Real estate sector spreading to city suburbs
Sunday, 10 January 2010
Shahiduzzaman Khan
While inaugurating the REHAB Fair in the city recently, the state minister for housing issued a veiled warning to the real estate developers. He said many developers are allegedly indulging in corruption and irregularities, and trying to influence the government to bend rules for them. He said the government would not bow to offenders who are giving the whole real estate sector a bad name. He called for a more environment-friendly approach and said the government and the private sector developers should join hands to solve the city's nagging housing problem.
Yet there is no denying that these developers in the private sector are doing a commendable job in addressing the chronic housing problem in the city. According to the Real Estate and Housing Association of Bangladesh (REAHAB), apartment sales increased around 15 per cent after the government had allowed investment of black money in the sector. It helping if the sector stage a comeback amid global recession. It mainly helped boost the sales of high-end and luxury apartments. Turnover in the sector was higher in 2009 compared to the previous two years when an anti-corruption drive had restricted many potential buyers from spending on flat or land.
In fact, apartment prices increased due to a rise in land prices. Construction cost is also going up, which has ultimately limited the purchasing capacity of the buyers. The government also promised earlier to ease the chronic housing problem through public-private partnership, but it is yet to be seen.
Developers are now unable to construct low-cost buildings for the middle-income group as the cost of land in Dhaka city has marked an unusual rise in the recent past. According to a study, a fierce competition by real-estate companies for land, age-old land record system, taxation structure and cumbersome land transfer procedure have made the whole land system in the city unmanageable.
The way land is sold in Dhaka city is just like an auction. There should be a system to regulate the land market in the city. The land ministry needs to take effective and immediate moves for settling the pending land-related cases and bring the land registration directorate under the jurisdiction of the land ministry. The merit for introduction of one-stop service in the land registration directorate deserves attention for appropriate policy actions sooner than later. The computerisation of land survey, recording and land management process also demands a priority consideration.
The study says the pressure on limited land in Dhaka has not only intensified urbanisation, it has also led to indiscriminate filling of lowland in the deltaic flood plans to make way for urban development. The developers are now being forced to opt for the construction of high-rise buildings because of the high price of land. High-rises may be the key to resolving the housing problem in Dhaka city but the developers are facing various objections to skyscrapers from the Civil Aviation Authorities.
The government recently fixed the price of land in Dhaka city to keep it within the capacity of city dwellers. However, the market price of land in all parts of the capital are three to 15 times higher than the government fixed price. The minimum selling price of one katha of land has been fixed at Tk 1.0 million for Gulshan and Banani, Tk 0.3 million for Uttara, Tk 0.6 million for Mohammadpur and Tk 0.8 million for Mirpur. But in reality, one katha of land is selling at more than Tk 10 million at Gulshan and Banani and more than Tk 5.0 million at Lalmatia. In fact, the land price has increased five times in the last five years, as the gap between demand and supply is enormous. Reports say the land price has increased by 25 times and the apartment price 10 times in the last one and a half decade making Dhaka's real estate most costly in the region after Mumbai and Delhi. In the backdrop of high demand, price hike of real estate has turned the country's capital one of the costliest cities in South Asia.
Real estate companies are now opting for more housing projects in different areas surrounding Dhaka, including Narayanganj, Comilla, Gazipur and Mymensingh. As these places are comparatively nearer the capital, many customers are opting for permanent housing in these places due to the price advantage. Outside Dhaka apartment price ranges from Tk 2,000 to Tk 3,000 per square foot, while it is not less than Tk 3,500 in the capital. Indeed, mobile internet accessibility has already made staying outside the capital quite feasible. Many real estate companies at the REHAB annual housing fair last year showcased their housing projects that are located outside the capital. The government also wants to develop extensive housing projects outside the capital to reduce the pressure in the overpopulated city and plans to build four satellite townships in the outskirts. It announced this year that it would develop 22,800 plots and construct 26,000 apartments in the next three years. Each of the proposed satellite towns will feature all environment-friendly facilities, equipped with their own internal solar energy system and rainwater reservoir to meet the water and power needs of the inhabitants.
The government is now trying to attract investment from the non-resident Bangladeshis (NRBs) in the real estate sector, a move that can turn the industry into a major foreign exchange earner. Already a significant portion of the foreign remittance is being channelled to the real estate sector.
Furthermore, there is a need for setting up of an information database to regulate the market, avoid artificially created land crisis, ensure equitable access to land by citizens and overcome the problem of speculation. There is no denying that information about land price helps the policymakers and the planners understand and analyse the dynamic urban structure of Dhaka as the capital city and plan its future growth.
.........................................................
szkhan@thefinancialexpress-bd.com
While inaugurating the REHAB Fair in the city recently, the state minister for housing issued a veiled warning to the real estate developers. He said many developers are allegedly indulging in corruption and irregularities, and trying to influence the government to bend rules for them. He said the government would not bow to offenders who are giving the whole real estate sector a bad name. He called for a more environment-friendly approach and said the government and the private sector developers should join hands to solve the city's nagging housing problem.
Yet there is no denying that these developers in the private sector are doing a commendable job in addressing the chronic housing problem in the city. According to the Real Estate and Housing Association of Bangladesh (REAHAB), apartment sales increased around 15 per cent after the government had allowed investment of black money in the sector. It helping if the sector stage a comeback amid global recession. It mainly helped boost the sales of high-end and luxury apartments. Turnover in the sector was higher in 2009 compared to the previous two years when an anti-corruption drive had restricted many potential buyers from spending on flat or land.
In fact, apartment prices increased due to a rise in land prices. Construction cost is also going up, which has ultimately limited the purchasing capacity of the buyers. The government also promised earlier to ease the chronic housing problem through public-private partnership, but it is yet to be seen.
Developers are now unable to construct low-cost buildings for the middle-income group as the cost of land in Dhaka city has marked an unusual rise in the recent past. According to a study, a fierce competition by real-estate companies for land, age-old land record system, taxation structure and cumbersome land transfer procedure have made the whole land system in the city unmanageable.
The way land is sold in Dhaka city is just like an auction. There should be a system to regulate the land market in the city. The land ministry needs to take effective and immediate moves for settling the pending land-related cases and bring the land registration directorate under the jurisdiction of the land ministry. The merit for introduction of one-stop service in the land registration directorate deserves attention for appropriate policy actions sooner than later. The computerisation of land survey, recording and land management process also demands a priority consideration.
The study says the pressure on limited land in Dhaka has not only intensified urbanisation, it has also led to indiscriminate filling of lowland in the deltaic flood plans to make way for urban development. The developers are now being forced to opt for the construction of high-rise buildings because of the high price of land. High-rises may be the key to resolving the housing problem in Dhaka city but the developers are facing various objections to skyscrapers from the Civil Aviation Authorities.
The government recently fixed the price of land in Dhaka city to keep it within the capacity of city dwellers. However, the market price of land in all parts of the capital are three to 15 times higher than the government fixed price. The minimum selling price of one katha of land has been fixed at Tk 1.0 million for Gulshan and Banani, Tk 0.3 million for Uttara, Tk 0.6 million for Mohammadpur and Tk 0.8 million for Mirpur. But in reality, one katha of land is selling at more than Tk 10 million at Gulshan and Banani and more than Tk 5.0 million at Lalmatia. In fact, the land price has increased five times in the last five years, as the gap between demand and supply is enormous. Reports say the land price has increased by 25 times and the apartment price 10 times in the last one and a half decade making Dhaka's real estate most costly in the region after Mumbai and Delhi. In the backdrop of high demand, price hike of real estate has turned the country's capital one of the costliest cities in South Asia.
Real estate companies are now opting for more housing projects in different areas surrounding Dhaka, including Narayanganj, Comilla, Gazipur and Mymensingh. As these places are comparatively nearer the capital, many customers are opting for permanent housing in these places due to the price advantage. Outside Dhaka apartment price ranges from Tk 2,000 to Tk 3,000 per square foot, while it is not less than Tk 3,500 in the capital. Indeed, mobile internet accessibility has already made staying outside the capital quite feasible. Many real estate companies at the REHAB annual housing fair last year showcased their housing projects that are located outside the capital. The government also wants to develop extensive housing projects outside the capital to reduce the pressure in the overpopulated city and plans to build four satellite townships in the outskirts. It announced this year that it would develop 22,800 plots and construct 26,000 apartments in the next three years. Each of the proposed satellite towns will feature all environment-friendly facilities, equipped with their own internal solar energy system and rainwater reservoir to meet the water and power needs of the inhabitants.
The government is now trying to attract investment from the non-resident Bangladeshis (NRBs) in the real estate sector, a move that can turn the industry into a major foreign exchange earner. Already a significant portion of the foreign remittance is being channelled to the real estate sector.
Furthermore, there is a need for setting up of an information database to regulate the market, avoid artificially created land crisis, ensure equitable access to land by citizens and overcome the problem of speculation. There is no denying that information about land price helps the policymakers and the planners understand and analyse the dynamic urban structure of Dhaka as the capital city and plan its future growth.
.........................................................
szkhan@thefinancialexpress-bd.com