Term Paper

On
Problems, Prospects and Ways Forward of Real Estate Industry in
Bangladesh

Course name: Business Environment

Course Code: MKT-510
Batch no: 43th
Session: Fall’2019
Department: Marketing
Program name: EMBA
Group no: 02
Submitted to: Mr. Muhammad Intisar Alam
Date of Submission: 03.12.2019
Submitted By: 1. Suvro Dev Ghosh (41943043)
2. Tahsin Azad (41943009)
3. Kazi Yasir Ahmed (41943014)
4. Shoaib Uddin Shuvo (41943010)
5. Md. Saddam Hossain (41737040)
6. Parash Mahmud (41943052)

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 Acknowledgement

First and foremost, praises to the Almighty, for his blessing throughout our term paper project to
complete the work successfully. We take this opportunity to express our gratefulness to those who
have been influential in the development and completion of this term paper.

We would like to express our special thanks of gratitude to our course teacher and guide,
Muhammad Intisar Alam sir, Assistant Professor, Department of Marketing, Faculty of Business
Studies, University of Dhaka. We are truly motivated by him in doing this term paper on such an
interesting topic (Problems, Prospects and Ways Forward of Real Estate Industry in Bangladesh).
His wisdom, knowledge sharing and thought process development strategies have guided us so far
in developing this paper. His vision, sincerity and dynamism have deeply inspired us. We were
highly encouraged by Sir’s lectures and unique way of teaching through relatable examples of the
contemporary business world. We will truly cherish his motivation in preparing this term paper. It
has been a great honor and privilege to be under his guidance and discover him as a true mentor.

We, including the team members have tried our best to build this project words by words with the
aid and backup from some profound researchers, authors and online support. We would like to
extend our heartfelt gratitude to all of the sources stated above.

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 Letter of Transmittal
3rd December, 2019

Muhammad Intisar Alam

Assistant Professor
Department of Marketing
Faculty of Business Studies
University of Dhaka

Subject: Submission of term paper on problems, prospects and ways forward to Real Estate
Industry in Bangladesh.

Dear Sir,

It is indeed a great pleasure for us to be able to hand over the result of our hard work of the report
on problems, prospects and ways forward to Real Estate Industry in Bangladesh. This report is
the outcome of our learning from the respective course. The given topic has been valuable in
expanding our horizon of knowledge. We have learned to research, data collection, data analysis
and gained knowledge on the topic on a great deal while preparing this report. It has been a
comprehensive learning experience for us. We have tried our level best to complete this work
properly as per to your guidance, as much as possible. We do believe that our tiresome effort will
live up to your expectation.

We would like to express our sincere gratitude to you for your motivation and guidance in
preparing the paper. We will be happy to provide any further query regarding this report, if the
same is needed.

Regards,
Suvro Dev Ghosh 41943043
Tahsin Azad 41943009
Kazi Yasir Ahmed 41943014
Shoaib Uddin 41943010
Md. Saddam Hossain 41737040
Parash Mahmud 41943052

3
 Executive Summary
Like any other country in the world, the housing sector plays crucial roles both in the context of the
economy of Bangladesh and serving the fundamental human right of shelter. Apart from providing
physical shelter, housing may have significant impact on the lives of the dwellers in terms of skills
enhancement, income generation, increased security, health, self-confidence and human dignity.
Bangladesh, like many other developing countries, faces an acute shortage of affordable housing both in
the urban and rural areas. Moreover, housing affordability is being eroded by poor land administration
policies, which have resulted in very high land prices that make urban housing prohibitive for lower-
income groups. Also, there is no active secondary market for real estate, mainly because of the high
transfer taxes and an uninterrupted long-term increase in land prices. In spite of all these, this sector has
experienced considerable growth in past few decades. With a rising population and increasing housing
demand, apartment culture has grown up in Dhaka sharply and opportunity for real estate business
sector has been rising ever since.

However, although real estate sector is under revival, there are still constraints in the industry. One major
drawback is the lack of a central database. For example, there is no information on real estate developers
operating outside Dhaka. Another challenge plaguing the real estate sector is the rapid urbanization which
exerts pressure on land as well as deteriorates quality of life in the city. This is why decentralization of
Dhaka is very much relevant to current real estate industry to solve the housing problem in urban and
rural areas. During the last decade, the total volume of Real Estate, Renting and Business service sector
increased every year which implies a positive growth in the sector every year. But, compared to overall
GDP growth, this sector expanded at a slower rate. Apart from meeting the housing needs, the Real Estate
sector contributes to the Government exchequer through Registration Fees, VAT, Advance Income Tax
(AIT), Stamp Duty, Property Handover Tax etc. Also, the construction industry is a labor intensive industry,
whose capacity of absorbing labor is great. The industry provides many jobs for skilled, semi-skilled and
unskilled workers both in the formal and informal sectors. For the migrants from the rural areas the
construction industry is often a stepping stone to urban life. Real Estate sector is a major part of the
construction sector. Most of the labor force engaged in the construction sector is basically engaged in the
Real Estate sector. Thus real estate sector is also contributing a lot in the overall economy of Bangladesh.

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 Table of Contents
S/N Name of the topics Page no
1 Introduction: Purpose, vision, mission, business goals 06-07
and objectives of real estate industry
2 SWOT analysis of real estate industry 07-08

3 Overall Scenario of Real Estate Industry in Bangladesh 08-11

4 Problems & Prospects of Real Estate Industry in 11-22

Bangladesh
5 Recommendations 22-24

6 Way Forward 24-25

7 Conclusion 25

8 Reference 26

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Introduction

Real estate sector is one of the fastest growing and thrusting sectors in Bangladesh. Infrastructural
development is highly important for a country to rise as a developed nation and to ensure housing
facilities for the citizens of the country. The housing sector plays vital roles both in the context of
the economy of Bangladesh and serving the fundamental human right of shelter which actually
call for the awareness and analysis regarding various pertinent issues involving the sector. These
analyses include the size and contribution of the housing sector to the economy, current market
structure and trends in this sector, regulatory framework governing this sector, various government
policies and associated challenges arising from recent economic crises and policy changes.
Without adequate information the players in this sector cannot plan and prepare themselves for the
challenges and opportunities. Availability of proper information is also necessary from the
perspective of the investors so that they can make efficient investment decisions. This is very vital
as the sector grows to its matured phase, investors has to be well aware of the facts and status of
the industry.

What is Real Estate Business

Real estate is the property, land, buildings, air rights above the land and underground rights below
the land. The term real estate means real, or physical property. “Real” comes from the Latin
root res, or things. Others say it’s from the Latin word rex, meaning “royal,” since kings used to
own all land in their kingdoms. The business of real estate means the profession of buying, selling,
or renting land, buildings, or housing. It is now very popular in many developed and developing
country like Bangladesh, India, England, Wales, Northern Ireland, United States, Canada,
Pakistan, Australia, and New Zealand etc.

Purpose of Real Estate Business

The purpose of real estate business is, to earn profit, but the promoters and the equity holders are
aware of their commitment to the society to which they belong. A chunk of the profit is kept aside
and/or spent for socioeconomic development through trustee and in atomization of art, culture and
sports of the country. The purpose of this sector is to make a substantive contribution to the society
where it operates, to the extent of our separable resources.

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Vision of Real Estate Industry
Application of modern information technology in business activities, offering high standard
clientele services and proper coordination of business is the core of real estate sectors’ vision.
Mission of Real Estate Industry

With a view to achieving objective of the real estate sector, their sincere and al out efforts stay put
unabated. Respected clients and stakeholders are attached to this field for the transparency,
accountability, social commitments and high quality of clientele service.

Objective of Real Estate Industry

Bring Modern facilities to the doorstep of general public through diversification of service. Real
estate sectors’ aim is to maintain their quality of the product. The objective is to maintain the
commitment to the client through:
 Professionalism.
 Transparency.
 Service.

Business Goal of Real Estate Industry

To patronize, sponsor and encourage games and sports, entertainment and other social activities,
alongside providing the best services to the clients.

SWOT ANALYSIS OF Real Estate Business

Strengths

 High standard of construction quality.

 Contribution in GDP
 Scarcity of land & growing housing demand in major urban areas
 Inflow of foreign remittances in land and flat purchase

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Weaknesses

• Rise in prices of land

• Lack of experienced professional to construct high-rises and skilled labor
• Lack of proper regulations and standards
• Purchase & maintenance cost of construction materials are high

Opportunities

• The Upcoming budget (2019-20)

• Tax incentives for investment in housing sector
• Decentralization of government activities from the capital to reduce pressures on the city.
• Prevailing political stability
• Positive economic growth and increase in per capita income leading to high demand of
housing

Threats

• Uncontrolled land market.

• Corruption
• Aggressive competition to achieve market share
• High amount of financial investment which leads to high level risk
• Loss of livelihood

Overall Scenario of Real Estate Industry in Bangladesh

In Bangladesh, real estate emerged as a crucial sector of our economy. Contribution from this
sector has been very significant and over the last two decades it contributed on an average 8.24%
on the overall GDP of the country. The growth of real estate is firmly associated with the growth
of urbanization.

Dhaka City, born during the Muhgal Empire and grown with the British rule, is expanding rapidly.
From the beginning of the 20th Century its growth and latter development is marked with sheer
lack of proper and far-reaching planning. The impact is now being felt at the end of the century.
Dhaka City is undergoing terrific growth phase throughout the last two decades. While there are

8
so many real estate developers in the market, there are also very few of them who have maintained
the quality, safety and customer preference. 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. 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). Almost 110
Companies are at present affiliated with this association, while more than 250 companies are
working independently. BTI took a leading role in the formation of the industry association and is
one of the founder members of the REHAB.

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

In Bangladesh, real estate emerged as a crucial sector of our economy. It has a huge multiplier
effect on economic activities. It is one of the largest employment-generating sectors after
agriculture and garments (REAL ESTATE MARKET BANGLADESH, 2019). It also stimulates demand
for allied industries, for example steel, cement tiles and sanitary ware, cable and electric wire,
paint, glass and aluminum, brick, building materials, and consumer durables. Contribution from
this sector has been very significant and over the last two decades it contributed on an average
8.24% on the overall GDP of the country. The growth of real estate is firmly associated with the
growth of urbanization. According to Census 1991, 22% of the population was in urban and 40%
people of the country will be urbanized within 2020, according to United Nation (2014).

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Fig: Urban & rural growth proportion
Source: REAL ESTATE MARKET BANGLADESH. (2017). MTBiz: Monthly Business Review, vol 04.

Moreover, compare to the South Asian countries, Bangladesh has enormous potentiality when it
comes to urban growth. From the early 1980s, real estate started to flourish and showed robust
growth. By 1988, there were 42 developers in business in Bangladesh. As of now, Real Estate &
Housing Association of Bangladesh (REHAB), the biggest association for the country’s realtors,
has 1073 registered members. Apart from REHAB members, some other non-registered realtors
are also operating in the market. With the progression of economic growth of the country, standard
of living has improved quite significantly. People of increased income bracket have higher
tendency to own a flat in recent time. Moreover, number of city corporations have increased and
realtors are eyeing on these new areas too. Some of the real estate companies have already started
their operation in district level areas.

Source: REAL ESTATE MARKET BANGLADESH. (2019). MTBiz: Monthly Business Review,vol 04.

Dhaka is now growing in a great pace accommodating over 0.6 million people per year. On the
basis of that more than 0.12 million units are required to house the added population in Dhaka
(REHAB). Realtors sliced prices by a significant margin in the last few years to attract investors.
On the other hand, commercial banks pulled down interest rates of housing investment products
gradually. Reduced price and declining home loan interest rate may influence the real estate

10
demand. The bigger portion of our population is young generation. Their level of education and
life style may push them to have an apartment with different facilities.

Market prices of apartment or flat varies depending upon their locations and sizes. Flats in Banani
area are offered at BDT 9,633 per square feet on an average of all sizes (REAL ESTATE
MARKET BANGLADESH, 2019). Gulshan area charges BDT 9,222 per sq. feet on an average
all sizes of flats. Dhanmondi area charges on an average BDT 8,225 per sq. feet. Mirpur and Uttara
comparatively ask lower price than these three areas and on an average BDT 5,600 per sq. feet is
the regular price for these two areas.

Fig: Market prices per sq. feet depending upon their locations
Source: REAL ESTATE MARKET BANGLADESH. (2017). MTBiz: Monthly Business Review,vol 04.

From REHAB data, it shows most of the members cut their price by 25% in the last three years to
attract investors. In 2015, the price per sq. feet in some posh areas of Dhaka city was over BDT
12,273 per square feet on an average but recent price level is near to BDT 9500 on an average.
Generally, small flats are available more in middle-class populated areas like Mirpur and Uttara
while big flats are available more in higher middle class and upper class populated areas like
Banani, Gulshan, Dhanmondi etc.

Problems & Prospects of Real Estate Industry in Bangladesh

Being one of the most densely populated countries of the world with a huge population,
Bangladesh has already surrendered nearly 25% of its land to human settlements and related uses.
With the current 30 million urban populations, the share of urban land is about 2 percent of all
lands and nearly 10 percent of land under settlements.

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Due to various factors, including absence of an urbanization policy or a human settlement policy,
urban growth and urban development in Bangladesh is basically Dhaka oriented. Already 30% of
the urban populations of the country are concentrated in Dhaka Mega city region. The trend is
continuing or becoming more entrenched. As Dhaka is the Nucleus City of Bangladesh and the
focal point of all social, political and economic activities, the current housing situation of Dhaka
City is mainly outlined in this paper. The problems and prospects of housing are also discussed in
the light of the experiences of some other major cities of the world. The present and future trend
of housing development is also discussed with special reference to high land value in Dhaka City.
In future there would obviously be a need for higher density of population in both rural and urban
areas, more so in urban areas. Density can be increased both horizontally (by more compact
arrangement) or vertically through multi-storied development. There is no magical solution to the
present or future housing problem of Dhaka City. Different sets of policies need to be implemented
both at the national as well as the local levels. Nevertheless, in the light of the prevailing high
growth rate in population as well as increasing value of land in Dhaka city, it can be easily argued
that apartment development should be encouraged in the coming years. Both walk-up as well as
high rise developments should be encouraged. Hence the future residents of Dhaka should adapt
themselves to apartment living by being more accommodative and tolerant. All of us would prefer
to live in a private home with a front lawn and /or a back garden, but since urban land is scarce
and expensive, solutions with high rise development need to be considered in a rapid developing
city like Dhaka.

Housing in Dhaka City

Housing conditions of Dhaka City vary greatly between high and low-income groups as well as
by area. The gap is obvious between luxurious high income apartments/houses which exist in high-
income areas such as Gulshan, Baridhara, Dhanmandi, Uttara areas and poorly constructed
temporary housing (Jhupri) with extremely small floor space, very densely located on the lands
prone to flood disasters. About 30% of the slum dwellers live in Jhupri, 24% in Chhai, 13% in
Tong, 30% in Tin-shed, 2.5% in Semi-pucca and 0.5% in Pucca type of structure. Housing
requirements in Dhaka is 218,000 units including dissolution of backlog and replacement, wherein
the requirements of urban poor is 140,000 units, which share almost two-thirds of the total
requirements. In terms of tenure, 54% of the households are on private rental basis while 31% are

12
owned. Only 1.2% is on social housing. It can be pointed out that people from all socio-economic
backgrounds in Dhaka are facing housing problem of one type or another. While the urban destitute
need rehabilitation, the slum dwellers need slum upgrading. The low-income families are in need
of low cost flats or plots and the middle and upper income families are complaining that the cost
of a decent plot or a decent flat is going beyond their means. The solution to the problems of these
different groups is also different and mainly lies in the hand of the policy makers and the
government.

Apartment/Real Estate Development in Dhaka City

Three decades back the city dwellers were reluctant to live in flats while ten years back someone
would have thought twice before buying an apartment/flat. But in the last couple of years people
have shown an increased interest in owning apartments. As mentioned earlier the main reason is
economic due to increased land cost as well as construction cost. There are also other reasons such
as reluctance of individuals to spend time and energy in house construction, increased awareness
of apartment living, and western influence. As a result, apartment-owning is becoming
increasingly popular. Moreover, the absentee i.e. the wage earners in Middle East and other
countries are also a major contributing factor towards the increasing demand for apartments. As a
result of increased demand, many apartment builders have appeared in the market in recent years.
Twenty years ago there were fewer than five companies in Bangladesh engaged in developing
apartments while today there are more than 250 developers. It may be mentioned here that in 1988
there were less than 20 such developers in Dhaka. At present there are 80 such developers working
in Dhaka City who are members of REHB. But there are many other companies/individuals
engaged in such development in smaller scale and selling apartments to friends and relatives only.

Construction and Development Process

The contribution of construction industry in the Gross Domestic Product (GDP) is significant.
Over the last 15 years the Real Estate Development sector has made significant contributions to
many sectors of our economy. Since 1985 this sector has created homes for over 12000 families
in the metropolitan city. Contribution of construction industry may be summarized as:

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Construction industry generates huge formal and informal sector employment. This fact needs to
be remembered more generally while policy making.

·Income redistribution through employment generation, skill upgrading, favorable financing for
low-income housing, capital spending for large-scale civil engineering works, all contribute to
redistribution of national products downwards (social justice component).

·On-the-job skill acquisition frequently leads to further specialization, both in the construction
sector and in serving other industrial sectors. Skill generation is thus possible by construction
industry.

·The low-income population, after the provision of shelter and civil infrastructure, feel morally
upgraded (direct contribution to labor productivity). It has also been observed that improved
dwellings are frequently transformed into some sort of informal economic production units.
Improved road systems make commodity outputs of small units more easily accessible.
Construction industry thus contributes to higher productivity.

The construction sector directly relates to employment, power and transport sectors. The
construction industry is a very labor intensive, providing many jobs for skilled, semi-skilled and
unskilled workers both in the formal and informal sectors. The informal sector also employs many
people in construction industry. For the migrants from the rural areas the construction industry is
a stepping stone to urban life.

It is a recognized fact that the health of the Real Estate Development sector is the barometer of the
national economy. Housing is indeed one of the most important priorities of any government. It is
very unfortunate that today the Real Estate Development sector of Bangladesh is in the doldrums.
Many construction projects are left incomplete; many people who have invested their money face
uncertain future; and many related industries will face the consequence of this depression in the
immediate future. It is our view that a part of the reason behind this pathetic scenario is the
misunderstanding of this sector by the successive governments. Instead of receiving
encouragement and nurturing, this sector has been progressively quashed by regressive
government policies.

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Development of High-rise Building

High-rise buildings probably were first constructed in response to the corporate need for increased
direct communication and expansion of business operation. Businessmen understood the need for
proximity and personal communications and quickly recognized the value of “going vertically up”
within a compact business core in the central city. This philosophy has remained, all over the
world, despite the extraordinary technical advances made over the last 50 years in both
transportation and telecommunications. The corporate world is not the only beneficiary of high-
rise development; often other enterprises that serve corporate business or its employees also locate
themselves in high-rise structures. Offices for lawyers, accountants and other business related
professionals are established in close proximity to the corporations, often being located in the same
building. Medical and dental practices open where they can capture and serve office workers as
well as the general urban population from a central location. Even where the structure bears a
corporate name and was built specifically for a corporate tenant finally ends up catering to various
professional and business clients. The reasons of this development are as follows:

· Easy access
· proximately of supporting facilities of offices.
· Higher rate of return on investment.
· Besides the land value there are other reasons for the construction of high-rise structures to
accommodate office staff where land is limited.
We can safely say that high-rise structures in other locations is not suitable or attractive because
of· Lack of access, Absence of supporting services, Lower rate of return

Current State of Tall Building in Bangladesh

The history of tall building in Bangladesh is only four decades old. Broadly speaking two types of
high-rise buildings are constructed in terms of use type: Institutional buildings including
government & commercial office buildings, hotels etc. Residential buildings particularly for
middle and high income groups. The trend that started in 1963 with the construction of 11-storied
WAPDA building at Motijheel, the Central Business District (CBD) of the capital city Dhaka has
currently gained a tremendous momentum. Although tall buildings are being constructed in few
numbers in other cities of the country, almost all the existing and under-construction tall buildings

15
of the country are located in the capital city. In Dhaka, there are about 120 such notable buildings
clustered mainly at the Motijheel commercial area and in places like Eskaton, Mohakhali and
Banani. If one compares the number of tall buildings in the capital city with the size of the greater
Dhaka with a present population of about 10 million, the insignificant proportion of the tall
buildings with respect to the overall scenario becomes evident.

Land Use, Land Use Economy and Land Value

The trend towards construction of tall buildings in Dhaka is very much connected with the very
high price of land in the main commercial and business districts. Since land value is very high in
inner city areas, population density should be increased by adoption of multi-storied construction.
In less developed areas, where commercial value is less, tall buildings are virtually non-existent.
High-rise buildings are constructed to ensure economical use of land in areas where land is scarce
and its cost is high. Individual plot holders can save a lot of land by going in for multi-story
buildings. However, the savings in a given sector of land depend on the gross densities in number
of dwellings per acre including the land required for common amenities like parks, playground,
schools, shops, road etc.

We are of the opinion; however, that Real Estate companies are just one among several reasons
for the rise in price as the value of urban land is actually determined and fixed through competition
in a complex economic process. Besides, there are other factors, which influence urban land value.
These are social values, customs and others. On carefully analyzing the land value trend of Dhaka
City and the suburbs for the last thirty years, a number of causes of high land value have been
identified as follows:

a) Lack of investment opportunity in other sectors of economy.

b) Rapid urbanization and consequent scarcity of urban land.
c) Uncontrolled land market.
d) Lack of comprehensive land policy.
e) Inappropriate taxation policy.
f) Political instability.
g) High rate of inflation.

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h) Land speculation and the role-played by brokers.
i) Land ownership being regarded as a symbol of social prestige.
j) Inflow of foreign remittances earned by Bangladeshis abroad, especially from the Middle East.
k) Land purchase by real estate developers.

Since land value is very high in inner city areas, increasing multi-storied construction will
increase the density. Many parcels of inner city land are underutilized or vacant, which should be
put to proper use for balanced growth. To achieve these objectives and to minimize the negative
effects of high-rise constructions the following recommendations are suggested:

a) Proper rules and regulations for high-rise construction should be formulated and implemented.
b) In case of apartment, exclusive apartment law (condominium law) should be enacted and
implemented by RAJUK and other concerned agencies.
c) Zoning law for Dhaka City in terms of use class and height class should be formulated and
strictly enforced as per DMDP structure plan and related plans.
d) Particularly in the high cost areas of inner city vacant land tax and punitive tax for very low-
rise construction should be enacted.
e) Building rules related to lift, parking and firefighting should be strictly monitored and
enforced by concerned agencies, as per Bangladesh National Building Code 1993.
f) In commercial areas low-rise structures should be totally discouraged by appropriate measures.
g) In high-rise/high density zones, co-ordination between utility agencies should be increased to
plan in advance for high capacity utility mains.
However, in the context of Dhaka it is envisaged that in the future years high-rise construction
will increase both for commercial buildings and residential development.

Construction Industry and Environment

Once undesirable environmental consequences of the use of a natural resource have been
identified, there are two types of control, which can be exercised: control of the supply and control
of the demand. Control of supply could be exercised by means of introducing land-use regulations,
pricing of the resource and other measures, eliminating indiscriminate exploitation or reducing it

17
to acceptable levels. Demand side controls aimed to restrict or change the nature of the activity.
The goal is to reduce or eliminate the demand.

In the case of construction activity, which is acknowledged to be essential for virtually every
type of development, an increase rather than a decrease is desirable in all developing countries.
There are many ways in which the nature of current construction activity can be changed to make
it less environmentally damaging, without reducing the total amount of construction in terms of
the built space created or other functions it performs. These include:
– Improving land-use and pollution emission legislation and control
– Pre-construction environmental impact appraisals
– Greater use of demolition and mineral & agricultural wastes in construction.
– Extending the life of and reuse of existing buildings.

Potentialities in Construction Sector

The construction sector has great potentials. The traditionally used building materials are locally
produced. Cheap labor, appropriate technologies and easy transportation system have also been a
positive catalyst for the advancement of the construction industry.

(a) Building Materials: Locally available traditional raw materials can be used as effective
construction materials. The government should publicize information regarding locally available
building materials, its high productivity, the locations and accessibility. Local small-scale
industries should be encouraged to produce quality-building materials. The Housing and
Building Research Institute (HBRI) is encouraged to develop new building materials and
techniques with the objectives of reducing costs and imports. On one hand, there is research into
alternative and low-cost materials and techniques while on the other land; alternative building
materials of indigenous sources like clay tiles get little interest.

(b) Labor Force: Construction industries can create employment opportunities. Institutional
training should be facilitated for the unskilled laborers. Special vocational training should be
introduced and training made essential for creating highly skilled specialized labor force.

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(c) Appropriate and Simple Technology; Building technologies will differ from place to place. Use
of appropriate and simple technology is essential to improve construction productivity.

Apartment Development: Problems and Prospects

Apartment development in Dhaka City, as mentioned earlier, has become increasingly popular in
recent days and is likely to continue for sometime. It has a number of plus points regarding solving
housing problems of the city. But at the same time it has certain demerits. We propose to review
critically both the prospects and problems. Here it has been attempted to identify the major
criticisms of apartment development as cited in the media. They are:

i. Economic: Mainly middle and upper class families are purchasing both walks up and high rise
apartments. Lower middle and lower income groups cannot buy such expensive flats.

ii. Services: In many apartment building certain services (mainly recreational and community
space, open area) are lacking. Problems associated with water supply, firefighting and fire escape
(mainly in high rise apartments), and inadequacy of lift are notable.

iii. Social: It is sometimes argued that high rise building prevents social contact with other
neighbors, which can lead to socio-psychological problem.

The above mentioned criticisms can be contradicted on the following grounds:

i. Economic: The private apartment developers are catering for the middle or upper income group
and thereby solving the problem partially for that group. This has nothing to do with the housing
problems of lower income groups. Only government and autonomous agencies can be helpful by
subsidizing and/ or extending loans to their employees in apartment construction and/or
purchasing. Private sector can only be effective when soft term credit area extended to private
developers for constructing apartments at lower cost catering for lower income families.

ii. Services: Services provided are related to the cost of the apartment. In the private sector higher
facilities will lead to higher cost which can be prohibitive even for upper middle income families.
Lack of open space is entirely due to very high land cost in the good localities. Many associated
problems regarding service and design problem can be very effectively tackled with proper

19
institutional and design control. Sometimes these problems only arise in the cases of developers
lacking in professional and financial expertise.

iii. Social: This can be minimized by more careful planning and design of high rise apartments.
Rather than constructing matchbox type structure more intimate and personal design elements can
be incorporated in high rise blocks.

Besides these broad criticisms, many small problems have been identified from the responses by
apartment users in different apartment blocks in the city. These are cited below under the following
headings:

a) Planning Problems
i. Inadequate distance from one building to another.
ii. Some parts of the building are always shaded.
iii. Lock of green space.
iv. No relationship between surrounding built forms.
v. No fire escape or fire-fighting provisions.
vi. Absence of community space or any playing area for the children.
vii. Exposed gas lines inconveniently situated at the main entry, which may be dangerously
hazardous.
viii. Height variation between different closely associated buildings creating privacy problem.
ix. Absence of lifts or inadequate number of lifts.
x. Absence of mail box.

b) Planning and Designing Problems

i. Parking area is paved and totally open and unsecured in many cases.]
ii. Outer view is disturbed by unplanned telephone lines.
iii. Absence of garbage chute or garbage disposal arrangements.
iv. People drying wet clothes inconveniently from verandah or in ground space and spoiling the
beauty of the building.

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c) Design Problems
i. Ladders are used to approach the roof, which are inconvenient. In some apartments roofs can
not be used at all.
ii. Secondary entry is more utilized than the main entry as it exposes the kitchen, or toilets of
master bed etc.
iii. Entry to the building is through a dark place, which is not easy to locate.
iv. Entry to the apartment with long corridor which is an improper utilization of space.
v. Lack of proper outlet makes the stagnant air hot and unhealthy.
vi. Dining space is the circulation space with inadequate opening and designed without
considering furniture layout.
vii. Privacy problem created between exposed living and dining space.
viii. Staggering stair cases with narrow stairs.
ix. Lack of proper ventilation or light in different rooms of an apartment due to improper
planning of rooms.
x. Built-in closet is not functional in terms of sizes, shape and height.
xi. Absence of lightning arrester.
xii. No provision for installation of air-conditions units at later stage.
d) Construction Problems
i. Fitting and finish of toilet fixtures in certain cases are unsatisfactory.
ii. Constructional defect leading to cracks in the floors and walls.
iii. Dampness in external walls and in certain cases in internal walls.
iv. Excessive heats in the top floor due to lack of lime terracing.

For solving the housing problem in Dhaka city the following steps should be considered, some of
these stapes are directly related to housing, while others are concerned with different issues
having impact upon housing:
a) The growth of Dhaka City needs to be checked. This can be attained by developing small and
medium towns through adoption policy of balanced urbanization and decentralization. By
generation employment opportunities in these intermediate cities, the migration towards Dhaka
can be trapped in those towers.

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b) A metropolitan housing policy should be devised in conjunction with overall metropolitan
transport and land policies.
c) Provisions of areas for high-rise, low-rise, permanent and semi-permanent structures should be
made in the Master plan of Dhaka City. Expensive central city areas should be reserved for high
rise developments. In this way the concerned authorities can provide higher capacity
infrastructure at an optimum cost.
d) Housing development both in public and private sectors should conform with the development
of physical and social infra-structures like roads, electricity, water-supply, sewerage, gas,
telephone and the like.
e) Sprawl development of Dhaka City in any direction should be discouraged. Underutilized land
within the city limit should be developed and properly utilized.
f) Special schemes for housing the urban poor and destitute by constructing low cost core
housing with provision for upgrading on self-help basis should be adopted.
g) The private sector should be encouraged to cater for the upper middle and upper income
groups.

The Way Forward

Changes in financing options, confidence in the economy, and the rapid urbanization of
Bangladesh are starting to push the previously stable real estate market into an era of growth,
making it an attractive investment option. In addition to this, government initiatives to boost the
industry with black money flows mean that this growth will be sustained.
Increasing the ceiling of home loans from the current Tk 12 million and reducing the interest rate
will encourage investment. Registration costs, which can be up to 16% of the property price, also
act as disincentives [9]. Changing these policies can facilitate middle-class consumers to invest in
real estate.
A priority for the government should be keeping housing affordable so that consumers can
actually invest in housing without losing their life savings or take unsustainable loans.
Decentralization can be the key to this, by moving residential areas to the suburbs. This would
relieve pressure and congestion from the core business areas of the city, and allow residents to
purchase affordable housing in suitable locations. Creating affordable housing options for the
homeless or poverty-stricken populations of Dhaka will be a crucial step in development, and

22
incentives must be provided to developers to make properties targeting middle-income
consumers. Public-private partnerships have been successful in this sector in other developing
countries and may be the answer to this growing concern.

Recommendations:

The construction in Dhaka has multi-faceted roles for sustainable development. It provides the
direct means for physical development, expansion, improvement and preservation through
maintenance. It is the key sector in city’s development. It provides the direct means for physical
expansion, development and improvement. The planning and design component of construction is
very vital and it contributes to high productivity. Appropriate planning and design for construction,
use of modern equipment, efficient use of building materials, participation of construction actors
and effective management are considered important factors for construction industry’s
development.

It is understood from the experiences that the construction industry has multidimensional aspects,
which include actors’ participation, building materials and equipment, building code and
standards, regulations etc. It is also observed that the construction activities are frequently
disrupted by the inherent problems. Considering all issues, following broad general
recommendations both in the public and private sector should be taken into consideration:

a) Appropriate planning and programming for the construction project would be framed based
on the nature of works.

b) A major concern in the construction industry is the apparent backwardness in the adoption of
new construction technologies for the adoption of new construction technologies and practices,
which can reduce cost and increase quality.

c) The authority with help of professionals should formulate general guidelines of building
designs. Special attention would be given to prepare appropriate planning rules, building codes
etc. based on the character of the area. It will also cover building regulations and related detailing
of the building and also cover selection of materials.

23
d) It has been observed that the construction material and equipment differ from place to place,
considering this fact, specialized standards and code should be made.

e) Simple and innovative technologies should be introduced in the construction sector for high
productivity. The attention should be given on its acceptability to the construction actors.
Affordability to the government as well public enterprises should be taken into consideration.

f) Research and innovation for development should be encouraged. Proper research support and
financial support should be provided both in public and private sectors. Even groups of
entrepreneurs and individuals should be encouraged by the policies.

g) Research outputs, available materials, energy consumption cost, environmental impacts and
other information should be made available to the public through institutions and mass media.

h) Selection of building materials, the consultants are required in conjunction with experienced
contractors.

i) Local based building materials as well as cheaper alternative/substitutes should be encouraged.

j) Special financial policies for consultants/contractors financing should be introduced. It would

be included: i) reduction of bureaucracy, ii) generous advance payments, iii) risk guaranties
etc.

k) Overall management effectiveness is essential for the construction sector. It should be

managed on an institutional basis, and the construction actors have contractors, laborers, managers
and other related actors as active participants.

The planning and design approach is very important components in the construction sector
specially to ensure sustainability. The technology and innovation in the construction industry may
reduce construction cost and time, as well as increase safety. New technological innovations, often
in conjunction with materials and equipment, should be introduced into several of the disciplines
within the construction industry. Such technology also ensures higher productivity, which can
bring socio-economic prosperity to the country. The Government sets regulations on construction
industry (building code, land use, tendering constructor’s negotiation and environmental

24
regulation) in national and local level. Changes are also sought to improve quality, management
efficiency, material flow, and maintain schedules by better organization and controlling of design
and production process.

CONCLUSION
We all know that after food and clothing, housing is one of the basic rights of every citizen. To
meet this fundamental need, the private real estate and housing developers initiated a real estate
development venture a couple of decades back, especially to address the growing urban housing
problem. Private sector initiative sparked a remarkable boom in investment and development
activities. The sector has extensive potential to attract investment to its various segments.
However, progress is possible only with the joint efforts of both the industry and the government.
The government must provide fiscal incentives to developers to build low-cost and affordable
housing for the masses. Realistic and long-term policy guidance for the real estate sector must be
taken by government to encourage investment and development in Bangladesh's real estate. The
notion of 'affordable housing' must be popularized to set a minimum standard of accommodation
for all citizens. Ensuring housing for all is obligatory for the development of a nation. Without
proper accommodation, we cannot develop a capable work force for contributing to the national
economy. Judging the multi-sectoral nature of housing, it is clear that one or two isolated initiatives
will not be enough to solve the urban housing problem. The government should come forward and
take the lead role; private developers can only be an ancillary actor in this sector.

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