1.3.

1 Broad Objective: Challenges and prospect of real estate business in

Bangladesh.

1.3.2 Specific Objective:

 To find out the challenges of real estate business in Bangladesh
 To find out the prospect of real estate business in Bangladesh
 To fin out the role of real estate business in economy of Bangladesh
 To provide the recommendation for betterment of real estate business of Bangladesh

Methodology:
The report has been designed based on a qualitative approach to identify the problems and prospects.
I have collected data from both primary and secondary sources of information. Such primary
information has been collected through face-to-face or phone interviews. However, data residing in
books, articles, journals, news portals, blogs, etc., related to real estate has been considered to serve
the purpose of the report.Primary sources of information from Government published reports and
websites, phone and online interviews of buyers, developer, and personnel. Secondary sources of
information from Books, journals, articles, newspapers, blogs related to real estate. Housing became
a burgeoning building business, with as many as 25 developers in Dhaka by the 1980s.

2.2 Organizations/ Authorities:

Organizations/ Authorities involving in Real Estate and Housing Development are:
1. Real estate developer companies
2. REHAB: Real Estate and Housing Association of Bangladesh
3. Ministry of Land
4. Ministry of Housing and Public Works
5. National Housing Authority (NHA)
6. Rajdhani UnnayanKartripakkha (RAJUK)
7. Chattagram Development Authority (CDA)
8. Khulna Development Authority (KDA)
9. Rajshahi Development Authority (RDA)

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2.3 About REHAB
Commercial real estate companies and professionals in Bangladesh are represented by the Real
Estate and Housing Association of Bangladesh (REHAB), the only real estate trade organization in
the country. In 1991, eleven of Bangladesh’s major real estate firms from that time established
REHAB to look out for each other’s interests and to help the business as a whole. More than 2600
real estatecompanies are currently engaged in the real estate business, with 1191 of them being
REHAB members. Every major developer company in the country is represented here.

Every year in Bangladesh, REHAB hosts its most popular annual event, the REHAB Housing Fair,
for its member developers, financial institutions, and suppliers of building materials. Numerous
Housing Fairs have been completed with great success.

2.4Real Estate Market Size

The real estate sector in Bangladesh has a market value of 6,000 crores BDT. Medium-sized flats
between 1200 and 1400 square feet have seen a 39% increase in the previous five years. Dhaka and
Chittagong are the two largest cities in Bangladesh, where the real estate business is booming. Dhaka
and Chittagong’s ever-busy urban society has a significant demand for smaller apartments. First, the
real estate market in Bangladesh spiked in 2006 and lasted until 2009, and then again in 2015 and
lasted till 2018. In the years 2023-2026, we may expect a further increase. The new surge will be
based on factors such as changes in generational and cultural trends, coupled with inadequate land,
and a revolution in cost-effective housing. Moreover, Bangladesh has seen a dramatic increase in the
number of dedicated residential zones in the last decade all around the country specially in Dhaka,
like Bashundhara, Purbachal,Savar, Keraniganj, Gazipur and others.

Increases in home loans from banks reflect a growing preference among middle-class families for
this method of financing. In 2019–20, the demand for home loans was BDT 1496 billion, and BDT
1,544 billion in the fiscal year 2020-2021. Therefore, the real estate business as a whole account for a
larger share of the national GDP than practically any other sector.

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2.5Top Real Estate Developer Companies in Bangladesh:
 Building Technologies and Ideas Limited
 Asset Developments Limited
 The Structural Engineers Limited
 Concord Group
 Navana Real Estate Limited
 Bashundhara Housing Limited
 Sheltech (Pvt.) Limited
 South Breeze Holdings Limited
 Comprehensive Holdings Limited
 ABC Real Estate Limited
 Assure Group
 Assurance Developments Limited
 Bay Developments Limited
 Cube Holdings Limited
 Basic Builders Limited
 Amin Mohammad Foundation Limited
 Anwar Landmark Limited
 Rupayan Group
 RANGS Properties Limited
 RANCON Properties Limited
 SANMAR Properties Limited
 Jumaira Holdings Limited
 Dominant Group
 Nandan Kanon Housing Limited
 Gemcon City Limited
 JCX Developments Limited

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2.6Contribution of Real Estate to Bangladesh’s Economy
REHAB estimates that the real estate business and related businesses account for 12% of GDP. The
real estate market has generated roughly Tk. 20 billion in sales, as well as about Tk. 2 billion each
year in tax revenue for the government. Approximately 2 million people are currently employed in
real estate and related industries. This includes architects, engineers, management officials, and
direct and indirect laborers. These businesses have added 12-14% to GDP annually on average over
the past five years.

2.7 Contribution of financial Institutions in real estate business:

Real Estate Business generates direct and indirect employment in other linkage more than one
hundred industries such as construction, building products, sanitary ware, electrical products, Blocks,
sands, Cement business, brokerage, designing solutions, Bank, NBFI and more.

Financial Institutes (Banks and NBFI) is also contributing in real estate industries. Banks and NBFIs
are giving easy loan to the apartment, house, land purchaser. Real Estate company also takes project
loan for completing the projects. Banks are giving seventy percent of apartment value or maximum
taka 2 Crore which is lower, and NBFI also giving loan usually seventy percent of apartment value
(some cases up-to ninety percent of apartment value), NBFI has no maximum limitations.

There are monthly taka seven hundred crore Home Loan market in Dhaka and Chattagram city.

Monthly average home loan disbursement by the Banks and NBFIs:

SL No Name of Bank/ NBFI Monthly Disbursements Market Share
in Crore
01 DBH Finance PLC 130 18.5%
02 IDLC Finance Ltd 90 12.8%
03 The City Bank Ltd 60 8.6%
04 IFIC Bank Limited 50 7.2%
05 Prime Bank Limited 40 5.7%
06 Dutch-Bangla Bank Limited 35 5%
07 Standard Chartered 30 4.3%
08 Eastern Bank Ltd 25 3.6%
09 MTBL 20 2.9%
10 IPDC 20 2.9%
11 Others 200 28.5%

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At present, the real estate sector of Bangladesh is a leading growth sector and is providing
remarkable contributions to the GDP in Bangladesh and creating employment opportunities for the
unemployed people of Bangladesh. It can be shown by the following table.

Figure 1: Contribution of Real Estate Business in GDPSource: (Bangladesh Bureau of Statistics,

2020)We can see from the graphical representation that the real estate business contributed to TK.
6,01,190 million to Bangladesh's GDP in 2010-11, TK. 6,87,147 million in 2011-12, increasing
gradually to TK. 14,45,392 million in 2016-17, TK. 16,64,189 million in 2017-18, and TK.
19,04,866 million in 2018-19. This information demonstrates that the real estate sector's contribution
to Bangladesh's GDP.

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4.1 Analysis
4.1.1Current Scenario and Demand Analysis:
One of the most promising areas for investing in Bangladesh right now is the real estate market.
World Bank data shows that Bangladesh is now experiencing an annual rate of urbanization of about
3%. The urban population of Bangladesh currently accounts for approximately 38% of the country’s
total population. There is a severe lack of available housing in all major urban centers, and this
scarcity is expected to worsen as demand for new homes rises.

among the middle and higher middle classes. This massive increase in urban density and influx of
people into Dhaka has resulted in high demand for lodging and housing services.

The present number of developers cannot meet the current need in this severe environment of rapidly
rising demand. Because the demand-supply imbalance is widening, this situation assures that future
demand will be larger. Supply Analysis Without a doubt, the supply of flats in the residential sector
is rapidly rising. Only 11 developers and builders were members of REHAB at the time of its
founding, the number had risen to 42 by 1988 and in 2022 REHAB members are 1191 and total
number of developers is more than 2600.

4.1.2Current Trends in Bangladeshi Real Estate Sector

4.1.2.1 Condominiums: A way to spacious living
A condominium, also known as a condo, is a unit in a complex or building of units that is privately
owned. The air space inside a condo is owned by the condo owner, who also owns a share of the
communal property, which includes the floor, walls, walkways, stairwells, modern amenities, and
outside spaces.
There are two types of apartments in the condominium projects in the capital – luxury and ordinary.
Japan-Bangladesh Joint Venture Company started the first condominium project in the
Mohammadpur area in Dhaka in 2004. Rupayan Group started a condominium project in
Narayanganj, named “Rupayan City”. Rakeen Developments (BD) Limited started a condominium
project in Mirpur, named “Rakeen Bijoy City”.

Later, Building Technologies and Ideas Ltd (BTI), Concord Real Estate Limited, Navana Real Estate
(NREL), The Structural Engineers Limited (SEL), Sheltech (Pvt) Ltd, Sanmar Properties Limited,
Rangs Properties Limited, ASSURE GROUP, ABC Real Estate Company, Epic Properties Ltd,
Edison Real Estate, started building condominiums in the city.

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4.1.2.2 Studio apartments: A new prospect in housing market
The studio apartment or an apartment with all necessary features in a single room has been gaining
popularity, particularly among those who are required to live in cities or near tourist spots for a
specific period of time.A good number of real estate developers are responding to the growing
demand by developing studio apartment projects in the country.

4.1.2.3 Traditional Red Bricks Outlawed, Welcome Concrete Blocks

In an effort to reduce air pollution, the Ministry of Environment, Forests, and Climate Change have
announced that concrete blocks will be compulsory for all construction works by 2025.

The popularity of Steel Structures in Urban Real Estate

In urban areas, the prefabricated steel structure is becoming more common because it is more
convenient and secure for corporate structures.

Incorporation of Digital Platforms in the Real Estate Business

The vast majority of successful companies today offer their services exclusively online. They
maintain a website where you can view their portfolio, ready flats, and works in progress. Online
consulting services are also available from a lot of these companies. Recently, Bproperty, a digital
real estate platform, held a virtual property fair in the year 2020, 2021 and 2022, which was quite
successful.

4.1.3 SWOT Analysis of Real Estate Business:

Strengths:
 Experienced Management.
 Efficient and dedicated employees.
 Good understanding between employees.
 Good relationship with existing clients.
 Locations of the Projects are good enough.

Weaknesses:
 Many prospective clients don’t have any idea about its construction quality.
 Comparatively product’s prices differences between many companies.
 Lack of promotional activities or advertisements.
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  No specific policy following by the employees.

Opportunities:
 Huge demand of land and apartments
 Availability of Home Loan for apartment purchase
 Huge number of projects under construction
 Many prospective clients don’t have any idea about construction quality
 Availability of low-cost labor
 Utilization of Black Money

Threats:

 Huge number of competitors

 Lack of suitable land

 National catastrophes.
 Non-availability of funds
 Lack of experience stuff

4.1.4 Affordability and Economy: The city's restricted housing supply and rising unaffordability
have substantial sustainability implications for individuals who live and work there. It also places a
strain on housing benefit spending on the welfare system.

Development of Real Estate in Dhaka City: Various variables are linked to and influencing the
current condition and pattern of real estate growth. Physical factors such as apartment size, plot size,
price and rent of dwellings in various locations, and socio-economic status of the inhabitants, land
tenure ship pattern, automobile ownership pattern, the level of satisfaction of apartment owners with
services provided by real estate developers, problems faced by apartment owners, factors influencing
apartment purchase decisions, willingness to purchase a second apartment and other things influence
the current pattern of apartment development in different parts of the city.

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4.2Findings:
The success of a business depends upon many factors and marketing is one of those. The process of
letting people know about the solution to the shortage of housing is the marketing process of the real
estate business. The companies involved inthe real estate business and its fellow departments face
the following problems while functioning to meet up the customer’s needs and housing shortage.

Growth Rate of Urbanization: The term "urbanization" refers to a path to modernization that
includes such development as urbanization. In today's world, industrialization is at the core of
progress. Industrialization and urbanization are inextricably linked.

Higher Interest Rate: Comparing with other developed countries our home loan interest is higher.

Variable Interest Rate: As Banks and NBFIsare offering variable interest rate, customers face
difficulties if Banks/ NBFIs increase interest rate.

Complication of home loan processing: Processing of home loan is complicated; Customers are
faces difficulties for taking home loan.

Restructured Transportation Sector: Dhaka's public transportation system is now unable

toeffectively handle traffic congestion. With a significant rise in population and vehicle numbers by
2030, some journeys in the DMDP region are anticipated to quadruple, potentially worsening the
present traffic situation.

Demand and Supply Imbalance of Housing:The large disparity between demand and availability
of housing units continues to exist, resulting in the growth of informal settlements. towns and
satellite towns can grow, if economic sectors can be decentralized from the core city to smaller urban
sub-centers on the city perimeter.

Nonprofessional Practices
The current roles of this industries people are:
• Developers: Take Lands, Sell more
• The Architects: Design how the owner wants, copy
• Engineers: Reduce cost as we have been told
• Marketing: Facebook boosting, Paper advertising
• Sales Peoples: Look for customers, beg them to buy

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Well, the above scenario is not appropriate for all, but for many. So, the real estate business has
become a money-making business for entrepreneurs, and a surviving tool for the workers. Here the
customers are often forgotten and denied. Timely handover, Investment cost, Yield calculation, IRR
(Internal Rate of Return), and ROI (Return on Investment) explanation are never discussed on the
table when a customer is handled. Not many business specialists are concerned about the customer’s
demand.

Lack of Customer Faith: The most challenging task for marketing executives is to instill trust in the
minds of customers. They are always hesitant to make such a buy.

CommitmentFailure: Sometimes companies do not deliver packages or apartments within the

specified time due to various reasons, such as shortage of raw materials, legal buildings, delays in
preparing necessary documents, etc.

The Unstable Political Landscape: Due to political turmoil, construction and development projects
get postponed, and even the entire project as well.

Natural Climate: Heavy rains, floods, storms, earthquakes, and other natural climates; always delay
project works. Therefore, unfavorable natural disasters are one of the main problems in this business.

Participants: Competitors frequently changes their policies. For this reason, policy changes occur
often and carry enormous costs.

The Indifference of Government: The government did not provide any initiative for this business.
This is also considered another major marketing problem. Since it is a fast-growing business, it has
not yet been considered anbusiness.

Bureaucracy: Paperwork involved in approving the plan in RAJUK and other authorities
responsible for the delays.

Poor Execution of the Plan: National Housing Policy 2016 is responsible for proposing an
integrated approach to public and private housing financing systems. But the sad thing is that a
careful plan, if not implemented, is useless and will not bring any benefit.

Reasonable Price:Huge price gap depending on location and developer company.

Corruption: Interference and corruption of illegal subscribers of governmental and non-

governmental agencies.

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5.1 Recommendations:
The construction of a real state offers a straight path to physical growth, expansion, improvement,
and preservation. Dhaka's construction plays a variety of functions in the city's long-term growth. It
is perhaps the most important sector in the city's development. Construction planning and design are
extremely important and contribute to greater productivity.

Long-Term Plan: As urbanization growth rate is higher, real estate sector should think and work for
development of this sector. Long-Term plan required for real estate business as like Detailed Area
Plan (DAP).

Easy Financing by Banks/ NBFIs: Terms and conditions and processing of loan is not easy; this
process should be easy and customer friendly.

Interest Rate: Interest rate of home loan should be decrease and it should be fixed for entire term, so
that customers don’t face difficulties in future.

Restructured Transportation Sector: As urbanization is increasing faster transportation sector

should be restructure so that peoples may not face difficulties for conveyance.

Demand and Supply of Housing: As demand is increasing more than supply, there will be
imbalance situation in housing sector in future. Real Estate sector should prepared and think about
increment of the supply as require.

Practices professionalism:
• Developers:Developers should maintain the standard of works as customers demand.
• The Architects:Should design as environment demand.
• Engineers:Should maintain work the standard as required.
• Marketing:The success of a business depends upon many factors and marketing is one of those.
Marketing peopleshould try to established company’s goodwill and use modern technologies to send
message to customers.
• Sales Peoples: Should get proper information about the product, discuss about the product features
with customers, create demand of the products.

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Create Customer’s faith: Few developer companies are doing immoral things and whole real estate
sector are in question mark about the business ethics. Although, maximum developer is doing good
and they have a strong goodwill in this sector like, Asset Development and holdings limited, BTI,
SEL, Sheltech (Pvt.) Limited, Concord Group, Navana Group, Assure Group and more.

Developers Commitment: Commitment of developers about hand over in time, quality of work,
using of materials and fittings should be maintain.

Natural Climate:Preparation require to be safe from natural climate like heavy rains, floods, storms,
earthquakes, and other natural climates, so that project works may not delayed.

Bureaucracy: Paperwork involved in approving the plan in RAJUK and other authorities should be
completed in reasonable time.

Execution of the Plan:Execution of plan should be followed by the developer company and the
authority should inspect it.

Control Corruption:Corruption erodes the trust we have in the public sector to act in our best
interests. It also wastes our taxes or rates that have been earmarked for important community
projects – meaning we have to put up with poor quality services or infrastructure, or we miss out
altogether.

The utilization of new technology:The utilization of new technologies, Efficient use of building
materials, engagement of construction actors, and good management are all regarded as essential
factorsin the development of the construction business.

Reasonable Price:Huge price gap depending on location and company. Price of apartment and land
should be reasonable.

Suitable Planning Laws, Building Codes: The government with the assistance of professionals
should develop general building design principles. Special emphasis should be given to developing
suitable planning laws,building codes, and other regulations based on the area's character.

Registration Cost: Government should reduce the registration cost, peoples are demotivating to buy
real estate products for higher registration cost.

Fraud Control: Real Estate business are interrupting by few frauds’ real estate business, reputation
of real estate business are hampering by this type of businesses.

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Developmental research: Developmental Research and innovation should be promoted by the
government. Both the public and private sectors should be given adequate research and financial
support. Groups of entrepreneurs and individuals should also be encouraged by the policies.

The public and private sectors joint venture:The public and private sectors should combine to
make the research outputs, materials information, energy consumption cost, environmental impacts,
and other information available to the public through institutions and mass media.

Alternative Building Materials:The use of advisors in conjunction with competent contractors is

essential for the selection of building materials. Locally sourced building materials, as well as less
expensive alternatives, should be promoted

Management Efficiency:For the construction business, overall management efficacy is critical.

Construction actors include contractors, laborers, and managers. It should be controlled on an
institutional basis.

Adequate Legislative Support:To recognize the construction sector as a critical contributor to

national development, adequate legislative support is required. A comprehensive and multifaceted
regulatory framework should be established. It should encompass civil engineering work,
construction output durability, and all safety measures, such as loads, enforced deformations,
environmental concerns, fire, and natural disasters, and so on.

Legal Procedures: The physical environment of the project's site should be given special
consideration. Existing Legal action procedures should be upgraded. Legal actions must be taken
againstthe parties who don’t follow the legal procedures.

Establish Regulations and Control Procedures: One of the major purposes of government should
be to establish regulations and control procedures. The construction business must be recognized as a
critical sector for national growth. Regulations and controls can have a significant positive impact on
construction costs, building energy efficiency, and limiting energy consumption and pollution,
among other things.

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5.2 Conclusion:
The residence provides security, personal safety, and protection. Adequate housing provides people
with dignity and the opportunity to lead a normal life. Due to the rapid growth of the population in
Bangladesh, the demand for housing in metropolitan areas is skyrocketing. Thishas led to a serious
issue across the country, particularly in the major cities of our country. In recent years, private real
estate corporations have taken several steps to ensure that land is used to its maximum potential in a
planned manner. As I have discussed in my report that the government of Bangladesh has the
capability of assisting these real estate enterprises to develop their operations on a broad scale,
allowing the country to better utilize its wasteland and alleviate some of its housing shortages. It is
undoubtedly visible that real estate finance has a flourishing future in a country like ours where the
land is considered to be expensive. The government happened to consider utilizing those lands by
coming to an engagement withthe real estate industries and thus eradicate the slums as well. There
are also some problems the real estate business is facing in Bangladesh but if the recommended
suggestions are fully implemented, the problems can be prevented to shape the goal of the business
as well as the development of our country. Hopefully, with the flourishment of this business, our
people would not have to stay in an unhealthy place like slums and the dream of becoming Digital
Bangladesh would be succeeded.

Though there are some problems in the real estate business in our country, it cannot be ignored that
the business sector of real estate possesses some future possibilities of the flourishment in such a
developing country.

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