House rent has been increasing in Bangladesh since 1990 at high rate.

In 1990 and 1995 the inflation in house rent was around 25%. Though in the recent times this inflation has been a little bit lower, still in 200 , statistics shows increase of house rent at about 10% in the countr!. "ccording to the real estate #artici#ants, the inflation in the house rent is encouraging #eo#le to bu! a#artments in order to a$oid the increasing e%#enditure of house rent. " recent stud! conducted b! &onsumers "ssociation of Bangladesh '&"B( shows that house rentals in )ha*a ha$e more than doubled '2 9.+2 #ercent( in the last 1, !ears. The rentals in )ha*a witnessed a -um# in 1991 b! o$er 2. #ercent and it continued the trend later on, finds the stud!. The increase was around 1, #ercent in 200, and 1+ #ercent in 200+. /ecent estimates indicate that o$er ,0% of housing is rented in )ha*a and there is an annual re0uirement of o$er +0,000 new homes #er annum. Tenants who are from u##er middle, middle, lower middle and lower income grou#s are the worst $ictims of the rising trend of house rentals. This section of the #o#ulation s#ends nearl! 50 #ercent of their monthl! incomes in house rentals alone.

Major Players in the Real Estate Sector of Bangladesh

Historicall! ma-or mar*et #la!ers in the Bangladesh real estate mar*et ha$e been 1astern Housing 2imited, 3hine#u*ur Holdings 2imited, Bashundhara, BTI, &oncord, and 3heltech. Their mar*et shares ha$e not been changed much during the last !ears. 1astern Housing occu#ies .5% and 3hine#u*ur has .5% as the two ma-or mar*et leaders. The other com#anies absorb the rest .0% of the real estate mar*et. 1astern Housing has been earning on an a$erage of T*. +2 million a##ro%imatel! with net turno$er of around T*. 50 million.

3hine#u*ur is earning in an a$erage T*. 1 million with turno$er of around T*. .., million '"ims, 1999(. "s this data shows the status of around a decade bac* #eriod, a detailed sur$e! is badl! needed to e%amine the #rofitabilit! of this sector. Therefore a recent statistics could not be generated and with e%#ectations of fresh interesting insights, this issue ma! be a further research area.

Real Estate and Bangladesh Economy: 4$er the last 10 !ears, Bangladesh5s /eal 1state sector had grown at an a$erage of ..+ % reaching the #ea* at ..6.%. Though it had a fall in 200072001, there was reco$er! in 200172002. 8or the last 5 !ears this sector grew im#ressi$el! and showed a smooth rising trend. The com#arati$e scenario of 9): shows a stead! +% growth for Bangladesh. "ccording to real estate de$elo#ers, as 9): of Bangladesh is still below that of other 3outh "sian &ountries, Bangladesh has more sco#e to grow which can be fostered b! the continuous increase in the share and growth of real estate sector in the countr!. This contribution of real estate and construction in 9): of Bangladesh was 1+.20% in 199 71995, which became 1+.+9% in 200072001 and attained 1,.22% in 200 72005. This share slowed down around 6% in 2006 which is due to the high #rice barrier for larger #ortion of #o#ulation to bu! real estate a#artments, and also almost saturation of the alread! e%isting high end #o#ulation mar*et.

Analysis of Real Estate Industry

Be!ond #ro$iding #h!sical shelter, housing ma! ha$e significant im#act on the li$es of the dwellers in terms of s*ills enhancement, income generation, increased securit!, health, self7confidence and human dignit!. In Bangladesh, real estate is a recent #henomenon, although such acti$ities started sometime in 19+ . Is#ahani 9rou# was the #ioneer in this sector. )uring 19,0s there were fewer than fi$e com#anies in Bangladesh engaged in this business. But in earl! 1960s with the ince#tion of 1astern Housing 2td., the a#artment #ro-ect started flourishing. ;ow this is a booming sector of the econom!. 3ince late 1960s, it came within the #ur$iew of business field. "s a fast growing cit! of Bangladesh, such business was initiall! concentrated in )ha*a. 3uch acti$ities were later on s#read to &hittagong and <hulna cities. "t #resent, there are about 00 firms o#erating a#artment business and the! ha$e a#artment #ro-ects in )ha*a &it! as well as in some other cities. In the real estate business #rocess, some #ros#ects and #roblems are in$ol$ed. :ros#ect is that human being is able to dwell in, des#ite the fact that the! ha$e limited land and #roblems are of se$eral t!#es.

In categori=ing #ro$ision of shelter as one of the fundamental res#onsibilities of the state, the &onstitution of the :eo#le5s /e#ublic of Bangladesh recogni=ed shelter to be among the fundamental human rights. The >; )eclaration on 8undamental /ights also re$eals that e$er! #erson has a right to an ade0uate standard of li$ing, which includes housing. But ma*ing shelter a$ailable to all is increasingl! becoming a significant challenge. Though #o#ulation growth rate in Bangladesh has #lateaued at 1.+ #er cent, an increasing e%#anse of li$ing s#ace at this rate will also be necessar! to accommodate the ?demogra#hic momentum@. 3tatistics show that Bangladesh will need to construct a##ro%imatel! million new houses annuall! to meet the future demand of the ne%t twent! !ears. 1stimates for annual re0uirements for housing in urban areas $ar! from . la*h to 5.5 la*h units. In Bangladesh 25 #er cent of the #o#ulation 'some .5 million #eo#le( now li$e in urban areasA this #ro#ortion will be . #er cent ',5 million( b! the !ear 2015. )ha*a, with a total #o#ulation of 10 million, is now the 22nd largest cit! in the world. The #a#er identified this as a conse0uence of high rate of in7migration to )ha*a. B! the !ear 2015 )ha*a is #ro-ected to ran* as the 5 th largest cit! in the world, where 19 million #eo#le will ha$e to find their house. 4n the other side, with the continued growth of #o#ulation land for agriculture and forest will shrin* in tandem. This calls for high densit! settlement either in high rises or in small unit low rise a#artments. The area occu#ied b! human settlements and su##orti$e infrastructure in Bangladesh is 0uite high at .0 #er cent. 2and is becoming increasingl! inade0uate to #ro$ide indi$idual housing solution to all and as a result demand for a#artments is growing ra#idl!. Inheritors are inclined to building a#artments as a means to share common #ro#ert!. /emittance flow which is cloc*ing a high growth also dro$e u# demand for housing. /eal estate sector has made substantial contributions to the growth of Bangladesh econom!. But research on the real estate sector is 0uite inade0uate. Bost of the studies b! academics are mostl! theoretical with an academic biasA when the! are conducted b! de$elo#ers, business gets the utmost em#hasisA when the go$ernment themsel$es #erform the stud! onl! the thoughts of the go$ernment are reflected. )es#ite significant growth of the housing sector in the recent #ast, good research dealing with the de$elo#ment of this sector is lac*ing. This is com#ounded b! the fact that there is a #aucit! of statistical information.

" large #art of the rele$ant information is inaccessible since it is classified as commercial secret. /eal 1state business, es#eciall! a#artment #ro-ects, too* off in the )ha*a &it! in the late 19,0s. 8rom the earl! 1960s the business started to flourish and showed robust growth. "t #resent, more than 250 com#anies are acti$e in the real estate business in the countr!. "bout 95 #er cent of this business is still dominated b! the to# 10 com#anies. >llah, Bhui!an, C "*hteru==aman had identified the reason for the growth of the real estate business. Their stud! re$ealed that the main reason for the growth of this industr! is scarcit! of o#en s#ace in the im#ortant areas of the cit! where Hossain, Islam and "lam in$estigated the nature of real estate business, #s!chological as#ects of the bu!ers and the #olic! decisions of the firm. "nother stud! was conducted on housing for low Income :eo#le in Bangladesh. The #a#er was an endea$or to #resent and anal!=e the im#ortance of real estate business in rural areas and to identif! the actual #roblems to e%#and it in those areas. The! mentioned that housing situation in Bangladesh has ne$er been satisfactor!. The ma-orit! of dwelling units are tem#orar!, sub7standard, unsafe and o$ercrowded. The ancillar! #h!sical, social and economic facilities and ser$ices essential for the de$elo#ment of health! and harmonious communit! life are highl! inade0uate both in the urban and rural areas. In that studies the! found that lac* of infrastructural facilit! is the main obstacle for the land de$elo#ers to e%#and real estate business in rural areas. "nother stud! was conducted on >rban Housing and 8inancial Institution in Bangladesh. The! mentioned housing is -ust one of man! national #riorities that call for go$ernment fund but since the! in$ol$e large in$estments and long term commitments sometimes the go$t. failed to #ro$ide the desired ser$ice des#ite of the fact that the go$ernment tries to encourage in$estment through ta% incenti$es, interest subsides etc. >nfortunatel! in Bangladesh a s!stematic institutional structure to channel financial resources b! wa! of mortgage loan into housing in$estment is still loc*ing. Talu*der C Bhui!an found that the #resent mar*et of a#artment houses is limited within the high income grou# of the societ! onl! and there e%ists room for im#ro$ement of the #resent mar*eting s!stem. 4ne of the interesting findings of the stud! is that #eo#le are graduall! de$elo#ing fa$orable attitudes towards a#artment li$ing which is gaining cultural acce#tance. 8rom the conte%t of )ha*a &it!, with a rising #o#ulation and increasing housing demand, a#artment culture has grown u# in )ha*a shar#l!.

The hori=ontal e%#ansion of the cit! is $er! limited as )ha*a is hemmed b! a networ* of ri$ers that ma*es outward e%#anding difficult and onl! $ertical e%#ansion is #ossible to accommodate the growing numbers of residents. "#artments were first introduced b! the formal #ri$ate de$elo#ers in earl! 60s to the housing histor! of )ha*a. It first a##eared in )ha*a near 1astern :la=a and subse0uentl! )ha*a e%#erienced a boom in a#artment de$elo#ment in all residential areas including :aribagh, Baghba=ar, 3iddeshwari, 3hantinagar, )hanmondi, Bir#ur, Banani, 4ld )4H3, new )4H3, 9ulshan and Baridhara, to name -ust a few. 3oon after, small scale de$elo#ers, indi$idual home owners choose a#artments to construct on their own #ro#erties demolishing the earlier house form due to high demand of housing as a result of ra#id urbani=ation and #o#ulation growth. 2ater building a#artments become well acce#ted to this informal housing #ro$ider and s#read out all o$er the cit!. Twent! !ears ago there were fewer than fi$e com#anies in Bangladesh engaged in de$elo#ing a#artments while toda! there are more than 250 de$elo#ers. But there are man! other com#aniesDindi$iduals engaged in such de$elo#ment in smaller scale or in informal sector. In most of the cases an indi$idual or real estate com#an! constructs one or more buildings com#rising of se$eral a#artments, which are later sold to indi$idual #urchasers. This has #rom#ted man! indi$idual entre#reneurs to de$elo# a#artment buildings resulting in an increased number of real estate com#anies in the cit!. There is an acute shortage of housing su##l! in all urban areas and it5s increasing with current demand of +00,000 to 600,000 units all o$er the countr!, and #articularl! in )ha*a this demand is estimated at +0,000 units of real estate a#artments combined with 200,000 units of re#lacement #lus bac*logs, according to /1H"B. Thus there e%ists a high unfulfilled demand for #lot and flats. This huge demand is highl! attracti$e for the real estate #roducers. /1H"B, being the sole organi=ation of real estate agents, de$elo#ers and builders, has more than 50 members registered in 2009 and around .50 non7 registered real estate de$elo#ers are ma*ing business in this sector.

"ccording to /1H"B, the! are currentl! su##l!ing onl! around 6,000 and 10,000 units of housing a#artments against the abo$e mentioned huge demand. The a##ro%imate turno$er in the real estate sector has been T< 20 billion, which contributes re$enue of around T< 2 billion a !ear to the go$ernment. The real estate de$elo#ers and builders ha$e alread! su##lied a##ro%imatel! +0,000untis to this sector mar*et in the #ast 20 !ears. The sector now em#lo!s 2 million #eo#le, which constitute architects, engineer, management official, direct and indirect labor. " good number of real estate com#anies are wor*ing under one umbrella association named E/eal 1state and Housing "ssociation of BangladeshE '/1H"B(. "lmost 6. &om#anies are at #resent affiliated with this association, while more than 200 com#anies are wor*ing inde#endentl!. BTI too* a leading role in the formation of the industr! association and is one of the founder members of the /1H"B.

Reasons for development of the industry: The main reasons wh! real estate business de$elo#ed in )ha*a cit! are as followsF a( 3carcit! of o#en s#ace in the im#ortant areas of the cit! b( Ha=ards of #urchasing land c( Ha=ards of construction of building d( /a#id increase in #o#ulation of )ha*a e( )ecrease in the rate of ban* interest f( :rice of land and a#artments is increasing da! b! da! g( /ent of the a#artments is com#arati$el! higher than the rent of #ri$atel! constructed flats h( 4#en Bar*et 1conom!. /emittance of foreign currenc! is $er! eas! i( 3ecurit! -( 3er$ice facilities such as garbage dis#osal, central satellite TG connection, a#artments ser$ices sa$es time, roof to# facilities, lift and so on.