sylhet.
3.2.4. Khulna: Industrial Zone of Bangladesh
Khulna is the second most important industrial zone of Bangladesh and it
is situated in the south west part of the country. The city has the third
largest amount of population among the cities and there are lots of
industrial units in this area. People from Khulna sometimes claim that
they have a kind of multicultural environment in the city as people from
different parts of the country came and settled here. But they still have
their own cultures.
The city has large amounts of educational institutions including couples of
universities, medical colleges, engineering universities, polytechnic college
etc. But except the public university, engineering university, and the
medical college no other educational institute attracts students those are
not from Khulna region. So there are not that much students looking for
housing here. At the same time universities offer large scale
accommodations for the students. So though there are lots of educational
institutes in the city, students cant be a logical target market.
Figure-3.5: Khulna in the map of Bangladesh

The level of education in this area is medium and in an average majority
of the people are of medium income. But still there are some real estate
activities are found in this area. The reasons are in point.
Due to the high population density the market is attractive to the

real estate firms.
20
Though the city is expanding in almost all directions, the level of

land scarcity is increasing gradually.
People have money to spend on luxury housings also.
The growth of urbanization is pretty high which motivated the real
estate firms.
Most importantly universities in this area have some special courses
on real state developments and architecture. It means that real
estate firms have some readily available local resources to start
their venture. It works as an added advantage for the firms, as
these local graduates know the market well than others.
Its worthy to mention here that all the real estate firms that function
here are of small and medium size. They normally operate outside of the
city corporation. Therefore now-a-days experts put the question on
whether or not these small and medium firms will be able to meet the
increasing housing demand in Khulna city arising from rapid
urbanizations.
3.2.5. Chittagong: The largest industrial zone of Bangladesh
Chittagong is the main industrial city of Bangladesh and its in the second
position among cities based on total population. In Chittagong people
speak in a different dialect and they have their own culture. The level of
education was not much good until the last couple of years. Though the
city has the second largest population, real estate business is not yet
seen that much in this region. It might happen as because the level of
land scarcity is low till now.
Figure-3.6: Chittagong in the map of Bangladesh

At the same time the city expands in all directions it can which allows
people to live in the outskirts of the city while doing jobs or business in
the city centre. In fact as the number of industries increase city also
expands.
One of the mentionable characteristics of the population in Chittagong is
that it is comprised of lots of labor class people who come to the city for
21
jobs from different other regions of Bangladesh. These jobs are mostly
low paid jobs like jobs in the garments sector. As a result people always
look for the cheaper houses and they go out of the city area to live. But
its also true that there is a significant amount of population in the city
who has above average annual income and affords luxury houses. These
people are the basic target here in Chittagong market for the real estate
firms and therefore there are couples of companies are working here in
the real estate sector. Initially there were some small and medium size
firms, but now almost all the big firms that mainly operates in Dhaka
region, focus on Chittagong market. Some have already started housing
projects here.
In Chittagong division, Bangladesh has two beaches among which one is
Coxs Bazaar, the largest beach in the world. Coxs Bazaar is pretty much
attractive for the real estate companies especially for the commercial real
estate developers because of the large scale tourism activities in this area
around the year. In peak season the demand for residence becomes so
high that one has to book hotel or rest house well before one plan to go
there. At that time price is also very high i.e. almost double or triple of
that in off peak season.
Some large real estate firms operate in this area mainly to build hotels,
restaurants, and rest houses. There are also demand for residential
houses as some rich people of the country like to have houses here in
case they want to visit the city & beach sometimes. Recent data shows
that some five stars and four stars hotels have already been built in Coxs
bazaar and these are near to the beach. But the demand for residence is
still increasing which means that this market still have large potential. In
reality the market now looks for the quality services and therefore it
provides ample opportunities to them who can build the houses or
restaurants or hotels with quality through maintaining some pre-defined
standards.
Another unique characteristic of this division is that one significant part of
the division is hilly. Normally tribal people live in these hilly areas and
they build their own houses though the houses are not of quality at all. In
fact one might argue that they live in hills not in houses.
Therefore chances for the real estate companies in this region are mainly
oriented to the high income people. Thats what happening here in reality
too. Some small scale real estate firming is seen in the area named
Khulshi, an area that is pretty close to the city centre. Its said that elites
of the city has moved to this area in course of time. One of the major
features of this area is that it has beautiful landscapes and proper
arrangement of security, a primary concern for the people in this area.
22
In future it is hoped that real estate firms attention will be moved from
Dhaka to Chittagong to meet the rising demand of housing in this area. It
should be mentioned here that the demand rises normally because of the
high pace of industrialization in this area.
3.2.6. Dhaka: The Capital of Bangladesh
Dhaka city, the capital city of Bangladesh from Dhaka division, is the main
area of real estate business in Bangladesh till now. The city is expanding
day by day in every direction it can and this expansion generates the
opportunities for the real estate business sector. In Dhaka the population
density is pretty high and its still increasing. People from rural areas and
the outskirts of Dhaka city come to the city everyday which makes an
enormous traffic in the city per day. All the major government offices and
diplomatic offices are also in Dhaka that made the country centrally
administered followed by an increase in the daily traffic to the city.
3.2.6.1. Brief History of Dhaka
The city which was born during the Moghul Empire and grown with the
British rule, has experienced a lots of ups and downs of history. But after
the expiry of British rule in 1947, when Bangladesh has been separated
from Pakistan in 1971, Dhaka city got the most attentions as the
powerhouse of the country. Rapid development and growth was found in
every sector. But gradually the city was lacking proper management and
from the late 90s of 20th Century its growth and latter development is
marked with sheer lack of proper and far-reaching planning.
Figure-3.7: Dhaka in the map of Bangladesh

3.2.6.2. Demographics of Dhaka
With 816 square kilometres areas Dhaka is the largest and the most
populous city of Bangladesh. This is also the capital city of Bangladesh.
Currently the city has around 6.5 million populations (BBS, 2006) and the
23
amount is increasing day by day. The rate of growth of population is 4.2%

per year, which is one of the highest amounts among the Asian cities. In
reality the population is much more which amounts to 11.9 millions when
all the localities in the wider metropolitan areas are included. The city has
the largest numbers of educational institutions among any city of
Bangladesh and it also has the highest literacy rate in the country which
amounts to 62.3% (BBS, 2006).
There are several reasons why populations are increasing in the city
among which some are Dhaka provides the best possible living standard in Bangladesh.
Also this is the most urbanized area of Bangladesh. So people
move to this city to have the better life standards.
Almost all the government offices and diplomatic missions are in
Dhaka for which lots of people move to the city either to work or to
meet their demand.
Enormous amounts of universities, engineering universities,
university colleges, colleges, schools, vocational training centres,
medical colleges are situated in Dhaka city and its outskirts.
Therefore huge amounts of students and officials including teachers
move to the city.
In Bangladesh Dhaka provides the largest amount of jobs and
almost all the head offices of different companies are in Dhaka.
This also attracts people to move to Dhaka.
Unavailability of jobs in the rural areas motivates people to move to
Dhaka.
In brief one can explain the high density of population in Dhaka city by
the availability of jobs and educational institutions because these two are
widely claimed reasons of migrations to Dhaka.
This huge population in Dhaka city is the triggering point for the real
estate developers. They could combine the two major factors which are
land scarcity and the bulky growth rate of population in Dhaka city. This
combination has become the blessing for most of them at least at the
initial time of real estate business in Bangladesh. Table 3.1 shows the
population scenario in different divisional cities of Bangladesh.
3.2.6.3. Real Estate Business in Dhaka
While there are so many real estate developers in the market, there are
also very few of them who have maintained the quality, safety and
customer preferences. It is customary in the country that the first day
quality and impression is lost after a while when people start getting a bit
of familiarity. This happens due mainly to lack of professionalism.
24
Sometimes the consumers here are in a fix to choose a particular brand

out of many.
A good number of real estate companies are working under one umbrella
association named 'Real Estate and Housing Association of Bangladesh'
(REHAB). It has been formed in 1991 with eleven (11) initial members in
order to strengthen the role of real estate sector in economy. Currently
321 real estate developers are affiliated with this association.
Table-3.1: Total population in different city corporations
City
2001
2006
Dhaka
Chittagong
Khulna
Rajshahi
Sylhet
Barisal
5333571
2023489
770498
388811
263197
192810
6479751
2438403
830454
447031
394119
205166
Source: BBS (Bangladesh Bureau of Statistics), 2006

Real estate business has been started in Bangladesh at late 70s. At that
time only five (05) developers were engaged in this business. In 1988 the
number was increased to 42. Then after that the sector experiences a
boom and in 2004 the total number of real estate developers has been
increased to 250. Right now in 2008, the total number of REHAB affiliated
developers is 321 while there are lot of other developers who operate
individually. However, its widely argued that almost 90% of the total
business is dominated by top 10-15 companies. Therefore market is
pretty much concentrated.
There are lots of discussions about the booming period of the real estate
business in Dhaka-why did it happen? Suddenly the demand of real estate
products has been increasing too much that lots of developers came to
the market to invest. Discussions with the experts, customers, and other
relevant persons produce the following list.
Land Scarcity: Due to the large number of migrants and industrial

activities, total amount of available land have been decreasing over
time. At a certain point in time Dhaka become too crowded and
some people argued that this city is not eligible to live in. In reality
Dhaka city has not been properly managed when it started to
expand. In a modern city there should be at least 15% spaces
allotted to the transportation system. Dhaka does not have that
amount and the transportation system suffers. There are terrific
traffic jams in the city along with the pollution.
25
However random constructions in the city have not been stopped.

Though there were regulations about the construction activities,
they have not been followed properly. As a result efficiency of land
use could not be gained followed by the scarcity of lands. Lands
scarcity helped booming of the real estate sectors because people
wanted to secure the living place anyhow.
Hazards in purchasing land: Bureaucratic process of land

purchasing motivated people not to buy lands. Therefore they
started to depend on the developers who manage everything
including land acquisition.
Hazards in construction of building: To construct a house one

has to deal with all the stakeholders including engineers, financing
institutions, architects, construction workers, brick companies,
cement companies, municipal corporations, tax authority etc. This
brings lots of complexities to ones life and to get rid of that one
does not do by oneself. Rather one like to depend upon the
developers.
Security: This is one of the most important reasons for which

people used to depend on the developers rather than constructing
by themselves. Well this is a socio cultural phenomenon. One could
not be sure that one can construct the building even though one has
land and all other relevant stuffs to build the house. One had to
satisfy some other parties to get the final green signal. These
parties
includes
some
corrupted
officials
from
different
administrative sections like tax department, municipal office, local
loafers etc. Local loafers could be so dangerous sometimes that
people had to think about the total loss. To get rid of this insecurity
people started to depend on the developers. Developers have power
and capacity to manage all these parties and the risk becomes low.
Above all in the post construction periods developers help in
arranging the better security system in the buildings.
Public Sector Failure: Though according to Bangladesh

constitution and United Nations resolution shelter is the
fundamental right of any citizen of the country. But due to the
resources scarcity Bangladesh government could not meet the
growing demand of houses let alone houses for the people who lack
affordability. So alternatives came out from the private sectors and
there is now a formal real estate sector in the country. Almost all
the firms are private in this sector and they are trying to meet the
growing demand of housings. But not necessarily they try to meet
the demand of houses for the people who lack affordability.
26
Price: Prices of land and apartments were increasing rapidly day by

day. So people wanted to ensure their living place as soon as
possible which puts a pressure in the supply side.
Decrease in bank interest rate: Decrease in the bank interest

rate has an inverse relationship with the real estate activities. So
when rate was decreasing demand for the houses were increasing.
Decreasing bank interest rate is pretty much helpful for the people
who have the access to the financing system of the country.
Increased population: Dhaka as one of the major suppliers of

jobs and educational services among others attracted lots of people
from the rural areas and the migration rate was very high.
Increased population puts a pressure on the demand side and
developers increased the supply. New investors also took this
chance to get into the market.
Rent variation: To meet the growing demand for houses

developers developed lots of houses because rent in apartments is
comparatively higher than the rent of privately constructed flats. It
worked as a motivating factor.
Complimentary services:
garbage disposal, central
services, roof top facilities,
developers. It reduces the
liked it much.
Complimentary service facilities such as

satellite TV connection, apartments
lift and so on are well managed by the
complexity of the daily life and people
3.2.6.4. Products of real estate firms in Dhaka

In Dhaka real estate firms operate in both fields-residential and
commercial. But the main attention goes to the residential real estate.
Within these two broad categories there are variety of products too. For
example, residential real estate products range from Duplex Home,
Triplex Home, Penthouse, Luxury Home, Furnished Apartment,
Unfurnished Apartment, to Condominium and Vacation-Resort etc. On the
other hand commercial real estate products include Industrial Shed, Agro
Farm House, Warehouse / Godown, Commercial Space, Industrial space,
Office Building, Office Suite, Furnished Office, Commercial Showroom,
Exquisite Office, Industrial Park, Factory, Lofts, Shopping centres etc.
27
3.2.6.5. Market Segmentations

The market of real estate business is highly segmented. This
segmentation is mainly based on location, price of the land, size of the
apartments, and the amenity. Following is a general way of segmentation.
Segmentation-01: This includes Baridhara, Gulshan, Banani,
DOHS, and Uttara. Gulshan, Banani, and Baridhara are three most
expensive zones of Dhaka city. Majority of the diplomatic offices
are situated in these three zones especially in Gulshan. In Uttara
and DOHS both expensive and inexpensive houses are available.
Middle class people also afford housing there. Some industrial units
are also found in these areas.
Segmentation-02: Dhanmondi is in segmentation two. This is a
big area and it becomes famous as a residential area since the time
first president of Bangladesh after independence has been living
here. There are lots of universities and colleges mostly private in
this area. The average income level of people is pretty high in this
area. But now-a-days this area is loosing some of its reputation as
a gorgeous residential area because of the introduction of some
industrial activities in this area. At the same time lots of medium
income people could access the housing in this area because of the
introduction of large scale real estate activities in this area. This is
something high income people treat as degradation of the area. So
some high income people moved to Gulshan or Banani from
Dhanmondi. One of the special features of this area is Dhanmondi
Lake which is pretty long and covers almost all sections of
Dhanmondi. Therefore there are some amazing & very expensive
housing projects around the lake where houses have lake view.
Segmentation-03:
This
segment
includes
Segunbagicha,
Shantinagar, Kakrail, Malibagh, and Kalabagan regions. All of these
regions are semi residential and semi industrial. But regions like
Segunbagicha and Kakrail are famous for government offices
including secretariats. However generally both high and medium
income people can afford housing in these areas.
Segmentation-04: This segment is bit away of the CBD (central
business districts). It includes all the sections of Mirpur. This area
mainly for low and medium income people. But the scarcity of land
moves high income people too in this segment for housing. Lots of
industrial activities are found in this area among which garments
industries are mentionable. In fact majority of the garments
industries in Dhaka city are situated in different sections of Mirpur.
28
Figure-3.8: Dhaka City Map Showing Different Market Segments

(Source: Banglapedia)
29
Segmentation-05: It includes the old Town of Dhaka City. Well

there are not much real estate activities in the original old town.
But when one includes the expanded old town area then there are
lots of real estate activities are found now a days. Mostly medium
income people are moving to these areas. Once again land scarcity
pushes the high income families too to buy houses in these areas.
Segmentation-06: Motijheel, Dilkusha, Fakirapool DIT Extension
Road, RK Mission Road, Shahidbagh, Kawran Bazar, Pantha Path
etc. comprise the segment six. This segment is the main target
market for the developers who develop commercial real estate
products like office buildings. But due to the land scarcity, the
scope of new construction activities is pretty much narrow in these
areas.
3.3. Real Estate Business in the Outskirts of Dhaka City
As mentioned earlier that the land scarcity is pretty intense in Dhaka city
and the city is expanding in all directions it can. As a result the volume of
metro area is also increasing in courses of time. Therefore real estate
developers get the chances to expand their markets in the outskirts of the
city too.
In south part, the city expands towards Keraniganj, the police station in
the border of Dhaka and Munshiganj district. Currently there are lots of
real estate developers working in this area with different projects
targeting different income level people. One good thing for the developers
is that people are now unhappy with the living conditions in Dhaka city
due to traffic jam, crowds, pollution etc. and at the later stage of life
especially when one retires from ones job, one wants to get out of this
city to live a peaceful and smooth life with fresh air. So these areas gets
an enormous amount of attention from those people who are going to
retire in the next five to ten years. Therefore pension funds enter into the
market as investment in real estate sector.
The same pattern is visible in other directions of the city too. In north
part of the city, it expands towards Savar, the police station in the border
of Dhaka and Manikganj districts. In fact Savar region got the most
attention in the last couples of years from the real estate developers. The
reason is the dramatic development in the communication system in
between Dhaka and Savar in the last couples of years. Savar is only few
kilometres away from the last point of metro area in Dhaka and the
transportation system got a revolutionary improvement after the
construction of Dhaka-Aricha highway in 2000. This is one of the very few
busiest highways in Bangladesh.
30
Figure-3.9: Dhaka city and its outskirts (Source: Banglapedia)

Right now real estate firms not only covers Savar but also the Manikganj
district. Its pretty rational because people who are about to retire or who
plan their future well before are buying houses or lands in these areas. In
fact very few people could predict that after the Dhaka-Aricha highway
construction, there would be so rapid urbanization in those areas followed
by the rapid movement of people from Dhaka city to its outskirts.
31
Another very important place under Savar police station is Ashulia. This is
a place where people come to spend some of their free times when they
become bored in Dhaka city. This is kind of recreational spot in the
vicinity of Dhaka city for the people in Dhaka and its outskirts. There are
two amusement parks here and the spot is very close to the Dhaka
airport and another famous residential area Uttara. Also its very close to
the Dhaka Export Processing Zone (DEPZ), the industrial park where lots
of people works in different foreign companies. So the place holds a
strategic importance for which it has been targeted by the real estate
developers in the last couples of years. But as there were some conflicts
on the issues like real estate firms are not considering the importance of
recreation for the urban people, the construction activities have not been
started until the last two years. Now there are lots of construction
activities are found here and the areas close to the airport. These
constructions includes a range of housing projects starting from houses
for medium income people to houses for the highest income level people
in the country.
Close to Ashulia there is another place which is called Tongi under the
district of Gazipur. But now its difficult to understand whether its a part
of Dhaka city or a part of Gazipur district because of rapid urbanization in
this area. There are lots of real estate activities in this area and real
estate developers are already pretty much inside of the Gazipur district.
The main reason of this large scale real estate activities is once again the
improvement of the communication systems in between the districts.
People now can come to Dhaka from Gazipur very easily for jobs and can
go back after the job period. The same holds for the people in Dhaka who
go to Gazipur for jobs.
In the east part of the city all the areas got huge pace of urbanization in
the last couples of years and lots of real estate firms are working there to
meet the rising demand for houses in the areas like Demra, Jatrabari etc.
The focus of the real estate firms is no more limited in these areas; rather
they are already inside of the border districts like Narayanganj and
Munshiganj. Though in Munshiganj they started newly, the town areas of
Narayanganaj is almost like another region of Dhaka with lots of real
estate activities. This happened once again due to the rapid urbanizations
and developments of communication systems in between the districts.
Narayanganj is only 30-40 minutes away by bus or 20-25 minutes away
by train. Therefore jobholders come to Dhaka in the morning and get
back home in the evening very easily.
32
Figure-3.10: Neighbouring Districts of Dhaka

Therefore in brief one can say that the real estate developers are creating
new markets not only in the outskirts of the city but also in the
neighbouring districts of Dhaka. Developers think that once the market in
Dhaka region becomes saturated these markets will work for them. So its
better to be present in those areas well before for the competitive and
strategic advantages.
33

Real estate activities in Bangladesh are mainly oriented to the city areas
where the pace of urbanization is pretty much high compared to the other
parts of the country. But not all the cities are penetrated fully till now
while some districts that share borders with Dhaka city has been
penetrated pretty well by the developers. Improved communication
systems with Dhaka and the pace of urbanization are the two major
reasons behind this. At the same time attention of the real estate firms
are getting out of Dhaka as they predict that the real estate market in
Dhaka will be saturated in near future. In their opinions scarcity of land
and the wish of people to have a smoother life outside of Dhaka city are
two main causes for which they should focus on the markets other than
Dhaka.
The good thing is that developers have a significant market to capture in
reality. So its a logical move considering the survival of the developers as
well as economic consequences.
34
4.0. Actors Analysis

Due to the lengthy production period, the amount of actors and
stakeholders of real estate business is pretty high compared to some
other industries. In reality lots of different actors come from different
industries banks and cement factories for examples. Section 4.1 talks
about the major actors in the real estate industry in Bangladesh while in
section 4.2 there is a summary for actors analysis.
4.1. Major Actors in the real estate industry in Bangladesh
Though from the broader view one can argue that all the stakeholders can
be treated as actors, in this paper the author limits the number only to
those who can play crucial role in the real estate business in Bangladesh.
REHAB: REHAB goes for Real Estate and Housing Association of
Bangladesh. Its an association that has been introduced in 1991 with
eleven (11) members only. Currently the total affiliated members of
REHAB are 321. This association works as the spokesperson for the real
estate sector in Bangladesh. It also arranges REHAB housing fairs both in
Bangladesh and abroad like New York, Rome, and London etc. in a regular
basis. In these fairs especially in the fairs in foreign countries real estate
firms get lots of new orders which helps the countrys economy as foreign
currencies are getting in.
Individual Firms: They are involved directly through investments and
the production of real estate products. The main aim of them is earning
profits as much as possible. The majority of the firms are solely involved
in real estate business. But there are some firms who are basically sister
concern of some well known companies in Bangladesh. These large
companies invest in the real estate business mainly to diversify their
portfolio and to gain from the current business opportunities. The
interesting thing is that these companies have some advantages over the
small firms who are involved in real estate business only. Advantages
come from
Costs because of their higher efficiency level compared to the small

firms and
Economies of scale and scope issues
Therefore in bad time of real estate business when small firms were
getting out of the scenario, large firms survive and they lead the market
eventually.
Again individual real estate firms are in the supply side and have large
influence on demand/supply mechanism in the market to determine the
35
price of the real estate products. But pricing depends on lots of other
factors too like land price, land value, interest rate etc.
Customers: Customers are on the remaining side i.e. demand side of the
market. Customers preferences, affordability, income range, tastes etc.
influence the demand and supply of the real estate products in the
market. The main aim of the customers is to buy houses with the highest
possible quality at a given budget.
How customers can influence the market is somehow limited to the
different aspects like available substitutes, emergency etc.
Architects: These are the professionals who transfer lots of imaginations
in reality for both developers and customers. They play a crucial role in
designing and construction phases of houses. To get permission from the
government authority to construct buildings, firms have to submit the
design done by architects. The aim of architects is to secure job and earn
money from designing and consultancy.
The influence of architects is limited by their goodwill, experiences,
success stories, educational background etc. More and more architects
are being produced in the country and they enter in the job market. But
the major problem is the work field for them is limited to the situations
where the laws are strict. Therefore one might argue that architects are
not the critical factor in case of real estate business in Bangladesh.
Financial Intermediaries: This group includes mainly banks. But there
are some other sources also. For example, pension funds, insurance
companies, individual savers etc. Though almost all banks have some
offers for the customers in case of real estate buying, there are some
specialized banks for the financing of real estate products. But its claimed
that the offers from other banks are not lucrative as they dont finance
the big purchase and the offers from the specialized banks are pretty
much expensive due to the high interest of the banks.
Central bank also plays a crucial role here. It controls the ups and downs
of interest rate in the market and therefore due to the negative price
elasticity, demand for the real estate products goes down.
One of the major concerns in finance is the accessibility of mass
population in house financing services provided by the banks or other
institutions. In Bangladesh this is really a big problem because
Banks put some difficult conditions on lending such as property as

mortgage
Credit risk of borrowers is high because of the low income level
36
Therefore these are some issues that central bank cant control and its a
continuous drawback for the growth of the real estate business in
Bangladesh.
Government & Government Units: Government is the ultimate role
player in any kind of business in Bangladesh through laws and
regulations. Though government interference is considered as an unfair
event in terms of free market economy concept, some markets require
government hand for the proper functioning. Real estate business in
Bangladesh is one like that.
However, in this sector there is not yet any regulatory framework.
Therefore builders do whatever they find good for them. It continued for
the long time and now all are in a mess. Though government is willing to
fix the problems, its pretty difficult and in some cases they are too late to
react. For example, due to the random construction the traffic system of
Dhaka city has been broken down since the last couples of years. Initially
government was not careful. Now though they are caring for it, fixing the
whole issue is beyond their means due to high level of costs.
In addition to government there are various units of government who
plays crucial role in the real estate business.
Ministry of Housing: This is the ministry responsible for the proper

housing policy design in order to ensure this fundamental right of
people across the whole country. But housing for all is still a dream
for the ministry. The ministry works with other ministries like
Ministry of local governance to improve the housing conditions of
the rural people.
City corporations: They provide the permission for the construction
activities
Tax authority: They can influence though tax quota determination
37
4.2. Summary of Actors Analysis

Real Estate firms, customers, banks, and government are the major role
players in the real estate industry in Bangladesh. Real estate firms control
the supply of housing units in the market, but they are dependent on the
demand which is basically controlled by the customers among other
factors like price, needs, quality, and income etc. On the other hand as
majority of the population in Bangladesh are of low income level, financial
services from different banks are not accessible by them unless banks and
other financial institutions relax their conditions on financing. Therefore
these financial institutions have a big say in the development of real
estate business in Bangladesh. Central bank plays the role by deciding
interest rate and the flow of money to a certain sector in a particular time
period.
Finally as the chief administrator of the country, government is supposed
to do a lot of positive things. But this is rarely true in Bangladesh though
the situation has started to improve. The most negative part from the
government side is that there is not yet any formal regulatory framework
for the real estate sector and lots of bureaucracy & corruptions in the
government administration. All of them are somehow responsible for the
unplanned expansion of different cities and the real estate sector in
Bangladesh
38
5.0. Analyzing the Decision Making Process

How buyers make decision is very important for a firm especially in case
of their marketing campaign design. As success of the real estate firms is
influenced largely by how effectively they could communicate with the
target market, marketing plays a huge role. Therefore firms has to
analyze the buyers behavior and their process of buying in order to get
proper insights to communicate with them as because real estate market
is pretty varied in terms of preferences and tastes. In this sections author
discusses the decision making process (5.1) and then apply that process
to the Bangladesh scenario (5.2) to get a better insight. Summary of the
analysis is followed by in section 5.3.
5.1. Decision Making Process
Decision making process involves several steps. Initially there were some
general steps in decision making process such as defining the problem,
collecting data, evaluating alternatives based on data etc. But in course of
time when new demand emerges with new complexity, the decision
making process has been adjusted to different industries. This adjustment
considers the varied and specific characteristics of a certain industry or
business sector or a particular situation.
There is also variation in how decision makers follow the steps in the
decision making process. This is pretty much dependent on the need,
time, ones education & culture, ones cognitive thinking, and ones
knowledge about the steps etc. It might happen that decision makers
follow the steps but they do not know that they are following because of
the lack of knowledge about the steps. In this section, steps in decision
making process are described with an adjustment to the Bangladesh real
estate scenario.
In general the following steps are included in the decision making
process.
Defining the problem: What is the real problem to solve? Here one
identifies the goals and objectives one wants to achieve by solving
the problem.
Developing criteria: One has to be sure about the attributes one
would like to see in the objective. These attributes are used to
evaluate criteria. Therefore one has to develop the set of attributes
in such a way so that they do represent their wish in the objectives.
Available alternatives: In this step one determines what are the
available alternatives one can consider to gain the desired goal.
Evaluation of alternatives: In this step one compares the
alternatives in light of the pre determined attributes. One can
39
assign weights to attributes too in order to put more emphasis on a

certain attribute over other.
Figure-5.1: Decision Making Process (Source: www.studygs.net)
Selecting the final one: After evaluation one is now up with the so
called scorecard of different alternatives when they are compared
against the pre determined attributes. One therefore selects the
best alternative to implement based on the scores in the scorecard.
Implementation: In this step one implements the selected
alternative to solve the problem and to gain the predefined
objectives.
Feedback & Control: This is the last stage in the process. Here one
collects feedback to know the success or failure stories of the
implemented solution. If needed one takes the action to adjust the
solution to the situation.
It should be noted here that the process employs a system approach. It

means that from any of the step one can go back to start again if one
thinks that one is not in the proper track.
40
5.2. Fitting theory into the reality (Bangladesh scenario)

In Bangladesh buyers follow almost all the above mentioned steps when
they make their purchase decisions. But as mentioned earlier may be they
dont know that they are following these steps. At the same time there is
an overlapping tendency in following the steps i.e. some steps are pretty
much short in duration.
5.2.1. Problem Defining
This is the very first stage where buyers try to define the problem. They
search for the answer of different questions like what is to achieve, what
do they want etc. The interesting thing is that in this stage buyers
abstract thinking trying to get a shape in terms of goals and objectives.
When I come back home after my office hours I normally travel by two
storied bus. I then see lots of beautiful houses around me. Very suddenly
I start dreaming of a house like those. My dreams break up when I think
about money. But at a certain point when I get enough money to think
about houses, I have to think a lot really. This is the very first time I
could realize the gap in between my dreams and reality.
.. A university teacher in Dhaka
This is pretty much the scenario of the majority of
Bangladesh. They have some abstract ideas that they
house. But high investment requirements constrain them
However once they get money to think seriously, its not
all.
the buyers in
want to buy a
to think ahead.
an easy task at
Initially buyers think that they want to have an own house. Then they
think about money and try to manage the monetary investments. So
there is an information search here about how much money one needs to
invest in order to have a house. But this information search is not that
deep and buyers sometimes make some inquiries with the real estate
firms or they try to learn from the neighbors about their experience of
buying houses.
Based on the information they gathered on monetary investment required
they start trading off. Here they try to decide what kinds of housing they
afford to buy or what kind of houses they should buy for themselves.
They want to maximize their preference within the available budgets.
There are three major ways one can meet the demand of houses. They
are described bellow.
41
Buy house: In this case one buys the whole house either
from the real estate firms or from an existing owner who sells
the house. In any case its very expensive and it does not
provide much financing flexibility. Real estate firms provide
some financing flexibilities like installment payments, but still
its pretty expensive because of high monthly installments
and huge down payments at the beginning.
Normally high income people afford it. The final outcome is a
ready house for the buyers. Buyers do not need to manage
any construction activities and therefore no complexities of
managing stakeholders like engineers, architects, developer,
brick company, and cement company etc.
Buy Plot: Some real estate firms develop lands and sell those
developed lands to the buyers. Buyers modify if needed and
build houses according to their own preferences. This is
relatively cheap initially but one has to spend much later on
when one starts constructing houses.
In this case one has to manage all the stakeholders which in
other cases managed by the real estate firms. Therefore this
option produces lots of complexities a buyer has to manage to
have the own house. The final outcome in this case is the land
to construct houses rather than a ready house. Buyers have
the flexibilities in financing as they can pay the money in
installments and the down payment is relatively low.
There is a variety here. One can buy lands from other parties
like individual landowners rather than real estate firms to
construct houses. It works as an alternative to the buyers
when they dont get any real estate firms offering the product
they would like to buy.
Buy Apartment/Flat: Flat as widely said in Bangladesh
rather than apartment is the most common solution to the
buyers of real estate products due to different reasons. First
buyers get the flexibilities in financing as they can pay the
money by installments. Sometimes real estate firms help the
buyers to get access to the financing services available. Again
as money is paid according to the predefined schedules, one
can plan long term which is helpful to accommodate any
changes.
Secondly here one gets ready house to live in. So one does
not need to handle with the complexities with the
stakeholders. Thirdly buyers have voice over the construction
42
of houses. Buyers can specify what they want in their houses

and real estate firms make the adjustments according to the
preferences of buyers. But buyers might have to pay in case
they want something extra or something that was not
specified in the initial contract.
Fourthly buying flat goes really fine with the income pattern
of Bangladeshis. Here its pretty difficult for buyers to pay
huge amount of money at once. Again its pretty difficult for
them too to build houses after buying lands as it includes lots
of issues like stakeholders management, access to financing
etc.
At the end of this step buyers come up with the decision about which one
of the above three categories they shall buy.
5.2.2. Developing Alternatives
In this stage, buyers look at the alternative ways that can fulfill their
demand. Then they evaluate the alternatives to find out the best possible
alternatives. Buyers use different criteria they think relevant either
consciously or unconsciously to evaluate the alternatives.
5.2.3. Developing Criteria
In this stage buyers have some information about the approximate costs
they have to incur. They also know what they want to buy i.e. flat or plot
or house. Now its time for them to think about the properties they want in
their houses. Therefore they decide on what do they want in their houses,
what properties they would like/dislike to have in their houses etc. Among
these properties price, quality, space, location, transportation facilities
around the residence, parking lot, surrounding environment & community,
access to the educational institutions from the residence, and access to
gas & electricity lines from the houses etc. are mentionable. For high
income group as houses are the symbol of prestige and status, location
matters most sometimes. At the end buyers come up with a list of
attributes they do like and dislike.
5.2.4. Looking at Alternatives
After developing criteria buyers look at the available alternatives.
Alternatives mean who are the suppliers in the market offering the
expected real estate products. There are some people who argue that
considering the Bangladesh real estate market, one should not think
about alternatives based on suppliers only. Alternatives can be thought of
based on locations, based on prices, and based on any other properties
buyers think important for their decision making.
43
In this stage buyers make an extensive information search. Some of the

most frequent information that buyers look for is in point
What are the real costs they have to incur?

What financial arrangements are there?
Facilities related to location of the house.
Gas and electricity concerns.
Company reputation and their previous works if available.
Plans for rooms and houses i.e. how many beds are there.
Facilities inside the building like lift, electricity back up,
parking etc.
Buyers collect the above mentioned information for all possible

alternatives they can reach. They adjust a lot in this stage what is
normally referred as the pre purchase switching. For example, one might
like some of the attributes of a certain property but does not like the
location, one switch to another available option. Buyers make lots of trade
offs also in this stage. According to the experts most trade offs are seen
in between space and costs.
Emotion is one of the major factors to consider here. By culture
Bangladeshis are emotional and emotion is pretty much attached to the
real estate purchase decision too. Buyers treat this kind of buying as a
long term issue and they normally perceive that they do it for their next
generations. Therefore emotions can change any decision even at the
very last moment. Another factors among others are income pattern and
marital status or family structure.
Most of the times when financing is a big issue, income pattern plays a
vital role. Low income groups may have to sacrifice some of their
preferences when they dont afford them to include. Marital status and the
family structure also play role in the buying process. Young couple
without kids may not be willing to spend more to have houses with more
beds while couples with kids might look for that. Again families with kids
put a large weight on the access to the educational institutions from the
houses.
5.2.5. Evaluating Alternatives
Buyers have all the relevant information by this time. Now they judge the
alternatives against the criteria set they did develop earlier. Sometimes
buyers put weights on the individual criteria to ensure the proper role of
criteria in the decision making process without violating the preference of
the buyers. In most cases assignment of weights is unconscious or
informal in Bangladesh. Buyers just know and keep in mind what they
want to have and how much they are ready to adjust in respect to
different criteria.
44
Experts mark this aspect normal in Bangladesh and they say its not that
complicated. In their opinions buyers put most of their emphasis on costs
and therefore they dont bother as long as they are convinced that
quality/standard well represent the costs.
So costs benefits analysis comes to the scenario. But in Bangladesh its
not common except the commercial real estate products. In case of
residential real estate products, buyers buy them not with the intention of
making profits from them. Rather they buy them in order to live and
emotion is pretty much attached to it. So they dont go for the cost
benefit analysis normally. But buyers are careful to be sure that the
property deserves the particular amount of investment considering the
properties of it and the market condition.
5.2.6. Selecting the Alternative
In this stage buyers pick up the one they think goes best with their
intention. In the previous stage buyers get a scorecard that represent the
worthiness of the possible alternatives to satisfy a particular need. Based
on that scorecard buyers select the one with the wish to implement. As a
general rule, buyers select the one that produce the highest score. But
reality becomes different when buyers add the qualitative judgment with
the quantitative scorecard. Like the previous steps emotion once again
plays a vital role here.
5.2.7. Implementation
Buyers are almost done in the process of buying house. They have
already decided about category and alternative they do want. So they
contact the supplier and make the contracts that explain among others
total amount to pay, the payment schedules, attributes of the houses,
delivery date, quality aspects etc.
One has to be very much careful when one make contracts to be safe
from any kind of frauds that might arise later on. It has been claimed that
frauds in the Bangladesh market has been rising in the last couple of
years.
After the delivery of the houses one gets the chance to compare the
promised features with the delivered features. Any discrepancies can be
settled by proper communication with the real estate firms.
One of the mentionable issue in this stage is the post purchase switching.
If after the delivery one does not like the products, one might switch to
the alternative. But this is very expensive. Thats why except some high
income people no one makes post purchase switching. Post purchase
45
switching might require one to sell the current houses which might incur
loss or gains for the seller.
Loss might come up because of costs of transactions, time, and other
administrative activities. Gains are also possible as because the property
values normally increase rather than decrease especially in the urban
areas.
5.3 Summary of the analysis (Decision Making Process)
Understanding buyers decision making process is important for any
company especially to put the right product at the right place at the right
time at right price. This all four right determines the success of the
company.
In case of Bangladesh real estate sector marketing carries an enormous
importance at the initial stage of decision making when one search for
information and try to compare different alternatives. If a company can
provide the required information at this stage properly company can gain
the attentions of the potential buyers. Purchase decision depends on the
companys performance in the later stages.
But in the later stages when buyers are about to make the decision they
dont depend on information about the company only. Rather they like to
see the real works, quality of the works, and companys total offer among
other factors.
So one has to be very careful about the contents of information one
provides to the potential buyers or existing buyers at different stages. For
example one should not provide the same information package to the
buyer who is in the initial stage of decision making process and the buyer
who is in the last step of decision making process. In the first step buyers
are looking for the information about the offers, the companies who make
the offers, and different attributes of the products etc. But in the last step
buyers might look for the information about the price of per square feet or
the cement the company is using or the length of balcony etc. So one has
to understand the buying process to design the proper strategy at
different stages in order to gain attentions of the target market followed
by contracts with them.
Experts argue that success depends on the micro level analysis of the
different stages in the decision making process of the buyers because
buyers are also varied substantially in different aspects.
46
6.0. Market Analysis

In the real estate market of Bangladesh there are huge variations in
investments. Small & medium firms also participate in the sector along
with the big firms. But big firms gain more as they have major
advantages arising from economies of scale and scope. However, market
is pretty much open to all the potential investors.
The abnormal profits in the sector attracted a lot of investors in the last
few years. But with the demand supply interactions as well as the
increased costs arising from the growing prices of the related components
have reduced the profits in recent years. At the same time government
got more attention to the sector due to its large scale contributions to the
GDP and the claims from the customers about the frauds in the real
estate sector. Another thing is that there is a change in the government
vision; government now wants to ensure housing available for the poor
and average income people. With that aim government initially took some
steps like counseling to the real estate firms to tell them to think about
the houses for poor and average income people. At the same time central
bank provides incentives to attract the investments in this sector in
coming days. But to change the way of going is not as simple as it
sounds. Some professionals involved in the real estate sector argues that
government should come up with fixed rules and regulations about the
business practices in this sector to have any long term improvements.
In this section Porters five factors model have been used to provide more
insight of the Bangladesh real estate market operations. It will show the
forces that well describe the real estate market in Bangladesh. Therefore
theoretical explanation of Porter model (6.1) is matched with the real
scenario of real estate operations in Bangladesh (6.2). One of the major
limitations of this model is that it does not include government in the
model. However an effort has been put to include the government to
provide a clearer picture (6.3). At the there is a summary on the market
analysis (6.4).
6.1. Introduction to the five forces model of Porter
Michael E. Porter, an US economist and a faculty of Harvard Business
School has produced this model in order to describe the five competitive
forces through which a particular market can be analyzed.
Porter model is a static model but goes further than traditional neoclassic
economic models, including the so-called structure-conduct-performance
(SCP) paradigm. Broader view in this model enables better understanding
and insight into a market. Neoclassic models focus on very specific
parameters like the number of suppliers and customers, barriers to entry
and the homogeneity of products. Porters model also includes these
47
parameters mainly within the category industry competitors that

determines the rivalry among existing firms. But his model considers four
additional forces too that determine the bargaining power of suppliers and
buyers, and the threat of new entrants and substitutes. These additional
forces can have substantial effect on the market outcome and the
competitiveness of the sector. Due to the generic characteristics of the
model this model can be applied to describe any industry. In this report
the model is applied to the real estate industry in Bangladesh. In the
following sections attributes of the model are described. The parameters
have been adjusted to the real estate business in Bangladesh to some
extent.
Figure 6.1: Porters Five Forces Model

6.1.1. Bargaining power of suppliers (Real Estate Firms)
This is the power producers of real estate products can exert on the price
and volumes of real estate products in the real estate market where
producers and customers meet. This is one of the factors determining the
total volume in a particular period for real estate products. This
bargaining power of producers is affected by different parameters that are
in point.
Number of producers: This refers to the total number of real

estate firms in the market. The greater the number, the lower the
bargaining power a producers can exert on the purchasers. The
48
opposite is also true i.e. a small number of producers indicate a

high degree of market concentration, and thus a favorable
bargaining position for producers.
Differentiation of Input mix: Difference in the combination of

inputs and the way a firm collects the inputs create a big difference
in the market when considered in total costs perspective. It
provides the real estate firms to compete towards the costs in the
market to influence price and profits. A firm that buys land today
with plan to construct houses in five years from now on has an
advantage over the firm which buys lands after five years to
construct the houses.
Importance of volumes to producers: A producer who depends

on a few purchasers is very sensitive for a decline in sales. For
example producers who produces housing only for the people in
Gulshan runs the risk in case the Gulshan market is fully penetrated
or the market is experiencing downturns or the market does not
show positive reaction to the new houses. On the other hand
producers who have many purchasers dont run this risk because
its pretty unlikely that all markets experience downturns at a
certain point in time.
Switching costs for customers: If customers have to incur a

significant costs to switch the firms, then its normal that customers
dont switch unless there is a major mishap. But it also works for
the companies who secure quality of products to exert some power
on the buyers.

According to Porter bargaining power of buyers is, the ability to force
prices down, bargaining for higher quality or more service, and playing
competitors against each other. The parameters of this force are
described bellow.
Buyers-producers ratio (concentration): This is the relation

between the number of buyers and the number of producers. If
there are many producers producing products bargaining power can
be limited due to competition. On the other hand if there are just a
few producers serving buyers their bargaining power can be high.
Ability of buyers to produce: In this case buyers build its own

houses to meet their needs. This is applicable for the rich buyers.
Poor or mid income buyers cant do individually. They create
associations and build houses through co-operation. If this happens
suppliers influence reduces substantially.
49
Availability of information to buyers: Buyers can improve their

bargaining power as more market information reaches them.
Availability of information also helps the buyers to make a better
purchase because buyers then know the information about
competitors and competitive price & quality.
Volume of purchase: Well it says that when one buys a bulky

amount of products one can go for significant bargaining with the
producers. In case of real estate this does not work that much as
there are few or no bulky purchases.
Buyers know the production costs: Market information can

increase the awareness of consumers. Information on tariffs of
competitors, production costs, profit margins etc. can be considered
as market information. Therefore once a buyer knows this
information, it can influence the buyers behavior especially
switching behavior.
Availability of substitutes: Availability of substitutes and the

information about those substitutes can significantly increase the
bargaining powers of buyers.
Price sensitivity of buyers: Higher sensitivity to the price by a

buyer, higher the chance of switching producers. It means
producers have to pay more attention to their price policy to remain
competitive.
Price of total purchase: Buyers consider the total price that

includes the price of relevant services like gas and electricity
connection, lift service, parking lot price etc. Now if these services
make the total amount bulky buyers get an incentive to switch the
producers; at least they go for bargaining with the producers.
Strategic importance of the product: This is more or less related

to the concept of Giffen goods. Higher price of the house works as
the symbol of status or ego for a certain buyer. At the same time
buying a house in Gulshan might be a strategic reason for a buyer
rather than buying a house in Dhanmondi.

Threats of new entrants are sometimes the result of abnormal profits in a
particular sector. Its widely argued that the real estate sector in
Bangladesh still produces the abnormal profits for the firms though there
is not available data to prove that. Related parameters to describe this
force are in point.
50
Legal barriers to entry: Legal barriers that are normally imposed

by the government are due to varied reasons. It can be a through
patent or something else like this. In Bangladesh real estate market
there is nothing like this. This kind of barriers reduces the risk of
new entry in the market almost at a zero level.
Economies of scale: This works as a barrier when potential new

entrants perceive the market as an attractive one and wants to
enter into the market. Economies of scale of the existing firms allow
them to play with price and therefore they put the price in such a
way new entrants does not feel any attraction to the market.
Initial investments and fixed costs: Bulky initial investment can

provide an advantage to the existing firms as they can use the play
tough strategy to make the market unattractive to the potential
entrants.
Learning curve advantages: Incumbents can gain substantial

learning curve advantages during the years of presence on the
market. If incumbents enjoy unbridgeable learning curve
advantages new entrants can experience this as a barrier. Learning
curve advantages strongly depend on the related market,
specifically the market openness. For example, in general several
years R&D experience is more difficult to catch up then being active
on the market.
Brand Loyal Customers: High brand loyalty from customers to a

certain brand can make a market unattractive to the potential
players in the market. Therefore large firms spend their huge focus
on building brand loyalty.
Switching costs for buyers: High switching costs can reduce the
buyers intention to switch which fade the profit potential for a new
entrant.
Availability of important resources: Availability and access to

the critical resources is one of the very first things a new entrant
has to confirm before deciding to get inside of a market. In real
estate market of Bangladesh its not easy as the lands for example
for the constructions is decreasing day by day.
51

This refers to the extent by which buyers can replace their current
products by another one. In the context of this report substitutes does
not mean the pure substitutes of the core products. In fact here
substitutes means the substitutes of different dimensions of core
products. The core product is house and different dimensions include
among others location, luxury, producers etc. The relevant parameters
are the followings.
Loyalty of customers: High level loyalty of buyers to a certain

firm and its products reduces the substituting behavior and vice
versa. Price, status, ego, are some other factors that continuously
contribute to the substituting behavior of buyers.
Switching costs: If the costs of substitutions are high buyers are

negative towards substitution normally. In reality buyers try to
compare the gains from substitutes and the costs of substitutions to
decide whether they will go for substitution or not.
In addition to that if substitution offers innovations buyers might be

attracted to the substitute products. In this case early adopters are a
logical target market for a firm.
Economic advantages of substitutes: To be accepted by the

buyers, as substitute a product must offer economic advantages of
having it. If the buyers think that the potential economic advantage
is not rational, substitute products face the harsh reality.
Potential new substitutes: This is related to the potential new

entrants in the market with new ideas to act as substitutes. Success
of these potential new products as substitute depends on the
intensity of the newness of the ideas.

This refers to the intensity of competition within an industry. As in this
report author talks about the real estate sector in Bangladesh, the
parameters are adjusted with the Bangladesh market situation.
Market concentration: Market concentration determines how

many firms are in control of how much of the total market. If there
is high level of concentration, competition is not fierce normally.
Only few firms enjoy almost all the benefits.
52
Types of market & profits potential: It refers to the market

structure i.e. whether the market is monopoly or oligopoly or
perfect competitive. In perfect competitive market there is no
abnormal profits and entry is free followed by more innovations and
new products. But in case of other market types there are abnormal
profits (price is higher than the average costs), which reduces the
total welfare and invites others to get into the market.
Bargaining power: High rivalry among the competitors leaves low

level of bargaining chances for both producers and buyers because
its assumed that competitive price is either the fair price or close to
the fair price. Fair price here means the price that is expected in the
perfect competitive market.
Threat of new entrants: In general the more significant the threat

of new entrants the more is the rivalry among the existing firms.
Threat of substitutes: As mention on the previous page, the

threat of substitutes is composed of several parameters. The more
significant the threat of substitutes the more this can increase the
rivalry among existing firms.
Product differentiation: Product differentiation can work as the

added values for any firm in the market which also influence the
rivalry among firms.
Switching barriers for buyers: The more switching barriers

buyers experience the less significant the rivalry among existing
firms. In other word, if buyers are not able to switch from a certain
producer there is no incentive for firms to compete.
Barriers to exit the market: Huge initial and fixed investments

force the company to stay in the market and compete with others.
6.2. Applying Porters Model to the Real Estate Market in

Bangladesh
The Porter model is applied in this section to describe the Bangladesh real
estate market.
6.2.1. Bargaining power of suppliers (Real Estate Firms)
Huge number of real estate firms in Bangladesh real estate market shows
that the market is pretty much attractive to the investors. But the real
scenario is a bit different which is elaborated below.
53
Number of producers: As mentioned earlier that there are lots of

real estate firms in the market to produce the real estate products
in Bangladesh. But major gains go to some of the big companies in
the market. These companies could survive at the time of crisis in
the market. At the same time these firms have advantages from
economies of scale and scope. Lots of real estate business can be
treated as the portfolio diversifier of investors.
In case of market concentration market is pretty much concentrated
as only 10-15 large companies hold the 95% of the total market
share.
Differentiation of Input mix: One of the major inputs in the real

estate business in land. Therefore values & prices of lands affect the
Bangladesh real estate business very much. They play a strong role
in determining the selling price of the real estate products.
For example, prices of houses vary considering the locations they
are in. A house with lake view in Dhanmondi is far more expensive
than the houses in other regions of Dhanmnodi. In case of
commercial spaces, Motijheel is that much expensive compared to
new market region.
In addition to that, the time when the real estate firms buy lands is
very important. Firms that have bought lands in the suburbs of
Dhaka city ten years back are now in advantageous position than
the rivals in the market. The price of the lands in the suburbs of
Dhaka city has risen more than 5-6 times in the last ten years.
Therefore early buyers have an advantage over costs and gain
more. At the same time they if want can influence the rivals
business by setting the price at relatively low level.
So this is about the charisma of top management. The top
management that could figure out todays scenario of Dhaka city at
ten years back and took actions in accordance of that is now gainer
to a large extent.
Importance of volumes to producers: Not all the real estate

firms are capable to operate largely to cover all the segments of
real estate business. But depending on the business condition in
Bangladesh, experts argued that a firm should target at least two
income level of the society. If one targets only one level say for
example high income level, one might be pretty much limited to the
Gulshan area. In bad business time one will face problem because
of the limited customer base one has. But if one targets high and
medium income people together one might make a tradeoff in bad
business time.
54
In Bangladesh market though there are a lot of small firms

operating in the real estate sector and cant target more than one
segment, majority of the big firms target more than one segments.
Some firms target almost all segments. These are some big
companies but not in the real estate sector only. In reality some big
firms who were operating in other sectors came to the real estate
sector too either to maximize the potential return from this market
or to diversify their investment portfolio.
Discussion with experts and employees in Bangladesh shows that
initially real estate sector came to the scenario as a huge potential
source to earn revenues which motivated them to be involved. But
later on they could realize that real estate business can also be a
good addition in the asset portfolio to diversify the portfolio.
Switching costs for customers: Normal law is that if the

switching costs are high then customers have low incentive to
switch. In Bangladesh real estate market we can think about two
switching scenarios. One is pre purchase scenario and the other is
post purchase scenario. Though there are some companies in
market having brand loyalty, this loyalty not necessarily came from
their real estate business operations. It came from other business
operation of them in Bangladesh. For example, Sheltech, a well
known real estate company is a sister concern of Square Groups of
Bangladesh, a group having huge brand loyalty and recognition in
different segments including information technology, consumer
products, and medicine. Therefore real estate buyers normally have
no predetermined suppliers. Their choice depends on a combination
of factors like available budget, location where one wants to buy the
house, who are the companies operating there etc.
So one might argue that before making a purchase decision one
searches information and real estate companies meet the demand
of that information in different ways. One of the ways is extensive
marketing campaign through different marketing tools. Physical
inspection of the house premise is a frequent incident in case of real
estate buying in Bangladesh. Now one might switch the companies
in this period and this is pre purchase switching. It has the costs of
time, energy, transportation, and information collection mainly.
Considering the Bangladesh situation this costs are not that high.
But it could be pretty high when one switches a lot and find it
difficult to get the proper offer one was looking for. At the same
time in case of high income group and the blue collar job holders
the costs is high mainly because of the high level value of time of
them.
55
In case of post purchase switching, its really expensive for all the
groups in the market. The reason is that one has to go through all
the steps i.e. information gathering, evaluating alternatives,
deciding for one etc. again to buy another house. But in reality still
switching happens mainly by the high income groups.
Bargaining power of buyers that arises from different factors is the ability
to force prices down, bargaining for higher quality or more service, and
playing competitors against each other. The parameters of this force are
described bellow.
Buyers-producers ratio (concentration): In Bangladesh there is

lots of real estate developers in the market with the varied offers to
buyers. This variation is something that constraint the bargaining
power as the products are not perfectly substitutes of each other.
Each offer has something new and producers try to manipulate that.
Customers have a narrow chance to compare in reality. But in case
of general real estate products customers go for bargaining though
the depth of bargaining depends on the location and the fact which
party is in crisis. For example if a buyer is in a position that he has
to buy a certain product, seller has the advantage and buyer cannot
bargain a lot. The opposite is also true.
Again one really cant bargain a lot in areas like Gulshan as its pretty
difficult to get any houses in those areas to buy. High level of land
scarcity in these areas is the main reason behind the low level of
bargaining.
Ability of buyers to produce: It happens when one at least has

the land to build a house. Still one has to have the access to the
financing institutions to finance construction activities. This kind of
ability is pretty present among rich people. But they still hire some
third parties to construct their dream house according to their
preference. Most importantly these rich people also have the access
to the financing services in Bangladesh.
On the other hand, poor and mid income people cant do that even
though they have lands because they dont have the access to the
financing. Sometimes they build some kind of association and
through joint efforts they build their own houses.
Though not in the urban areas, it pretty much common in the sub
urban areas. Therefore in those areas buyers enjoy more
advantages than the suppliers.
56
Availability of information to buyers: Well though real estate

companies offer some kind of online services to the customers,
those are mostly insufficient because its widely claimed that there is
a gap in between their description of properties in the website and
the reality. Companies claim that they just put a general description
of their ventures in their website as its not possible for them to
update all the specifications of their ventures. At the same time
they think that in Bangladesh still people dont rely much on online
information. Rather they like to go for physical inspection. Thats
why companies are focusing more on their marketing campaigns
through visual medias mainly. They also trying to build reference
groups in the society.
This happened due to the improper IT infrastructure in the country.
But the companies also noticed that the IT infrastructure has been
improving in the last couple of years and the new generation is
more or less dependent on the online information. Therefore to
meet their information demand in coming days companies already
ensured their online presence and it will be improved day by day.
So in conclusion it can be said that information is not readily
available. One has to collect them if one wishes to compare the
products to make a better purchasing decision.
Volume of purchase: Well it says that when one buys a bulky

amount of products one can go for significant bargaining with the
producers. In case of real estate this does not work that much as
there are few or no bulky purchases. Above all almost all companies
have some offers that reduces the total price if one buys more than
one unit.
Buyers know the production costs: Once again this is related to

the information availability. As mentioned earlier in Bangladesh one
has to collect the information as they are not readily available. But
if one can collect the information its helpful for one to make a better
purchasing decision.
If one knows about the production costs one can create more
pressure on the seller to make a deal convenient for the buyer. But
it depends once again who is the party with need-need to sell or
need to buy.
Availability of substitutes: In Bangladesh market buyers have

substitutes to a large extent. But the scenario is different in urban
and sub urban areas. In urban areas though there are substitutes,
they are really varied in terms of locations, price, features etc. So
57
how much a buyer can substitute is mainly dependent on the

buyers affordability.
In sub urban areas where buyers also has significant ability to build
their own houses and the price difference is not that high,
availability of better substitutes gives buyer a substantial edge in
bargaining with the sellers. But in urban areas one has to make a
trade off in between the price changes coming from substitution and
the change in benefits.
Price sensitivity of buyers: High price sensitivity leads a buyer to

bargain more with the suppliers. But how much the buyer will be
successful depends on the location and once again who is the party
with need.
If its in the urban area, the chance of success by the buyer is low
while in sub urban areas buyer might gain some. The main reason
is that price sensitivity is offset by the scarcity of land in the urban
areas sometimes.
Price of total purchase: Buyers consider the total price that

includes the price of relevant services like gas and electricity
connection, lift service, parking lot price etc. Now if these services
make the total amount bulky buyers get an incentive to switch the
producers; at least they go for bargaining with the producers.
In Bangladesh buyers care for this pretty much. The good thing is
that they can customize the construction activities to implement
their preferences. Another thing is that in urban areas the relevant
costs like parking costs are more or less same. In sub urban areas
the costs are relatively low compared to the urban areas.
Strategic importance of the product: Well this is common

among the rich people. When they plan to purchase houses their
first choice is Gulshan. Gulshan is the area which associates
prestige and status for a buyer. Secondly they think about Banani
or Uttara or Dhanmondi. These people dont care about money;
they care for status, prestige, and ego. Therefore houses in Gulshan
or other mentioned areas are seen as the symbol of status and
prestige.
In case of commercial real estate products sometimes locations
become very much meaningful strategically. For example, its
meaningless to have a park like wonderland, a famous amusement
park in Gulshan area, in new market area because the park will not
get many visitors here as its expensive to visit the park. Again as
the commercial centre of Dhaka city, Motijheel has a strategic value
58
for the commercial real estate products. No one really thinks of

residential housing in this area.
Its widely believed that the real estate sector in Bangladesh has been
rewarding abnormal profits to investors and therefore lots of investors
came to the market. Abnormal profits here refers to the situation where
price for the real estate products is more than the average costs to
produce that products. In course of time profit margin has been declined
and more and more competition came up in the sector.
Legal barriers to entry: In Bangladesh there is no legal barrier to

entry to the real estate market. All are free to do business here.
Economies of scale: There are some big companies in the market

enjoying these benefits. But it does not mean that they did lower
the price to put the competitor in problem or put the buyers in high
satisfaction level. They rather enjoy the high profit margin by
reducing the costs. The author did not find at least in the urban
area of Bangladesh that any firm having economies of scale trying
to be more competitive by reducing the price. Therefore advantages
from the economies of scale are being used to increase profit
margin rather than building competitiveness, which could be a
threat for new entrants.
Initial investments and fixed costs: Well it requires large

amount of investment. But in most cases real estate companies has
very good access to the financial market of Bangladesh. At the
same time they get the down payments from the buyers and this
money can be used to start the project.
Learning curve advantages: Its very difficult to prove that the

companies in real estate market in Bangladesh are experiencing the
learning curve advantage because of the unavailability of data. But
this is true that companies do not spend much money in R&D
activities. They spend much money in land acquisitions rather than
R&D.
Brand Loyal Customers: This cant be an entry barrier in

Bangladesh market as brand loyalty is low here. Here buyers
justifies the alternatives first based on the available data and then
decide which one to select. At the same difference in locations and
needs discourages the brand loyalty to some extent. The reason is
that it might happen that the company to whom one is loyal is not
present where one wants to buy a house.
59
Switching costs for buyers: In Bangladesh pre purchase

switching tendency is common rather than post purchase switching.
Therefore new entrants should not be concerned as long as it is
confident that it can provide quality products.
Availability of important resources: Availability and access to

the critical resources is one of the very first things a new entrant
has to confirm before deciding to enter into a market. In real estate
market of Bangladesh its not easy as the lands for example for the
constructions is decreasing day by day.
Availability of human resources both in general and technical side is
another important factors to think about. Though day by day due to
the different initiatives of government level engineering education in
Bangladesh is improving, one has to look at the availability of those
technologically sound labor forces in the area where one wants to
operate.

This refers to the extent by which buyers can replace their current
products by another one. In the context of this report substitutes does
not mean the pure substitutes of the core products. In fact here
substitutes means the substitutes of different dimensions of core
products. The core product is house and different dimensions include
among others location, luxury, producers etc.
Loyalty of customers: As mentioned earlier that in Bangladesh

real estate buyers are not brand loyal to any brand. In other words
no company could yet build up brand image in such a way that can
influence the buying decision. Therefore, though well known brands
can motivate buyers sometimes, purchasing decision depends on
lots of factors like price, desired location, other related attributes
etc. Buyers inspect the activities directly beforehand to make a
good decision. Therefore brand loyalty is less here and people has
more switching tendency if they have the options available to
switch. It should be noted here one more time that in Bangladesh
pre purchase switching is pretty common compared to the post
purchase switching. Its because there are plenty of offers with
varied features in the market for buyers.
Switching costs: Switching costs are very high in case of post

purchase switching. So there are few post purchase switching. But
there are many more pre purchase switching as this is not
expensive most often.
60
Buyers try to justify the substitutes in terms of gains from the

substitution and compare it with the substitution costs. In reality lots of
buyers in Bangladesh market involve emotion in making purchase
decision. Well this is a cultural phenomenon that Bangladeshis are pretty
much emotional. People consider purchase of house as a very long term
decision and they sometimes overlook the high switching costs if they get
a better alternative.
This leaves an opportunity for the innovators in the market. Their
innovation gets attention easily and if they can make it affordable for the
target market, they can create a high substitution ratio in the market in
favor of their products.
Economic advantages of substitutes: In Bangladesh real estate

firms apply different techniques to help buyers to realize the
potential economic benefits of substitution. They make huge
marketing campaigns, they arrange site inspection events so that
buyers can imagine the benefits directly being in the house premise,
they arrange flat or plot fare etc. All are aimed at creating better
awareness in the market among buyers.
REHAB housing fair is one of the most important events for real
estate firms in Bangladesh. In these fairs firms participate and let
the buyers know about their offers both in home and abroad.
Potential new substitutes: Well there is newness of thinking in

the industry. For example, for the inhabitants of Sylhet region real
estate firms build houses in such a way so that buyers feel that
their houses are similar to those they are used to live in London. It
finally makes the houses much expensive. But as the target
population is rather rich, real estate firms employ more resources
there. Therefore there are lots of luxury houses in this area.
Another new idea from some real estate firms is that they started to
build houses in the outskirt of the Dhaka city couples of years back.
At that time lots of people questioned their aim and justification of
their activities in those areas. But suddenly when communication
system in between Dhaka city and its outskirt has been improved
substantially, everyone could realize the justification of their
operations. In fact these firms at that time could imagine that after
couples of years Dhaka city will be ineligible to live and people will
move to the outskirts of the city. Therefore now a days most of the
luxurious houses are being built in the outskirts of the city.
61

This is all about competition in the market. By nature Bangladesh market
is free for all and anyone can invest here. Therefore there are lots of
companies in the market who compete among themselves. However
competition is much fiercer in the urban areas like Dhaka city compared
to the sub urban areas like Savar, an area about 20 kilometers away from
the Dhaka city.
Market concentration: Market concentration determines how

many firms are in control of how much of the total market. If there
is high level of concentration, competition is not fierce normally.
Only few firms enjoy almost all the benefits.
Types of market & profits potential: In Bangladesh market all

are equally welcome to operate which means by nature one should
brand the market as the perfect competitive market. Therefore
there should not be any abnormal profits. But real estate experts
say that there are still abnormal profits in the market i.e. average
costs are lower than the price, and it attracts investors to this
sector. But there is not any kind of cartel or oligopolistic behavior in
the market. Its not a monopoly too.
What really matters is the knowledge and experiences along with
availability of resources. Companies with significant knowledge and
experiences in operating in the market can gain from the utilization
of the available resources. One of the gains comes from the costs
reduction which ultimately works as a barrier for the new entrants
to enter into the market.
Bargaining power: Though there is high rivalry among firms

mostly in the urban areas, still there is a place for bargaining for
both buyers and sellers. This happens due to the asymmetric
information in the market about the competing price, quality and
other relevant issues.
Buyers still go for bargaining to a large extent and success depends
on some factors like location (urban or non urban area), which
party is with the need (for which party the situation is critical) etc.
Threat of new entrants: Day by day the real estate sector is

getting new orientation in the Bangladesh market. New places are
being penetrated and the market expands with good pace. Thats
why the business has high profit potential to lots of investors which
put the threat of new entry to the existing firms. This increases the
rivalry among the existing firms to a large extent.
62
Threat of substitutes: In Bangladesh market, there are lots of

options for buyers to substitute the real estate products. This
substitution is not the substitution of core products; rather
substitution of different features of the core products.
As a result real estate firms face high rivalry from the competitors.
Therefore they have to be careful in designing their offer with
proper pricing, and marketing campaigns.
Product differentiation: When a firm can differentiate products

from the products of rivals, at least at the initial stage the
differentiator gets some advantages. This can be described as the
introduction of new features by real estate firms in Bangladesh
market.
Buyers are now much more aware about the quality of the products
and the difference in products. Therefore they want the best quality
products at the lowest possible costs. But they are also ready to pay
more for the quality products. For example they pay more for the
houses with the lake view in Dhanmondi.
Now a days buyers are rather careful about the finer details of their
houses like which tiles is being used, which constructing firm is
employed, whats the reputations of the construction firm, which
architects are in charge of design process etc. They can realize the
difference and the differences play important role in purchase
decision making.
Switching barriers for buyers: In Bangladesh market, pre

purchase switching does not incur much cost. Therefore firms have
to be careful about that stage as they experience more rivalry in
that step. But once one buys the product, post purchase switching
is pretty much low as its very expensive.
So the challenge in the pre purchase step. In this step all the
marketing campaigns are put in large volume to motivate the
buyers to buy certain products. More the information dissemination,
customers have more knowledge about the products. At the same
time companies try to build up some kind of reference groups to
take the advantage of the words of mouth.
Barriers to exit the market: Like all other business sectors, in

real estate sector also the hard worker is the winner. Now if some
one cant work hard one has to get out from a market like
Bangladesh market where there is no legal barrier to compete and
there is no regulation to control the market competitive behaviors.
Therefore one is free to enter and exit at least theoretically.
63
But once the company invests a lot in the factors of production like
labor and land, practically its pretty difficult for the firm to leave the
market. If the company leaves, company looses not only the
investment but also the potential profits.
So its not common that firms investing huge amount of money
leaves the market. In reality big firms that are operating in the
market, they do invest in real estate in order to diversify their
portfolio of investments.
6.3. Introducing government in the Porter model
Government can influence the real estate business activities to a large
extent through different policies of government. One of them could be the
interest rate change by the central bank. Real estate activities have an
inverse relationship with the interest rate changes. So interest rate ups
and downs can influence the access of people to the financing services
available in the country followed by the change in demand of real estate
products in the market. In Bangladesh, recently central bank has
announced that it will make the real estate financing issues more flexible.
Therefore stakeholders are expecting some positive affects of this
announcement in the real estate activities in Bangladesh.
Government can influence the flow of financing to a certain sector by
advising the financing institutions not to finance to a certain sector or the
reverse. It reduces/increases not only the money flow to the sector but
also the sectoral activities because of demand supply mechanism in the
market.
Government has lots of other ways to influence the sector. For example,
government can make strict laws and regulations about the real estate
operations in Bangladesh. Then it will be difficult for lots of business firms
especially the small and medium firms to operate in the market. They will
face difficulties to get the permission from the relevant authorities to start
their operations as only few firms are maintaining quality in Bangladesh
market.
In addition to that government can affect the sector by changing the tax
rates or by changing the land laws or by changing the construction laws
or combination of all these. In Bangladesh the sector currently lacks
proper framework where it can perform better. Random and indiscipline
constructions thats are now in operation will ultimately work as a big
negative factor for the city planners may be ten (10) years on from now.
64
Figure 6-2: Porter Model Including Government as the sixth factor

Therefore the author includes government in the Porter model as the sixth
factor to emphasize the importance of government in the real estate
business activities. Bangladesh government should come up with a proper
policy regarding the real estate business in Bangladesh along with the
proper modifications of the laws relevant to the real estate sector.
6.4. Summary of Market Analysis
Real estate sector in Bangladesh is dominated by few firms though there
are lots of companies in the market. Currently about 321 companies are
affiliated with the REHAB while there are some others operating in the
market individually. The sector has been experiencing growth since its
birth in the late 70s until now. Right now because of the political
instability in the country the pace of growth is bit low in the sector. But
experts argue that the situation will be changed as soon as there is a
political government in Bangladesh. Its mentionable here that there is a
non political interim government in the power right now in Bangladesh.
The market is not a monopoly or not an oligopoly and there is no control
mechanism from government too. In fact there are no regulations about
the sector yet though government is thinking on that since last couple of
65
years. Therefore the sector is open to investors to invest and experts

opinions show that there is still a large segment of market remaining to
penetrate.
The market is suppliers dominated though they have to rely on the
customers for the production as demand comes from them. Price,
location, and other attributes are perceived differently by different
segments of buyers and there is a continuous trade offs in between
different attributes of the real estate products.
It is assumed that in the coming years government will play an important
role as the sector is expanding its reach to other areas of the country in
addition to Dhaka city. Government got a bitter experience in case of
Dhaka city coming from the random and indiscipline development by the
real estate developers which has made the city one not eligible to live in.
Therefore government does not want the repetition of that and try to save
other areas of the country. They might come up with the regulations for
the sector deciding the framework for the sector within which the firms
should operate.
66
7.0. Value Chain Analysis

In this chapter the author focuses on the value chain model of Michael
Porter (7.1.) and then applies the concept to the Bangladesh scenario
(7.2.) followed by the chapter summary (7.3.).
7.1. Concept of Value Chain
Michael Porter in 1985 introduced the concept of value chain in his book
Competitive Advantage: Creating and Sustaining Superior Performance.
He generated a generic value chain model. But now a days different value
chain models have been developed for different industries based of the
varied characteristics of varied business functions.
Porters model was aimed at better understanding of the activities
through which a business firm develops competitive advantages and the
value for its shareholders. He introduced two sets of activities namely
primary activities and secondary activities.
Figure-7.1: Porter Value Chain Model

The model says that there are some primary activities that are more or
less common to all businesses along with some other support activities
that ensure the proper functioning of the primary activities. Finally margin
or profits for any firm depends on the effectiveness of the firms in
performing these activities efficiently.
67
Primary activities include the followings.
Inbound Logistics: In this function firms accumulate the required

raw materials from the suppliers and distribute them among
different section of the organization according to the needs
Operations: This is transforming of input into output. In this stage

firms uses its inbound logistics and support activities to produce
final products
Outbound Logistics: This is managing and distributing of finished

and work in process inventory
Marketing & Sales: This is making the products familiar to the

target customers and generating sales
Service: Its all about post sell service to keep the beneficial
relationship with the buyers
Support activities are the followings.
Infrastructure: This is about the organizational structure, work

break down system, organizational culture, and control system etc.
Human Resource development: It includes hiring, training,

developing, and compensating employees
Technology Development: It is the development of technologies

to support value creation activities
Procurement: This includes purchasing inputs like raw materials,

supplies, and equipments etc.
The main theme of the model is that firms ensure the efficiency in
performing primary activities that are the triggers of firms profits with
the help of support activities.
7.2. Applying the concept to the reality
Here the author applies the concept of value chain model to the
Bangladesh real estate business sector to find out where does the values
come from. At the same time it will show what are the most important
activities in the values chain for the sector.
In Bangladesh inbound logistics and marketing & sales are the two most
important activities in the value chain in case of primary activities.
68
Though value comes from all the activities in the chain, these two have
more influence compared to others. In inbound logistics, one of the most
critical things is the acquisition of lands for construction. Price of land
sometimes is the triggering point for the potential profits of any firm from
a certain projects. Therefore timing of land acquisition and the location of
land are very important.
Once one has the lands and all other inputs to construct the houses one
has to inform the potential buyers about their products. As real estate
business is a bit different and investors pay the money beforehand,
marketing plays the most important role in the initial stage, as this is the
mostly used way of communication with the target market. In Bangladesh
very few companies has the brand loyalty from buyers and therefore
buyers like to see all the details before making any decision. This is point
where marketing creates value for the companies.
In case of other activities very few firms could earn the customers
satisfaction while others still lack of it because of the following things.
Companies have high lead time

Companies cant keep their words on delivery date
Companies dont care that much in the post sell periods
In Bangladesh the score of power distance is pretty high and therefore

organizational environment can be characterized by formal relationships
and formal communications system. Most of the organizations are
centrally administered. So decision comes from the big bosses normally
and lower level employees are devoted to the daily operation of the firms.
In real estate organizations most of the lower level employees are sales
force or involved in marketing jobs. Companies sometimes arrange
training and development programs for the employees so that they can
perform better. Except architects most of the people are coming from
business or economics backgrounds. MBAs and engineers with MBA
degree are especially preferred in this sector. The reason is the
assumption that these categories of people can contribute most into the
business, as real estate business is a mixture of both technology and
business aspects.
Though value comes from all the activities in the value chain inbound
logistics and marketing & sales get the high level of importance as they
are very much influential for the profitability of the firms. On the other
hand employee selection get the most importance in case of support
activities as success of the firms depend on the effective processing of
inputs and management of that process.
69
8.0. Effects Analysis

Real estate business activities have different types of effects in both
regional and national level. In this chapter the author discusses different
types of effects (8.1) followed by a summary of the effects analysis (8.2).
8.1. Different Types of effects
Among different types of effects direct, indirect, and external effects are
mentionable.
8.1.1. Direct effects
Direct effects include the effects that are accounted to the community.
Community is getting benefits or being worsened off in this regard. In
Bangladesh real estate case direct effects includes the followings.
Shelter: At the very first demand for housing is met partially in different
regions in Bangladesh. Communities get improved conditions of living
with better amenities sometimes.
Economy: Economy gets the benefits of real estate activities in different
ways. The sector creates employment which solves some of the
unemployment problem, a burning problem of the country. The sector
utilizes the resources as efficiently as possible which otherwise might not
be possible. The sector contributes to the total productivity in the country
which influences the GDP. The good thing is that the contribution of real
estate sector to the Bangladesh GDP has been increasing over time.
Traffic System: Till now this is a negative effect of real estate activities
in Bangladesh. There is no regulatory framework for real estate activities
in Bangladesh. Therefore developers do whatever fits to their profit
maximizing motto rather than proper planning for a better community. As
a result traffic system is most often harmed by the development of real
estate products. Dhaka city where traffic jams are sometimes intolerable
is the worst example of this in Bangladesh.
Congestion: In case of congestion, in most cases real estate activities
worsen the situation because of the improper planning and development
activities.
Environment: Though the major aim of the real estate activities is to
build a community with better amenities, its hardly the case in
Bangladesh. Here firms are mainly profits concerned and they dont care
that much how environment is affected by their activities. In Bangladesh
there is not such a rule that a firm has to summit an Environmental
70
Impact Assessment (EIA) report to get the permission to operate. So

environmental concerns remain untouched.
8.1.2. Indirect effects
This includes the effects that are not directly experienced and not
targeted to any single user but it improves the collective situation. In case
of Bangladesh real estate indirect effects can be followings.
Other business: When there are new projects and new community is
built up, it opens the door for other businesses to get in. For example,
around the new community new markets are built up normally and it
includes grocery shops, hairdresser, restaurants etc. among lots of
others. At the same time different industries become interested to open
their branches in the community proximity. For example banks that can
create further benefits for the whole community and country as a whole.
Urbanization: Real estate development is positively related with
urbanization and to some extent dependent on urbanization for
expansion. However it can influence the urbanization process too to a
particular area.
8.1.3. External effects
These effects are not normally included when decisions are made, but still
deserve significant attentions. Some of them are in point.
Decrease of land: Real estate firms normally go out of the city area and
take the vacant land to build the new projects. The logic is that the prices
for lands in those areas are relatively cheaper and thus firms can
maximize their profits. But it puts a negative pressure on the lands
available for agriculture and therefore agricultural contribution in GDP
decreases.
Social Cohesion: Real estate projects build an automatic community. At
a certain point when the firms deliver the flats or plots, suddenly there
are lots of people at the same place. Gradually they become familiar and
develop sharing system which leads to the better social cohesion.
71
8.2. Summary of effects analysis

In general real estate firms are profit concerns and their primary goal is
to produce housing units at the lowest possible costs to maximize the
profits. Therefore the effects of real estate activities in Bangladesh are a
mixture of both positive and negative effects. But experts opinions
suggest that in the long run negative effects are more that the positive
effects. People cant realize that they are sacrificing their long term future
for the short term enjoyment through random and unplanned real estate
development activities. Experts argue that there should be a framework
for the sector to operate properly at an immediate basis.
72
9.0. Segregation Analysis

This chapter is devoted to the analysis of segregation and its effects, a
special case of real estate activities in a particular country. The chapter
begins with the broader definition of segregation (9.1) followed by the
reasons of housing segregation (9.2), types of segregation (9.3), effects
of segregation (9.4), and the summary of segregation analysis (9.5).
9.1. Defining Segregation
In general, segregation is the process of creating difference in population.
This difference can be made based on race, gender, ethnicity, religion,
poverty-richness etc. Very frequently it is referred as a tool of making
discrimination. Though some people try to utter that segregation is an
involuntary circumstances, there is strong opinions that this is rather a
voluntary circumstances. But in practice, it is a mixture of two. One of the
widely praised definitions of segregation comes from Garcia D. A. and
Lochner K. in 2001. They were working in Harvard School of Public
Health. Their definition is in point.
Segregation refers to the differentiation of two or more population groups
among subunits of a given social space. Population groups can be divided
along racial/ethnic, social class, and gender or age lines. The social space
can be a geographic social space such as a metropolitan area or a school
district, or an economic social space such as a labour market
Housing segregation is the process of creating spatial difference in
population in a particular area, no matter whether it is voluntary or
involuntary. In fact, when a particular portion in population fails to afford
housing of the same standard with other parts, there is segregation.
According to Roy Elliot Cundiff (1999), Residential segregation is tendency
for individuals with different racial backgrounds to inhabit different parts
of metropolitan areas in greater concentrations.
In Bangladesh there are a medium scale housing segregation. This is
medium scale because of the nature of construction activities. By nature
both expensive and inexpensive units of housing are sometimes situated
side by side. Therefore though segregation comes naturally mainly due to
income differences, the intensity is not that high. But the growing concern
is that the intensity is increasing.
9.2. Reasons of Housing Segregation
Though many believe that segregation is natural and a self selecting
process, in reality it is constructed by a variety of powerful factors like
actions taken by government, housing and banking industry, and
73
individuals etc. Lets have a look some of those factors which influence the
housing segregation in Bangladesh.
Income differences: Income differences works as an automatic

tool for housing segregation due to its direct influence on
affordability. Extreme levels of segregation can be stable when
racial income disparities are either large or negligible, but unstable
in some intermediate range (Sethi R. and Somanathan R, 2001). In
Bangladesh its very common and there are a high level of
segregation in this aspect
The role of Government: Government plays role in segregation in

different ways. They define the metropolitan areas which affects the
total facilities in daily life as well as the demand and supply of
housing units in a particular area. Among other factors though
infrequently used by government are change in the tax rate mainly
for income, and government step to encourage people to live
outskirt of the metropolitan areas. In case of later one, government
encourages construction activities in the outskirt of the cities,
develop the transportation facilities in those areas, and sometimes
expand the city toward different directions. These factors affect the
demand and supply for housing in a particular areas followed by the
change in house prices. Change in house prices affects the
affordability of people to own houses i.e. homeownerships.
Changes in tastes and preferences: Changes in tastes and

preferences affect the demand for housing units in a certain areas
sometimes. For example, when people have more money they want
to live better. Therefore they might try to move from the
Dhanmondi (one of the several most prestigious residential areas of
Dhaka; recently has been claimed that it looses it status level)
areas to Gulshan (still the first or sometimes second most
prestigious areas in Dhaka city) areas of Dhaka city. Its also related
to the status question
Fragmented metropolitan regions: This is sometimes a result of

narrow visions of politicians. They just divide a particular area in
different parts sometimes unnecessarily to gain political interests.
This fragmentation affects housing affordability of people when
there is a definition of municipality.
9.3. Types of segregations in Bangladesh

In fact, it is not possible to classify housing segregation, as its a
multidimensional aspect. It depends on the situations and associated
factors. However, some of the most common types of segregations
available in Bangladesh are presented in the coming sections. Its worthy
74
to mention here that there is no racial segregation in Bangladesh as there

are no black and white class in Bangladesh.
Income segregation: This is the most common type of housing

segregation in Bangladesh. In fact, there are more or less two
extremes in the society; one of them is rich and another one is
poor. Middle class diminishes gradually. As a result there is a
substantial gap in affordability among population followed by an
automatic division of areas for each group of people. Rich people
normally live in the areas like Gulshan, Dhanmondi, Uttara, and
Bonani. These are the most expensive regions in the country where
most of the diplomatic offices along with important government
offices are situated. On the other hand poor people live in areas like
new market, new paltan, university area, old Dhaka etc.
Marital Status segregation: This is another very common type of

segregation mostly seen in the divisional cities. In the six divisional
cities of Bangladesh, there are lots of educational institutions
including most well known universities and colleges, government
offices, and other placements. Therefore there are lots of people
including students coming to these cities from outside and stay
there. But the problem is that the educational institutions like
universities cannot afford accommodations to all students which
lead students to rent houses privately. Same thing happens to the
jobholders too who dont have own houses in the cities.
This is the point from where problem expands. House owners have
a kind of negative attitudes towards students and bachelors. They
dont like to rent their houses to students as they think students will
not take proper care for their houses and they can earn more if they
rent it to others except students.
There are some house owners who are that much religious and
think that renting their house to bachelors will bring lot of problems.
They think that bachelors have no commitments to family and they
just destroy the peace in houses as they have wild attitudes
towards life. So they dont rent house to bachelors and this bachelor
people become the victim of segregation and are coupled with
students.
Religious Segregation: Bangladesh is a Muslim majority country.

Approximately 85% of its population is Muslim while the second
majority is Hindu comprising 10% of whole population. India, the
neighboring country of Bangladesh is a Hindu majority country
where almost 80% of total population is Hindu. In both countries
fundamentalist groups are active and very often they try to create a
division among population based on religion followed by a lot of
75
crimes, murders, and criminal activities in the countries. The most

important thing is that problem in one country affects directly to
another country. For example, when in India Muslims are tortured
by Hindu people, in Bangladesh Hindu communities become
vulnerable. The reverse is also true. We can remember the
demolition of Babri Mosque in 1992. That was one of the most
pathetic parts of fundamentalism in the history of Indian
subcontinent. At that time, in both countries minority groups have
been tortured by the majority groups. Rape, murder, extortions,
and other suchlike incidents were pretty much regular. Thats why,
in both countries, minority group like to stay together with their
own community in a particular area. They think that staying
together will work against the potential domination by the majority
at the crisis time it has become a trend for many decades.
Its worthy to note here that this kind of segregation is decreasing
now a-days due to the change in lifestyles of people in this
continent since last couples of year. People are now more willing to
live in cohesion. Bangladesh is a good example of it and thats why
United Nations branded the country as the moderate democratic
Muslim country.
Gender Segregation: Bangladesh is a male dominated country

and here women ownership is pretty much low. When a family buys
a house normally the male becomes the owner of the house. But
the situation is changing. Women are being interested in the
ownership and there is an increase in the women ownership in the
last couple of years. It happened due to the different steps from
Government, NGOs, World Bank etc. Lots of campaigns from
different groups such as banks are devoted to women to encourage
them in ownerships. Banks offer different facilities to women to be
owner including lower interest rates while lots of NGOs give loans to
women with very much flexible condition for the same purpose.
Segregation due to Government Policies: Dhaka is one of the

most densely populated cities in the world. Almost ten million
people live here which is beyond its capacity. But due to the
availability of jobs, better access to educational and other
institutions people still like to live in Dhaka and day by day Dhaka
becomes ineligible to live because of lots of pollution. Thats why
government decided to make Dhaka little bit unattractive to people.
They decided to shift some of the Government offices to the outskirt
of the city. They were encouraging people not to live in Dhaka. They
ask people to work in Dhaka by living outside of the city area.
Government paid attention in the development of infrastructures in
these suburban areas. They stated different housing projects in
those areas and one can argue that there is a revolution in
76
communication system in between Dhaka city and its outskirts in

the last couple of years. As a result, there is one more segregation
in the areas where they implement housing projects. These
locations are now much more expensive than ever followed by the
inability of local people to afford houses in these areas now. In fact,
rich people who were living in Dhaka city are now moving to these
places to have a better environment.
9.4. Consequences of segregation
The consequences of segregation are manifold. This is associated with the
situations and lot of other factors such as location, culture etc.
Poverty: There is considerable debate on whether housing segregation
contributes to poverty or not. Some scholars try to say that poverty is
often concentrated meaning that poor people tend to live in a
neighborhood where other poor people live. So it is themselves who bring
poverty to their lives not housing segregation. But this argument is not
widely recognized as there is always a role from housing market. The
avenues through which housing market contributes to poverty are in
point.
High rent burden: High rent, a result of competition in housing

market, affects all the parties in the market. But the affect is much
bitter for poor people leading them more poverty as they has to
expend more on housing.
Poor quality of housing and health risk: Due to the relatively lower
income and unfavourable situation in housing market interaction,
poor people had to live in houses of poor quality which causes
various hazards to their health. There are no available data about
health hazards in Bangladesh arising from the poor living standards
of people. But the experience of the author in Bangladesh proves
that its present in Bangladesh at quite a large extent. We can refer
to a study in USA where it is found that health hazards do not vary
among black and white. But it differs between poor and rich
irrespective of ethnicity (John Yinger, 2000). Poor people thus face
both monetary poverty as well as health poverty.
Neighbourhood effects: Poor people dont afford house in
neighbourhood with better amenities and they are deprived of lot of
modern facilities such as better education, access to park and other
recreational areas, and pollution and crime free environment.
Spatial mismatch: Due to segregation, inferior group sometimes
remain not urbanised and they have to live without proper access to
job and updated information.
Crime: Segregation disallows poor people to have access in updated

information, jobs, better education to improve morale, and lot of other
77
things of modern societies. People fail to develop their standard and

sometimes get frustrations which lead them to be part in crime. So crimes
like burglary, criminal damage (vandalism) and car crimes etc are
sometimes very common in the clusters where poor people live in. Other
things being equal, property crimes tend to cluster in areas those are
globally or locally segregated particularly includes footpaths and rear dead
end alleys (Chih-feng, Shu S, 2000). In fact, in absence of better culture,
there is no reference group in a society to follow to develop own standard.
Unemployment: Segregation increases the difference between work
place and living place followed by an increase in commuting costs. It
hinders workers mobility and increase unemployment. The situation
becomes worse when there is not proper arrangement of public
transportation or people are charged more, especially for those who dont
won car. As a result, a big portion of ones wage is consumed on
transportations and the job becomes lees attractive followed by
unemployment. On the other hand, Distance to job opportunities may also
discourage job search (when it is too costly) or even deteriorate its
efficiency. In this respect, it has been shown that the quantity and quality
of information workers have about job opportunities within a specific
metropolitan area decrease with distance to jobs, which in turn reduces
the efficiency of job search (Rogers, 1997; Ihlanfeldt and Sjoquist, 1990;
Ihlanfeldt, 1997).
Even the scenario gets more complexity as job
recruiters place their ads in selected areas and make it restricted for
certain types of people (Turner, 1997) and job seekers normally search
for jobs within a limited range of their living place (Davis and Huff, 1972).
Some specific impacts of segregation on unemployment are in point.
Link between segregation and poor schooling results unemployment

due to competitiveness in the job market
Youngsters affected by the poor culture from a neighbourhood with
poor amenities make themselves not competent for jobs. The
propensity of youngsters to adopt a socially deviant behaviour (for
instance dropping out of schools or yielding to criminality) depends
on the proportion of same-behaviour individuals in the
neighbourhood (Crane 1991).
People in segregated areas suffer from network facilities and find it
difficult to get jobs as A significant proportion of jobs are usually
found through personal contacts (Mortensen and Vishwanath,
1994)
Job recruiters do not like to recruit people from disadvantaged
communities as considered inferior in quality. Employers draw an
imaginary red line around a stigmatized neighbourhood and beyond
which they discriminate against residents (Zenou and Boccard,
2000).
Unemployment decreases per capita income which ultimately puts a
multiplier effect on local retailers and other service providers.
78
Education: Segregation puts question on the educational level of

segregated sector (inferior part). Some people like to believe that in
segregated regions people lack from quality education as there are no
high quality teachers to teach, and the neighbourhood amenities cannot
provide any help to improve the standard of education. Moreover, poor
cultures in those poor neighbourhoods sometimes encourage youngsters
not to join school followed by the increase in loafers in the society. As a
result society experiences more criminal actions in segregated areas.
Other consequences
Consumption decreases due to the distance from the market areas.
It affects the economy negatively
Sometimes issue of sustainability comes in front due to the poor
quality of housing, living standard, and neighbourhood amenities
(Glenn Pearce-Oroz, 2001)
9.5. Summary of Segregation analysis
In reality there are varied opinions about segregation. Some people argue
its involuntary while some others argue its voluntary. Whatever the
reason the reality is that there are segregations and Bangladesh is not an
exception.
Major reasons of segregation here is income discrimination and the
policies of government. Due to huge gap in between two extremes-rich
and poor-in the society housing segregation occurs and there are some
areas eventually only for rich people. Medium income or low income
people can never access housing in those areas.
Again different policies of government influence the housing segregation
in the country indirectly. Government is tired of the indiscipline
developments of the real estate developers in Dhaka city. Therefore they
want the city to expand in any directions it can to reduce the pressure on
Dhaka city. As a result outskirts of the Dhaka city is no more outskirts;
rather they are being included in the metro areas gradually. Here is the
harsh reality for the low and medium income people. The more the city
expands to outskirts the more it becomes difficult to afford housing in
those areas by poor and medium income people followed by segregation.
Government tries to do something better but as the by-product they get
segregation in the housing sector.
A major effect of segregation is that poor becomes poorer and in poor
amenities youngsters dont find any role model to follow. Therefore crimes
and social disorder is common in those areas followed by less education
and more unemployment.
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10.0. Primary Data Analysis

This section is devoted to analyze the data that have been collected by
interviewing customers and real estate experts in Bangladesh.
Interviewees are from Dhaka city and its outskirts. Customers have been
interviewed by structured questionnaire (added in appendix) while
informal discussion was the mechanism in case of real estate experts.
Experts include the real estate professionals mainly in different firms in
Dhaka. Therefore in the following sections the author summarizes the
quantitative data along with the inputs from qualitative data. At the end
there would be a summary of the analysis.
In total 100 respondents have been interviewed from seven regions of
Dhaka and its outskirts.
10.1. Personal Information
Total sixteen respondents are from Savar and Ashulia while fourteen from
each of the six other regions. The rationale behind this is that Savar area
is the major beneficiary of the real estate sector expansion in Bangladesh.
Figure-10.1: Sampling of population (Source: Survey)

Though majority of the respondents are 30-39 years of age, majority of
the people who owns houses are from 40-49 years age category. 63% of
the total respondents are from 30-39 years age category while 49% of
the total respondents who own houses are from 40-49 years age
category. Second highest figure comes from the 50 & above age
category in case of owning houses and the figure amounts to 37%.
Respondents are equally distributed among three income levels.
80
Figure-10.2: House Ownerships in Bangladesh (Source: Survey)

This reflects the real scenario in Bangladesh. In Bangladesh medium
income people normally cant think of buying houses before 40 years of
age. At this age they are almost close to their retirement from the jobs or
they hold good position in the jobs for which they might have kind of easy
access to financing. At the same time at this age they have matured kids
at home. To ensure a good future for the kids almost all feel an urge to
own houses to live in the own way with family members.
Medium income people face the problems especially if they have big
families and therefore they sometimes cant start buying houses until 50
of their age. On the other hand low income people cant do it even after
50 of their age because of the lack of access to financing. But some high
income people own houses even at thirty or mid thirties.
10.2. Knowledge of the Real Estate Sector
Almost all (95% of the total respondents) respondents think that it was
the necessity to have a real estate sector in Bangladesh especially for the
better and planned urbanization. But there are some people (05% of the
total respondents) who think that it was not required. In their opinion it
should be done by the state not by some people who come in front line
mainly due to own interest not for greater social interest. They think it
creates division in between people in the society. But they also admit that
they are biased by their political philosophy.
Low income people think that rapid growth of urbanization helps the
country but put a pressure on them and make their life miserable
somehow. They cant afford this kind of expensive housing and feel
inferiority sometimes in the society. At the same time they think that
rapid growth of real estate sector increases the land exploitation and thus
reduces the amount of land for other uses.
81
Among the various reasons of real estate sector development in

Bangladesh land scarcity and the lack of social security got the most
attention from respondents. But respondents think that other factors like
population growth, price of lands and houses, and complexities of
purchasing land & building houses are also important factors behind the
development of the real estate sector in Bangladesh. Following table
summarizes the respondents opinions. Total responses are more than
100 because respondents found more than one option appropriate.
Table-10.1: Factors affecting the real estate sector in Bangladesh
Attributes
Number
Income pattern change

Hazards related to lands
Lack of social security
Price increase of lands
Scarcity of lands
Capitalist mood of economy
Luxury life
Land owners problem in financing
Rapid population growth
Rapid urbanization and migration
Decrease in bank interest rate
57
63
94
68
90
34
38
67
71
53
56
Percentage
57%
63%
94%
68%
90%
34%
38%
67%
71%
53%
56%
Source: Population Survey

Majority of the respondents think that the sector is now in the growth
phase though currently the business condition is not good. Well this
happens due to the political change in the country. Right now there is an
interim government in the country and they want to change a lot of things
in the administration. Thats why all the business sectors including real
estate sector are getting some kind of negative effects of that.
Figure-10.3: Stage of Real Estate Business in Bangladesh
82
Current government puts high importance on tax payment by the

residents among other issues to root out corruptions from the
administration in the country. It reduces the flow of money to the
economy. More and more money becomes idle, as people are scared of
being interrogated about the sources of money and tax payment. Thats
why growth in the real estate sector is bit low now but experts hope that
when there will be any political government in power, growth will resume
as there is a vast market to penetrate yet.
10.3. Property Ownership & Satisfaction
In the high income level people own houses when they are in the age
range of 30-39 years. But in the medium income level sometimes it takes
more than 50 years or even never in the life time. Low income people
mainly build their own houses in their own way. Sometimes their houses
are not buildings; rather they are made of woods and steels.
There is variation among the people who own houses too. Some rich
people think that real estate developers cant comply with all of their
preferences and therefore they construct their own houses in their own
way. But the situation is reverse for the low income people. They cant
afford the highly priced houses and thats why they build their own
houses.
Respondents focus more on overall quality and location when they buy
houses. But they also think that ease of financing is very important. When
they buy houses most of the respondents (98%) visit the location of the
houses or at least some other projects of the company to get an overall
idea about the company and its products. One of the interesting findings
is that majority of customers are not yet treating amenities as something
important.
Figure-10.4: Most valued attributes (Source: Population Survey)3

3
Total percentage is more than 100% because respondents could select more than one
option
83
According to respondents they get their first orientation to any company

mainly through their advertisements. If they become interested they look
for the people in the community who own products from the same
company. It means that advertisement plays the major role in the initial
stage.
Most of the respondents fall in between happy and somehow happy
categories in terms of the quality, post purchase care, financing terms,
and luxury aspects. But almost all the respondents are somehow happy
in case of time to hand over aspect. It happens because companies cant
keep their promises on the delivery date. Respondents think that this is
the negligence of the companies rather than something unavoidable.
Some high income people are not satisfied with the luxury aspects of
houses but they said that they have the chances to change the
components by discussing with the developers.
Table-10.2: Customers Satisfaction of real estate products
Quality
Post purchase care
Financing terms
Luxury aspects
Time to hand over
Very Happy
Happy
~~
19%
11%
2%
~~
29%
40%
33%
45%
10%
Somehow Need
Happy
Modifications
52%
33%
56%
52%
87%
19%
8%
~~
1%
3%
Source: Population Survey

78% of the total respondents argued that their companies just look for
profits rather than social responsibilities. But they think the efforts of
these companies can be redirected toward the better social welfare if
managed properly. A small number of the respondents argue that they
have the chances of customization of their houses according to their own
preferences and their companies offer them that flexibility.
10.4. Customers Recommendation
69% of the total respondents think that low quality of the houses will
force the companies to redesign their offers in near future to stay in the
market. Otherwise people will loose interest to their offers. A growing
concern goes to the exploitation of landowners by real estate companies
in case of land acquisitions. Respondents think that it increases the
number of frauds in the sector as most of the time companies just exploit
the landowners rather than satisfying them.
84
In reality what happens is that when there are some lands eligible to
construct multi storied housing project in the city, companies try to
convince the land owner by offering him/her some advantage package.
But questions come up because this package is not sufficient and even
companies force the land owners to adjust the package offer negatively in
the post construction phase. Some land owners are so simple that they
cant understand the complexities of the tricks companies play with them
and finally get high level of dissatisfaction.
Therefore 87% of the total respondents think government should come up
with proper regulations to set up an exact framework for the sector so
that all the efforts of the sector go in favor of the welfare of the country
and society. They think demand supply mechanism is not a proper way in
Bangladesh market till now because supply is less than demand and
demand is increasing day by day in the Bangladesh market and
developers just exploit the pace of demand not the social welfare.
They also argue that if demand supply mechanism would be good enough
then the city would not be so vulnerable to the earthquakes. It has been
claimed for a long time that an earthquake with the medium level
intensity can destroy the majority of the buildings in Dhaka city. Old city
area is the most vulnerable to the earthquakes.
Experts also argue that Bangladesh market is not yet ready for the
demand supply mechanism to decide everything due to various reasons.
Some of them are undue influences by some big companies to modify the
way of business in the sector, less awareness of the mass people,
corruptions in the administration, and demand is far more than the supply
etc. They argue that due to the above mentioned reasons the condition of
Dhaka city is miserable now. If government would be taking care of it well
before rather than today, Dhaka could be a very good place to live.
Therefore they suggest to the Bangladesh government to think not only
about Dhaka city but also about other cities in the country for a better
Bangladesh.
Though land scarcity and the lack of social security has led Bangladesh to
have a formal real estate sector, most of the dwellers are not satisfied
with the products of the real estate companies for various reasons.
Among them less quality, high lead time, random constructions by the
real estate firms, and the profit orientations of the firms are mentionable.
Therefore they suggest government to come into the scenario to design a
proper framework with regulations if necessary within which real estate
firms will operate towards the better Bangladesh.
85
11.0. Concluded Part

In this chapter the author focuses on the research question one more
time (11.1) and recommend some actions that might be taken for the
better functioning of the real estate sector in Bangladesh (11.2). In
addition to that, the author talks about the potential research areas in
coming times (11.3).
11.1. Conclusion
In this section attention goes back to the original research question why
real estate market has been developed in Bangladesh and how its
functioning now. Before focusing on the main question lets see the sub
questions.
Demographic information of the population in Bangladesh: Though
the per capita income of people has been increasing in the last couples of
years in Bangladesh, still majority of the population have below average
income. Its claimed that there are now two extremes in the society-rich
and poor. Middle class is diminishing gradually and becomes poor.
Though some middle class people have access to the housing, low income
people dont have. Government got this concern recently and advised the
real estate sector to arrange housing for medium income and low income
people too.
The society is male dominated but participation of female in the national
account has been rising with a good pace in the last couples of years.
Total number of women in jobs increases while girls also do well in the
education compared to boys.
Decision making process of buyers: As investment in the real estate
products is bulky in nature, buyers go through an extensive buying
process where availability of information is the key success factor for real
estate developers. Almost all buyers visit the project site or at least some
other works finished by the same developer before they make any
contract.
Real estate market and real estate products: Since its birth in late
70s the sector has been expanding its reach to the other areas of the
country in addition to Dhaka city. Dhaka is city where most of the real
estate firms operate. Currently all the six divisional cities along with the
outskirts of the Dhaka city and surrounding districts of Dhaka districts are
the major fields for real estate firms.
The market is neither a monopoly nor an oligopoly. More than 500
companies operate in the market among which 321 companies are
86
affiliated with REHAB. But only 10-15 large companies hold the 95% of
the total market share, which means that the market is pretty much
concentrated. However, the market is open to all investors to invest and
there is no entry barrier.
Residential real estate products dominate the market though there are
small scale commercial productions too. But its assumed that in near
future the scope for commercial real estate business will be expanded in
the other regions except Dhaka city.
Major players in the market: Real estate firms, customers, banks, and
government are the major role players in the real estate sector in
Bangladesh. Firms control the production while they have to be
dependent on the demand arising from customers. This demand is
affected by some other factors like price of lands, income level,
complexities in building houses, and population growth etc. among
others. Government as the chief commander of the country can influence
the whole market through different relevant policies, but there is not yet
anything like that from government.
Effects of real estate business: Though the sector has both positive
and negative effects, experts argue that it can be much better if
organized properly. Dhaka city as the victim of the indiscipline and
random developments by the real estate developers is suffering from
severe traffic jam and large scale pollutions.
Value chain and segregation: All the activities in the value chain add value
to the final products. However, acquisition of land and timing of
acquisition is very much value creating to the real estate developers. The
reason is that these two factors largely influence the profit margin from a
particular project.
Though most of the segregation is involuntary, resources scarcity
produces lots of by products which are pretty negative and taken by the
people as the effects of segregation. Among them crimes and lack of
proper educational services are mentionable.
Customers reaction: In reality customers are pushed to accept the
available offers in the market even though thats not the exact demand
from them. Therefore majority of the customers think that their
investments in the real estate products are not fully justified. They also
dont like the fact that the developers are caring for profits only rather
than total welfare.
Main research question: The answer of the main research question can
be get once one combines the answers of the above mentioned sub
questions. To meet the varied demand arising from the change in
87
demography of population in Bangladesh, a formal real estate sector has

come up in scenario in late 70s. Since then it has been growing with a
good pace and it experienced a boom in late 90s.
Why did that boom occur? Some other factors along with the change in
population demography contributed to this boom. Those factors include
rapid urbanization, rapid population growth, scarcity of lands, lack of
social security, complexities in buying lands to build houses, and changes
in the income of people etc. among others.
The sector expands it reach to the different areas of the country in
addition to the Dhaka city, the main firming area for the real estate
developers in Bangladesh. Six divisional cities are the basic target for
expansion. Outskirts of Dhaka city and the surrounding districts Dhaka
has become target well before and a good portion of these areas are
already captured by the developers. But still a large segment of the total
market is remaining to be penetrated which means the sector has a good
potential in coming days.
Currently the growth in the sector is a bit low because of the irregular
political practice in the country. But experts argue that the sector will get
back its normal face once the regular political government gets back in
power.
Majority of the customers are not satisfied with the services from real
estate developers. Therefore they think government should come up with
proper directions for the sector. They also favor regulations, as they
believe that Bangladesh market is not yet ready for the usual demand
supply mechanism.
11.2. Recommendations
Real estate sector in Bangladesh is not regulated yet and government
currently has no mentionable intervention to control the firming of the
firms in this sector. Therefore developers are doing what meets their
interest best. This made the whole sector chaotic and cities like Dhaka
suffers for the unplanned urbanization activities. Therefore its time to
save other areas of the country along with the protection for the Dhaka
city in case situation goes worse. With that aim recommendations from
the authors are in point.
Government should ensure the proper policy design and most
importantly proper implementation of those policies in case of
urbanization, in case of real estate firms operations, and in case of
government involvement in the business of the sector.
88
Corruptions and bureaucracies from the administration should be

removed. Government should ensure that large companies dont
get any unfair advantages.
Decision making should be more decentralized but without any
corruptions. Proper control mechanism should be designed and
properly implemented.
Trade license procedure for the developers should be more strict
and strict conditions should be put on the unplanned development
activities.
Government should take initiatives to help the mass of people in
case of real estate financing. Low income people should get priority
in this case as they suffer most.
Government should come up with different projects too in addition
to encourage the private investment in the country.
The sector really requires regulation and government should bring
that in order to save people from fraud and cities from unplanned
urbanizations.
Government might think about moving different government offices
from Dhaka city to its outskirts to reduce the traffic in Dhaka city.
It will also work as the decentralization of the country.
11.3. Future Research
After getting familiar with the development and current practice of real
estate sector in Bangladesh, the author found the followings.
Real estate can be a good portfolio diversifier in the multi asset

portfolio.
Real estate degradation has not been taken care of and now people
think its no more manageable. But no one talks about the possible
measures to reduce the negative effects of it.
Dhaka city is the real victim of random construction activities and it
deserves immediate attention from the highest level of
administration.
Its necessary to set up a framework with strict rules and regulations
considering the culture of Bangladesh.
One can go for further research with any of the mentioned areas. But as
par the author is concerned, preference goes to the Dhaka city and real
estate as portfolio diversifier.
89
As mentioned earlier Dhaka is the major victim of random and indiscipline

constructions by the real estate developers in the country. No one was
following the existing rules and regulations to construct buildings.
Therefore its argued that an earthquake of medium intensity can destroy
the major part of the Dhaka city. Above all traffic system and the
environment have been harmed so deeply that the city is now ineligible to
live.
Further research can be carried out on what can be done to minimize the
negative effects of the random constructions and to improve the living
standard in the city. The research will include the study of surroundings of
Dhaka, water system of Dhaka, transportation system of Dhaka, potential
improvement in the transportation system of the city, and cleaning
system in the city. It might include the study of the potential rules &
regulations, improvement of the existing rules & regulations, and strict
implementation of rules & regulations etc.
Secondly research might be carried out in the area where real estate can
be added in the asset portfolio to diversify the portfolio. Real Estate
business in Bangladesh has proved that it is worthy to invest in this sector
as still the sector provides abnormal profits though the margin is not as
healthy as it was earlier.
Another area could be the designing of the framework within which real
estate sector should operate. In this case one needs to study the current
rules and regulations, what is needed additionally, why there is a gap,
and what is the practice in the developed countries etc. One can take
input from the Swedish real estate sector too.
90
12.0. Appended Part

This section of the report includes two topics namely references (12.1.)
and appendix (12.2.)
12.1. References
Bayer P and McMillan R, An Equilibrium Model of Sorting In An Urban
Housing Market: A Study of the Causes and Consequences of Residential
Segregation, Public Policy Institute of California, 2002
BBS (2001) Population Census (Dhaka: Reproduction, Documentation and
Publishing Wing, BBS)
BBS (Bangladesh Bureau of Statistics) (2006) Statistical yearbook of
Bangladesh (Dhaka: Reproduction, Documentation and Publishing Wing,
BBS)
Center for policy Dialogue (CPD), Strengthening the Role of Private Sector
Housing in Bangladesh Economy: The Policy Challenges, Report 64,
http://unpan1.un.org, 2003
Cundiff R. E, Using Geographic Information Systems to Measure
Segregation in US Metropolitan Area, http://www.utexas.edu, 1999
Fisher R. C. and Wassmer R. W, Economic Influences on the Structure of
Local Government in U.S. Metropolitan Areas, California State University,
1997
Galster G, Neighbourhood Racial Change, Segregationist Sentiments, and
Affirmative Marketing Policies, College of Wooster, 1988
Garcia D. A. and Lochner K, Residential Segregation and Health, Oxford
University Press, 2001
Hoek-Smit M. C, Housing Finance in Bangladesh: Improving Access to
Housing Finance by Middle and Lower Income Groups, Ministry of Local
Government,
The
Government
of
Bangladesh,
http://ihfp.wharton.upenn.edu, 1998
Hossain, M. M. (2000) A study on Private Real Estate Developers of
Khulna city (Urban and Rural Planning Discipline, Khulna University)
Islam, K.S. (2002) Spatial Distribution of Urban poverty: a case study of
Khulna city (Urban and Rural Planning Discipline, Khulna University)
REHAB (Real Estate and Housing Association of Bangladesh) (2002)

Annual Report 2002 (Dhaka, REHAB) p.16
REHAB (Real Estate and Housing Association of Bangladesh) (2003)
REHAB Housing Fair 2003 (Dhaka, REHAB) p. 10
Ruchira Tabassum Naved, Intrahousehold Impact of the Transfer of
Modern agricultural Technology: a Gender Perspective, International Food
Policy Research Institute, Paper no-85, http://www.ifpri.org, 2000
Seraj, T. M. (2003) Solving Housing problem through private sector real
estate development in Dhaka Architecture and construction (Urban
Development Volume 10) (Dhaka, Quality Offset Press) p. 156
Sethi R. and Somanathan R, Inequality and Segregation, 2001
Shenkel, W. M. (1884) Modern Real Estate Principal (Texas, Business
Publications, Inc.) p. 214
The Institute on Race and Poverty, Examining the Relationship between
Housing, Education, and Persistent Segregation, McKnight Foundation,
1997
UN Discussion Paper, Proceedings of the Asia Regional Consultation on
'The Interlinkages between Violence against Women and Women's Right
to Adequate Housing', http://www.unhchr.ch, 2003
Yinger J, Housing discrimination and residential segregations as cause of
poverty, Syracuse University, 2000
12.2. Appendix: Questionnaire

Dear Respondent:
Good day. I am requesting your kind co-operation to complete my thesis work I am doing
as an academic activity. I am a student of Master Program in Real Estate Management at
KTH, The Royal Institute of Technology in Sweden and I am doing my master thesis on the
following topic: Real Estate Market in Bangladesh: Development and current Practice.
Please fill up or put a tick () mark appropriately for the following questions. Thanks a
lot in advance.
Personal Information
Gender:
Male
Age
20-29
50+
Location:
Baridhara, Gulshan, Banani
Malibagh, Kalabagan, Kakrail
Old Town of the City
Tongi
Female
30-39
40-49
DOHS, Uttara, Dhanmondi

Mirpur
Savar, Ashulia
In which income level you put yourself?

High Income Group
Middle Income Group
Low Income Group
Knowledge of the Real Estate Sector
Do you think that the development of the Real Estate sector was a necessity here in
Bangladesh?
Yes
No
If yes, what do you think main reason(s) for the growth of this sector in
Bangladesh?
Income pattern Change of people
Hazards in purchasing land & constructing building individually
Lack of social security
Price of land & apartments increase day by day
Scarcity of open space in Dhaka city
An expression of Capitalist economy
Willingness to have luxurious life
Lack of access to financial services by the land owners
Not possible to get the proper combination of desired attributes
Rapid population growth
Huge migration to Dhaka & the rapid urbanisation
Decrease to the bank rate
Others: ..
If no, please specify the reason(s)
In your opinion whats the current phase of the Real Estate Sector is in now in
Bangladesh?
Introduction
Growth
Maturity
Decline
Property Ownership & Satisfaction
Do you own any property from any real estate company?
Yes
No
If no, do you think you can manage your property better than the companies?
Yes
No
If yes, what are the attribute(s) you have been considering most before purchase?
Overall quality
Luxury
Space
Location
Company (Brand Value of the company)
Ease of financing like instalment payments
Amenities of the property
Others: .
Did you visit any finished project of the company before purchase?
Yes
No
If yes, how it influenced your purchase decision?
To a large extent
Little bit
No influence at all
If no, then what attracted your to this company product(s)?
Company advertisements
Stories from others
You had no other way
Others: .
How satisfied you are with your product(s)?
Very Happy
Happy
Somehow
Happy
Need
Modifications
Quality
Post purchase care
Financing terms
Luxury Aspects
Time to hand over
How do your rank your company compared to others?
Among top five (05): 1, 2, 3, 4, 5
Among top ten (10): 6, 7, 8, 9, 10
Among the rest
What are the major things you want to change for your company?
..
..
What do you think about your company?

Its just a profit concern
It cares for customers like customization
It is doing business simply by building shelters
It performs social responsibility
It solves the residential problems of Dhaka city
Others: ..
Will your recommend your company to others?
Yes
No
Your Recommendation
Do you think the real estate sector in the right direction in Bangladesh?
Yes
No
If no, Why?
Low quality infrastructure will drive the sector to decline
Problems of financing might be a big problem in future
Quality does not agree with the demand in most cases
Companies exploits land owners in case of acquisition
Others:
Which one you support from the bellow?
Govt. should come in scenario to solve the problems
Market forces and consumers awareness is enough
Both of the above
Detailed & updated regulation is needed along with application
Others:
Whats your opinion about the technical aspects of constructions like modelling,
architectural design of the construction?
They are well built and designed
One small earthquake can convert all to a hell
Others: .
Thanks a lot for your co-operation

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Division of Building and Real Estate Economics

Department of Real Estate and Construction

Master of Science Thesis Number: 428

Real Estate Market in Bangladesh: Development

Stockholm, April 2008

Master of Science Thesis

affordability of poor people to access housing etc. More and more

Md. Tarikul Islam

Introduction to the Real Estate Business in Bangladesh

Analyzing the Decision Making Process

5.2.5. Evaluating Alternatives

Primary Data Analysis

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Bangladesh along with an economic explanation of real estate sector in

Demographic information of population in Bangladesh

Economic conditions of Bangladeshi people

Real Estate market in Bangladesh: Development and Current Practice

Political change in the country.

1.4. Theoretical frameworks and the structure of the research

Market functioning based on the Porter model.

Two models of Michael Porter have been used as the theoretical

Real Estate market in Bangladesh: Development and Current Practice

Secondary Data: Secondary data comes from different

Data Collection: Formal questionnaire (added in the appendix) is used to

Real Estate market in Bangladesh: Development and Current Practice

2.0. This is Bangladesh

Figure-2.1: Bangladesh in the Indian Sub Continent

Real Estate market in Bangladesh: Development and Current Practice

Bangladesh was colonized by British when it was a part of India. But in

Figure-2.2: Districts Of Bangladesh

Real Estate market in Bangladesh: Development and Current Practice

Figure-2.3: Divisional Cities & City Corporations

Total population: Bangladesh is one of the most densely

Real Estate market in Bangladesh: Development and Current Practice

Age: The average life expectancy in Bangladesh is 65. 01 year (BBS

Figure-2.4: Population at different ages (Source: BBS 2006)

Male/Female ratio: An estimate in 2006 shows that the ratio

Language: Though there are some dialects in different regions,

Religion: Bangladesh is a Muslim majority country and almost

Real Estate market in Bangladesh: Development and Current Practice

(0.31%), and Animists (0.15%). In spite of this variety, people live

Sources: Population Statistics, BBS, 2006

Ethnicity: Though there are some ethnic groups, Bengali is the

Education: In case of education in fact Bangladesh is still in the

2.4. Economy of Bangladesh

Real Estate market in Bangladesh: Development and Current Practice

Figure-2.5: Sector Wise Contributions to GDP (Source: BBS, 2006)

Agriculture, forestry, and fisheries 17.0

Bangladesh imports more than it exports and therefore it always have a

Real Estate market in Bangladesh: Development and Current Practice

Source: BBS, 2006

Real Estate market in Bangladesh: Development and Current Practice

Table-2.4: Major economic data of Bangladesh

GDP (in Billion TK)

Sectoral Share of GDP

Inflation (CPI, National)

Source: BBS, 2006

Real Estate market in Bangladesh: Development and Current Practice

3.0. Introduction to the Real Estate Business in Bangladesh

Figure-3.1: Divisional Cities & City Corporations

Real Estate market in Bangladesh: Development and Current Practice

The level of education is variable across the country

Like all other developing countries, in Bangladesh land is one of the