REAL ESTATE DEVELOPMENT

Theoretical and Practical Issues

in the Context of Bangladesh

Dr. Toufiq M. Seraj

PMÜoMl
PATHAK SHAMABESH
BANGLADESH 2015
 CONTENTS

List of figures XV
List of tables XV
Research team xvi
Foreword xvii
Preface xix
Acknowledgement xxi
Abbreviation xxiii

Chapter 1: Concept of Real Estate 01 — 11

Introduction 1
Real estate 2
Contract 3
Deed 4
Lease 5
Mortgage 6
Broker 6
Brokerage 7
Land scarcity in Bangladesh 7
Emergence of real estate development in Bangladesh 9
Real estate practice in Bangladesh 10
Chapter 2: Administration of Real Estate 13 —27
History of land administration 13
Present land administration 14
Rights related to land 15
 CONTENTS

Government 15
Propertytax 15
Land acquisition 16
Enforcement of rules 16
Escheat (Fall Back) 16
Ownership 17
Fee simple 17
Encumbrances 18
Easement 18
Easement appurtenant 19
Easement in gross 20
Party wall easement 20
Encroachments 20
Liens 20
Property tax liens 21
Judgmentlien 21
Mortgage lien 21
Voluntary and involuntary lien 21
Special and general liens 21
Estates 22
Qualified estates 22
Freehold estates 22
Leasehold estates 22
Estate for year 23
Periodic estate 23
Estate at will 23
Tenancy at sufferance . 24
License 24
Chattel 24
Tenureofland 25
Chapter 3: Flanning Considerations in Real Estate Development 29—47
Urban planning 29
Real estate development in urban planning 31
Theoretical perspective of planning 32
Satellite Towns and New Towns 32
 CONTENTS

Urban Renewal 34
Smart Growth 35
Compact Development , , 36
Green Building j^ 37
Subdivision 39
Subdivision considerations • 40
Subdividers and developers 40
Flanning in Bangladesh 41
Evolution of development authorities in Bangladesh 41
Process of plan preparation—present practica 42
Development control mechanism 44
Land use control 44
Control ofbuilding construction 44
Control of land development 45
Flanning and Implementation Instruments 46
Chapter 04: Real Estate Management 49—62
Project procurement 49
Building design/architectural drawing 51
Land use and other clearances 52
Plan approval 53
Bill of Quantities (BOQ) preparation 53
Handover of possession of land 53
Soiltest ' 53
Brochure preparation 54
Detail working drawings 54
Structural design 54
Mechanical, Electrical and Plumbing design 55
Construction works 55
Initiation of construction works 55
Temporary Utility connection 55
Construction management 55
Purchasing materials 56
Inventory management 56
Permanent Utility connections 57
Apartment sale 57
 CONTENTS

Collection of instalments 58
Customer Service 59
Customer complaints handling 59
Performing optional extra works 59
Prqject handover 60
Registration and mutation 60
Leasehold property 61
Freehold property 61
Other activities 61
Management of human resources 62
Training for skills improvement 62
Quality management 62
Chapter 5: Evaluation of Real Estate Projects 63—87
< Cost estimation of real estate project 64
Pre-acquisition costs 64
Initial payment to landowner 64
Construction costs 65
Approval frora responsible agencies 65
Demolition cost 66
Valvation of real estate project 67
Definition and characteristics of value 67
The appraisal process 67
Three valuation approaches 68
Cost approach 69
Market approach 70
Income approach 73
Initial Environmental Examination (LEE) &
Environmental Impact assessment (EIA) 77
Initial Environmental Examination (IEE) 77
Environmental Impact Assessment (EIA) 78
Stages of the EIA process 78
Feasibility study 81
Market analysis 82
Site selection and analysis 83
Competitive market analysis 85
Financial feasibility analysis 86
 CONTENTS

Chapter 6: Real Estate Economics 89—106

Introduction 89
Participants in real estate markets 90
Landowners 90
Real estate owners 90
Real estate renters 90
Developers 90
Property managers 90
Market economics 91
Durability 91
Heterogeneity 91
High transaction costs 92
Long-time delays 92
Both an investment good and a consumption good 92
Immovability 93
Market mechanism for real estate 93
Demand for housing 93
Price elasticity of demand 94
Additional determinants of real estate demand 95
Measuring changes in real estate demand—
absorption concepts 97
Supplyof housing 99
The long-run aggregate supply 99
The short-run aggregate supply 100
New construction 100
Real estate price adjustment 102
Price determination mechanism 103
Real estate trade and investment cycle 104
Conclusion 105
Chapter 7: Real Estate Finance 107—121
Introduction 107
Time horizon 108
Volume of investment activity 108
Type of property 109
Mortgage 109
 CONTENTS

Sources of real estate finance 110

Commercial banks 110
Government agencies 110
Home loan provider 111
Savings and loan associations 111
Life insurance companies 111
Credit unions 111
Other sources 111
Real estate finance process 112
Finance for real estate companies 112
Finance for the apartment buyer 112
Real estate financial Organization in Bangladesh ' 116
The Bangladesh House Building Finance Corporation (BHBFC) 117
National Housing Finance and Investment Ltd. (NHFIL) 117
Delta Brac Housing Finance Corporation (DBH) 117
IDLC of Bangladesh 117
Current scenarios of real estate finance in Bangladesh 118
Problems of real estate finance in Bangladesh 119
Chapter 8: Legal Aspects of Real Estate 123—172
Deed restrictions 124
Flanning for development 124
Development authority 125
Town Improvement Act, 1953 125
The Chittagong Development Authority Ordinance, 1959 126
The Khulna Development Authority Ordinance, 1961 126
The Rajshahi Town Development Authority Ordinance, 1976 127
The Paurashava Ordinance, 1977 128
Zolling 130
The Building Construction Act, 1952 131
National Housing Policy, 1993 133
' ' Building Code 136
Bangladesh National Building Code (BNBC), 2006 137
The Bangladesh Environment Conservation Act, 1995 139
The Environment Conservation Rules, 1997 142
Natural Water Body Conservation Act, 2000 142
 CONTENTS

Landuse control regulations 144

National land use policy 2001 144
National land use rules 2001 145
Subdivision regulations 146
Private residential project land development rules, 2004 146
Dhaka metropolitan building constructionrules, 2008 154
Building drawing and occupancy approval procedura 155
Land use clearance 155
Special project clearance for large or special projects 156
Building permit 158
Occupancy certificate 159
Building services design 161
Urban development committee 161
Building construction 162
The Joint venture infrastructure development (apartment
construction) on government land rules, 2008 163
Real estate development and management Act, 2010 165
Real estate development and management rules, 2011 170
Chapter 9: Real Estate Construction 173-192
Security and safety 173
Security 173
Safety 174
Brick flat soling 175
Blinding concrete 176
Patent stone 177
Reinforcement in concrete 178
Reinforced cement concrete 180
Formwork 182
Brick work 184
Timber work 185
Doorframe 186
Door shutter 186
Plastering 187
Sanitary and plumbing 188
 CONTENTS

PVC/UPVC/PPR line 188

Galvanized iron line 188
Providing and fixing glazed dies 189
Painting 190
Lüne terracing 190
Testing procedura for quality control 191
Cement test 191
Laboratory test 192
Sand test 192
Concreto test 192
Rod test 192
Brick test 192

Appendices 193-224
References 225-229
Index 231-239