The real estate is one of the fastest growing and thrust sectors in Bangladesh. For rapid urbanisation, infrastructural development is highly important as well as a crying need for proper housing facilities for the citizens. Bangladesh, being one of the densely-populated countries in the world, has been experiencing severe housing shortage. Although majority of the population is segmented into the middle and the low-income groups, still housing for all has been a distant dream in Bangladesh.
The private sector developers have only met a small proportion of the national housing demand in the last more than 20 years. The gap between demand and supply is still wide. Despite inadequate policy preparations, these real estate developers have been successfully making business although housing for the middle and the low-income households is still untapped. With larger proportion of people living in these income groups, the private housing sector has a huge scope to grow in this country. This is supported by many key indicators such as increasing house rent, inadequate and costly land, easier financing availability, etc. To pave the way for development of the industry, the problem of inadequate financing availability at easy and lower terms and costs and crisis of utility services like electricity and gas must be removed immediately. A wider scope has to be created for non-resident Bangladeshis in view of rapid urbanisation in the country.
Rapid urbanisation has become quite a phenomenal development in the country. The rate of urbanisation is estimated to be at between 3-6 per cent annually. About 25 per cent of the people of Bangladesh are now living in urban areas and 34 per cent will be living by 2015 and 50 per cent by 2025. There is an acute shortage of housing in all urban areas. The need is increasing with current demand of 600,000 to 800,000 units all over the country. Dhaka is currently growing very fast compared to other cities in Bangladesh. Thus there exists a high demand for plots and flats. This huge and unfulfilled demand is highly attractive to the investors. Members grouped under the Real Estate and Housing Association of Bangladesh (REHAB), the sole organisation of the real estate developers, are currently providing only around 8,000 to 10,000 apartments against the huge demand. Developers/builders already supplied approximately 60,000 units to this sector in the past 20 years.
RAPID URBANISATION: Statistics and studies show that in 2000-2015, urban growth rate is expected to be at an average of 3.7 per cent for Bangladesh with 34 per cent of the total population living in urban areas. The scenario is further evident through per square kilometre population density growth. In South Asia, Bangladesh holds the second position in terms of urbanisation rate and proportion of urban population. This scenario tells us that Bangladesh also is likely to attract more real estate business than before. Only 40 per cent of the people of Dhaka city has standard or below standard housing facilities. Thus experts assume, the growth of housing demand in the country will see a rise in the next few years. The government should have strengthened its mechanism to ensure proper development of the sector.
REGULATORY ENVIRONMENT: Before 2004, there was no mandatory building regulation or law in Bangladesh. There is 'The Bangladesh National Building Construction Code 1993', which is not mandatory and not being enforced by the government properly. However, recently the government has made the application of the code mandatory. But according to newspaper reports, many developers do not follow the codes, which put the customers at risk. In 2004, 'The Land Development Act for Private Residential Project 2004" was passed. It is also mandatory to be complied with by the developers. The government also amended 'The Building Construction Act of 1952' in February 2006 through making mandatory 'The Bangladesh National Building Code (BNBC)' of 1993 to comply with in any building construction under the 'Building Construction Act of 1952'. This was to ensure accountability in the management of overall building construction and safety of the buildings. Developers also have to comply with the 'Dhaka Metropolitan Building Rules' of 2008 to ensure safe building construction. To protect the interest and ensuring safe investment of the buyers, the government has designed the Real Estate Management Ordinance 2008 but it is yet to be approved by the government.
Before buying any flat, we must see whether the developers complied with the necessary rules and codes related with building construction. Otherwise, hard-earned money of the buyers will go waste.
The real estate sector is now growing slowly due to inadequacy of utility services like gas and electricity. However, rise in house rents, increasing demand for housing, getting easy financing facility, rapid urbanisation, inadequacy of land and many other factors are creating huge scope for this sector to grow. As a result, the demand for housing and apartments will be increasing. Congenial regulatory environment will be helpful for the sector to grow as well as to be very important for protecting buyers' interests. Financing for the real estate sector has become easier and more available than ever before. Private sector housing finance is available at competitive interest rates for flexible periods.
Strengthened regulatory and supervisory mechanisms for real estate sector will contribute to the positive trend in its growth provided this sector is given proper attention and facilities. It has certainly become necessary to meet the increasing housing demand and minimise the supply gap in the country.
The writer is Senior Assistant Secretary, Press & Publication at the Institute of Chartered Accountants of Bangladesh. abutaher011@gmail.com
Real estate: Strengthening regulatory mechanisms
Abu Taher | Published: February 18, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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