Current Market Situation
BNM is founded as a developer company taking some small project and some separate lands for joint venture development.
The beginning the joint venture development was not so widely practice in Dhaka city. There were a large number of old and ancient type building in Dhaka city. On That situation some companies first introduced the term of joint venture development. As time passed real estate market become large to larger and today almost …..number of companies are performing their business centering the Dhaka city. Landowners are interested in joint venture development for their land. Besides this more and more people are now interested in purchasing both residential and commercial apartments rather developing themselves. That’s why real estate development business and the numbers of competitors are increased in a remarkable numbers today.
The real estate market is Bangladesh is developed rapidly due to some factors. The current market situation is much more different form the beginning when the first apartment project started on 1982’s. After the beginning the growth of this sector was slow until 1997. On the year of 1997 the apartment business got a boost and the growth continued to 2007 until when the caretaker government took the authorization. But the sector had overcome that declining situation again in more rapid way . in 2008 the growth rate of the both plot and apartment business was higher than any time of the past. Form that situation most of the business men assumed that the growth of the real estate business will remain to grow upwards up to next 8-10 years. But the situation changed to some extent and that decreased the rate of growth of the business in 2012. Studying the current market situation of the real estate market of Bangladesh we can find several characteristics of the real sector. Like
• Booming price: After 2007, the economy was in a very bad state. This eventually led to an increase in prices of raw materials like cement, rods etc. Apart from increasing costs of construction materials, the sector also witnessed the entry of several developing firms guilty of accepting housing projects at high prices and eventually contributing to the increasing cost of the apartments. Today there are more than a 1000 developing firms in the city, but only 20 of them can be considered professionals
Apart from covering costs incurred due to economic reasons, firms also reserve a portion of their budget in order to adhere to governmental legislations. Officials of real estate firms claim that developing companies are forced to bribe government officials in order to get their approval, without which they cannot continue their projects. “The rules laid down by RAJUK states that we need to get approvals from several departments: traffic, environment, electricity etc. Their approvals are impossible to get unless you bribe them. the costs incurred due to the above mentioned approvals also contribute to the prices of the apartments.
Land unavailability & Location preference: It is often found that the People of Dhaka city has a trend to live within the city and their professional and other activities remain conserved within the city area. That’s the reason why the real estate business of Bangladesh is developed centering the Dhaka city only rather than other areas.
Again the customer choice and preferences always varies from place to place, based on their workplaces, educational institutions, infrastructures etc. But a common problem always occurs when we found that the location or land seems to be unavailable according to the customer demand of the Dhaka city.
Products suitability with the location: This has become a very common but alarming problem for the people of Dhaka city. There are some particular locations which is considered as the luxurious location of Dhaka city. So people always look for their plots and apartments on those locations although those places are already over populated. In contrast some locations are considered as the lower developed area and people neglect to select those although all the living facilities are present there.
Unavailability and High interest rate of housing Loan: Although the real estate sector of Bangladesh is older of almost 30 years but still we do not have enough number of financial institutions to provide finance in this sector. There are only five or six financial specialized institutions who provide loans in this housing sector . other commercial banks also providing loans to the develops and the customers as well but the charge high interest rate worth to 12-17%.
• Dissatisfied customer: a large section of dwellers remain dissatisfied. The vicious increase in the prices of flats has made it almost impossible for people to buy an apartment of his choice. taking a bank loan was not an option due to the high interest rates. Besides that some fraud real estate developers are increasing the customer dissatisfaction through not providing products according to the promised one and delaying handover.
Rise and fall in the linkage industries: The recent developments in the housing sector have affected more than just the buyers; various linkage industries have suffered dramatic declines in their sales over the last few years. There are more than 20 lakh people working in this industry and the survival of their livelihood depends upon these apartments. According to reports, the glass and furniture markets in Dhaka have taken a hammering due to the decline in sales. A recent report published in the Daily Star on December 11, 2011 states that the sales of glass manufacturers have been affected due to the new rules that have been enacted for the provision of electricity in the upcoming apartments. Forced to adapt to the new situation, the report states that several glass industries are now planning to produce 'tempered, low-emission and solar control glasses in order to increase their revenue. A similar depression took place in the tiles industry as the demand for tiles decreased due to the slump in the sale of apartments. sales have dropped by over 60 per cent in this year. A number of developers who have already ordered tiles from us can't afford to pay us since not many flats are being sold. They aren't even getting bank loans to continue their projects.
Contrary to the situation of the various linkage industries, the unavailability of gas and electricity have surged the sales of ready-made apartments. A firm specializing in the sale of used-apartments, there has been an increase in the number of firms dealing with such flats. This business started in 2006; at that point of time there weren't many firms selling ready-made flats, now however, the number of firms in this business have increased, mainly due to the unavailability of the necessary utilities, although there wasn't much of a difference in terms of the costs of these flats, the availability of gas and electricity have encouraged people to invest in such apartments. The main areas in Dhaka are almost full, so if someone wants to shift to a specific area, he has to face such type of problems.
Undeclared wealth: With the increased prices and the utility-inconsistencies creating a negative trend in the sales charts, developers have looked towards the government for legislations that would support the Real Estate sector. The re-enactment of section 19B of the finance act which legitimizes undeclared wealth by investing in the purchase of apartments after having paid a certain amount of tax, is one such law that developers in the city have been vouching for. The provision which was abolished after 1/11 has, according to firms, discouraged people to invest in the real estate sector. The usage of undeclared wealth will help the real estate sector by stimulating cash-flow.in order to maintain the flow of cash and support the twenty lakh people working in the Real Estate sector, the provision to invest undeclared wealth in the sector was a necessity. The heavy losses incurred by potential buyers, in other sectors, have left very little money in the system, and people who have money won't come forward since they have to declare their source of income. Supporting the enactment of the law, several developers claim that if the undeclared wealth is not used in the real estate sector in Bangladesh, the money will go to real estate developers abroad.