CHAPTER 1: INTRODUCTION At present real estate sector (RES) is one of the booming sectors in Bangladesh.

Day by day as time passes on, this sector is becoming healthier since the substantial growth of population is creating a tremendous housing problem and due to the increase in demand of commercial spaces this sector has come into being. This sector provides an integrated and planned package to resolve these problems.

1.1 Purpose This report briefly reviews on the RES in Bangladesh in recent years and recommendsfor both the real estate developers and the government policy of Bangladesh on RES. 1.2 Scope The RES has so far spread its wings over Dhaka, Chittagong, Khulna, Rajshahi andSylhet. This report focuses only on the flourishing of real estate business in Dhakaand the real estate developers which are members of Real Estate & HousingAssociation of Bangladesh (REHAB) especially the prominent ones. 1.3 Limitations This report has been prepared based on secondary data. Concentration of real estate business in Dhaka may not reflect equal urgency in other cities mentioned earlier.This report does not include some of the problems created by illegal and unfair practices of very few of the developers, which is damaging the image of this sector.

1.4 Assumptions Recommendations of this report are based on the assumptions that REHAB will prevail and RES will keep on flourishing rather than recede or retard.

CHAPTER 2: EMERGENCE OF REAL ESTATESECTOR IN BANGLADESH The concept of RES is developed to resolve the residential facility which is a big problem in a densely populated country like ours. Especially the cities whereunavailability of land tends to rise the tendency of high rise apartments rather than private dwellings. 2.1 Existing Housing Situation of Dhaka At present the housing condition of urban area in Bangladesh, in general, is quiteunimpressive. In all metropolitan cities, there is acute shortage of housing supply andthe backlog is continually on the

increase. Inadequate supply of dwelling units for middle and low income people and high rental value are among the most severechallenges afflicting urban living in Dhaka. At present in our country the annuallyrequired shelter varies from 3 lakh to 5.5 lakh units. Bangladesh will need to constructapproximately 4 million new houses annually to meet the future demand of the next20 years. Now Dhaka needs 50,000 new houses annually to accommodate its growing population. But the existing annual supply is only 20,000 units. So there is a huge backlog and it is increasing every year.

2.2 Why Real Estate Sector? In Bangladesh, the rate of urbanization is very high further aggravated by high population growth rate and rapid rural-urban migration. The current trend of urbangrowth in this country is about 5%-6% per annum. This will change and increasedemand for habitat. At present 28% of the population of Bangladesh live in urbanareas, which will be 34% in 2025. The present estimated population of Dhaka is 10million and estimated growth rate is 4.7% per annum. All these people need shelter.To satisfy the housing of this huge explosive population Dhaka has attempted toexpand vertically. Here comes the need of real estate sector. They have been playingvery important role in providing housing regardless of high, middle and low-income people since the past two decades. 2.3 Real Estate Development In our country real estate business started in Dhaka in late seventies. The EasternHousing of Islam Group is the pioneer in this business. During 1970s there werefewer than 5 companies in Bangladesh engaged in this business. In 1988 there were42 such developers working in Dhaka and now in 2005 there are about 250 companies engaged in this business. From the early 1980s the business has started to flourish andin 1990s it has reached its peak. Towards the end of year 2000 there was slightdownfall in real estate sector. In 2003 this sector started showing growth again. Tostrengthen the role of real estate sector some pioneer real estate companies together built up an association named REHAB in 1991. At present it has 100 members.

CHAPTER 3: REHAB As the RES developed, necessity of an association arose sharply. REHAB is theoutcome of that need. REHAB resolves the dissimilarities among the real estatedevelopers and tries to maintain a standard thus pulling all the developers in thesame vessel. 3.1 Formation of REHAB Real Estate development in private sector in this country started in pre-liberation dayswhen Eastern Housing Ltd. in the mid 60s undertook land development project knownas Pallabi Project for housing purpose in the Mirpur area of the Dhaka city. Theconcept of apartment development started in the late part of the 70s when Free SchoolProperty Development Ltd. started development of ownership apartment

in theSiddeswori and Moghbazar areas of the Dhaka city followed by Eastern Housing Ltd.During the 80s a number of companies came into existence and engaged in ownershipapartment development.With the number of companies increasing gradually and various problems concerningthe housing sector having cropped up requiring early solution, necessity was stronglyfelt for the formation of a trade association of the Real Estate business. The real estatedevelopers met together in a meeting held on December 12, 1991 at the ConferenceHall of the Dhaka Chamber of Commerce and Industries and formed an associationunder the nomenclature of Real Estate and Housing Association of Bangladesh or briefly REHAB.

On December 12, 1991 a 7-member Ad-hoc committee was formed with Maj. Gen.(Retd.) Amzad Khan Chowdhury as President, Mr. M.S. Alam as General Secretaryand Brig. (Retd.) A.H.M. Abdul Momen, as Treasurer amongst others with the task of forming a constitution for the new association. The Memorandum and Articles of Association of REHAB was due at the earliest possible time. Government approval tothe formation of REHAB was received in June, 1992. In October, 1992 theAssociation was incorporated with the Registrar of Joint Stock Companies.

Bangladesh as a trade association and in November, 1992 REHAB was enlisted as anA class member of the Federation of the Chambers of Commerce and Industries(FBCCI) with 5-members representing REHAB in the general body of FBCCI.

3.2 Its Achievement The following past achievements of REHAB need to be mentioned especiallyGovernments declaration of construction of residential building on commercial basisas an Industry and the recognition of developer companies as Industrial Units bythe Investment Board for availing various facilities as an industry like other industrialunits under the Income Tax Act. Unfortunately the matter yet remains unresolved inspite of constant persuasion.

3.3 Present Performance: Followings are the important performances of REHAB:(i) REHAB held series of meetings with the Honourable Works Minister, Ministryof Works and the Chairman, Rajdhani Unnayan Kortripokkha (RAJUK)highlighting problems of the private sector housing and seeking their solutionand have been successful in resolving most of the problems.(ii) It met the members of the press number of times for general discussion on the problems facing the housing sector and sought their co-operation in projectingthe views of the REHAB through the respective newspapers. The response of the press has been satisfactory.(iii) It met the Chairman and members of the National Board of Revenue (NBR) for appraising the adverse effects in the increase of the rate of value added tax(VAT) and the collection procedure of annual income tax (AIT). Decision of the proposals submitted to the Government by REHAB

in this regard is awaited.(iv) REHAB was represented in the formulation of the Multi-Storied Residential PlotConstruction Policy, 1998 of the Government.

(v) Round Table Conference on High Rise Building attended by senior Governmentofficials, educationists, experts, elite, intellectuals, members of the Press andmembers of the Executive Committee of REHAB.(vi) Sub-Committees have been formed in REHAB to attend to various problems of the housing sector with a view to find out remedial measures and recommend tothe authorities concerned for appropriate necessary action.

CHAPTER 4:REHAB - ITS INPUT IN THE GOVERNMENTPOLICY MAKING REHAB by its name has the function not only to control and govern RES but alsosome influences in government policy making about housing that favours the overallobjectives of RES. In a sense it can be said that REHAB acts as an arbitrator in between developers and the Government of Bangladesh. 4.1 Declaration of Housing as an Industry To obtain recognition for the Housing Sector as an industry, efforts of REHAB havemet with partial success but there is hesitation in its implementation for lack of necessary regulating orders. REHAB is pursuing the matter with authority concerned but there appears to be inhibition in the mind of the authority concerned to theissuance of regulating orders. However, REHAB will keep up its efforts.

4.2 VAT Vat was to be recovered at the rate of 15% of the cost of an apartment. But REHABtook up the case with NBR and succeeded in convincing the NBR with all facts andfigures to affect actual deduction of 1.98% of the price of an apartment. This is because VAT is being paid at various stages of material procurement. VAT has beenenhanced since July, 1999 to 3%.In fact in the process of working out the VAT enforcement, there developed a goodunderstanding between NBR and REHAB.

4.3 Financial Policy for Housing Sector REHAB succeeded in this respect in a limited way in that it could convince the HouseBuilding Finance Corporation (HBFC) about a close cooperation between thedevelopers and the HBFC. After few meetings the HBFC Board and REHABsucceeded in enlisting its members with HBFC for financing the projects by offeringloan to prospective buyers through simplification of procedure and shortening the period of processing of loan advance. REHAB made efforts but failed to convince theauthority concerned to set aside as percentage of total loan advance by schedule banksfor apartment purchase. The

observation of the authority was that no directive could be given in the days of liberalization. But it is emphasized that housing or shelter isone of the basic needs and the Government must take appropriate steps to ensure easyaccess to financial assistance to its citizens.

4.4 National Housing Policy Representatives of REHAB were invited to participate in the formulation of NationalHousing Policy during 1993. It can be said with satisfaction that the recommendationsof REHAB were quite constructive and were given due considerations in the policy.However, it is stated that REHAB must be represented in any discussion relating tohousing sector, but many a times this has not happened. 4.5 Ministry of Public Works and RAJUK

The REHAB members have met Ministers & Officials of the Ministry of PublicWorks and RAJUK many a times to put forward its views on policy guidelines onhousing, expansion of housing sector targeting the low and low-middle income groupthrough distribution of developed land by Government, compulsory membership of all developers of REHAB and uniform transfer modalities of land and apartment byMinistry of Public Works and RAJUK. A determined effort of REHAB havesucceeded in some cases but there still remain some problems which are neither at allconduced to the growth of housing sector nor appropriate to offer opportunities to allfor some kind of shelter. However, REHAB's efforts are continuing to convinceauthorities concerned to be pragmatic and rationales in viewing REHAB'srecommendations

C A T R: EAL ESTATE PHENOMENA IN BANGLADESH H PE 5 R RES as an industry needs to accomplish its objectives. And the objectives are orientedtowards its diversified market. It should be accomplished within certain boundaryl i m i t s . U n d e r t h i s c i r c u m s t a n c e s a g e n e r a l a g r e e m e n t a m o n g t h e n u m b e r s o f developers and customers is in practice. 5.1 Objectives a) To offer finest apartments in excellent locations to the clients; b) To provide sound construction with aesthetic design to the clients;c) To install best possible fittings and fixtures;d) To satisfy clients by expert-oriented service;e) To help solving the residential problem of Dhaka City;f) To perform social responsibility for a happy future.

5.2 Market

Real estate business especially apartment projects has started in late 1970s in DhakaCity. But from early 80s the business started to grow and flourish. At present, morethan 250 companies are active in business but 95% business is still dominated by top-10 companies. Present market is growing at the rate of 15%. 5.3

Reasons for Development of the Industry: The main reasons why real estate business developed in Dhaka City are as follows:a) Scarcity of open space in the important areas of the cityb) Hazards of purchasing landc) Hazards of building constructiond) Rapid increase in population of Dhakae) Decrease in the bank interest ratef) Increasing price of land and apartmentsg) Increasing remittance of foreign currencyh) Securityi) Service facilities such as garbage disposal, central satellite TV connection, roof top facilities, elevators and so on

5.4 Market segmentation The market of real estate business is highly segmented. This segmentation is mainly based on the location, price of the land, and size of the apartments. The segmentedareas are:a) Segmentation - I :Baridhara, Gulshan, Banani, DOHS, Uttara b) Segmentation - II :Dhanmondic) Segmentation - III :Segunbagicha, Shantinagar, Kakrail, Malibagh, Kalabagand) Segmentation - IV :Mirpur e) Segmentation - V :Old Town of Dhaka Cityf) Segmentation - VI :(For office building) Motijheel, Dilkusha, Fakirapool DITExtension Road, RK Mission Road, Shahidbagh, Kawran Bazar, Pantha Path etc.Places in Dhaka City where residential and commercial projects have beencongregated:

Dhanmondi; Gulshan; Banani; Eskaton; Siddeshawari; Panthapath; Baridhara;Elephant Road; Mirpur Housing Estate, Mirpur; Dilkusha C/A; Kakrail Rd.;Malibagh; Lalmatia; Indira Road; Pallabi, Mirpur; Old Airport Road; Farmgate; Inner Circular Road; Mohakhali; Ashulia, Savar; Kalikair, Gazipur.

5.5 Types of Building Structure The development projects for apartments and residential purposes range from DuplexHome, Triplex Home, Penthouse, Luxury Home, Furnished Apartment, UnfurnishedApartment, to Condominium and Vacation-Resort Property. Commercial projectsinclude Agro Farm House, Warehouse, Commercial Space, Industrial Space, OfficeBuilding, Commercial Showroom, Exquisite Office, Industrial Park, Factory, Lofts,Shopping Center, etc. 5.6 General terms and conditions of allotment 1. Application for allotment of apartments should be made on the prescribedapplication form duly signed by the applicant along with the earnest money. Thecompany has the right to accept or reject any

application without assigning anyreason.2. On acceptance of an application, the company will issue allotment letter to theapplicant and both parties will sign an agreement which includes all terms andreferences of ownership including the payment schedule and based on which theapplicant shall start making payment as per the schedule of the project. Allotment of apartments is made on first come first serve basis.

3. Payments of earnest money, installments, car parking cost, additional works andother charges should be made by bank-draft or pay-order directly in the name of there spective company against which the receipts will be issued. Bangladeshis residing abroad may remit payments in foreign currencies by telephonic transfer (TT) or demand draft (DD) in the name of the company. 4. Payments of installments and all other charges are to be made on due datesaccording to the schedule. The company may issue reminders to the allotted, butnotwithstanding the issue of reminders, the allotted must adhere to the schedule toensure the timely completion of construction 5. The company may arrange HBFC/Bank loan (if available) for allotted onesaccording to the existing rules and regulations of the authority concerned. 6. Delay in payments will make the allotted liable to pay delay charge (amount variesfrom company to company) for every 30 days on the amount delayed payment. If the payment is delayed beyond 60 days the company shall have the right to cancel theallotment. In such an event, the amount paid by the allotted will be refunded after deducting the earnest money (and after allotment of the canceled apartment.) 7. Connection fees/charges security deposits and other incidental expenses relating togas, water, sewerage and electric connections are included in the price of apartments.The company will make those payments directly to the authorities concerned on behalf of the allotted. 8. Limited changes in the specifications, design and/or layout of the apartments andother facilities may be made by the company considering overall interest or due tounavoidable reasons. 9. The company may cancel an allotment for non-payment of installments in disregardof reminders and after final intimation to the allotted by registered post at the addressgiven in the application form. 10. The allotted shall be required to sign an agreement with the respective companyfor safeguarding the interests. 11. The possession of the apartment shall be duly handed over to the allotted oncompletion and full payment of installments and other charges and dues. Till then the possession will rest with the company. If the project is completed before the stipulatedtime, the allotted shall have to make full payment before taking possession. 12. The allotted will become shareholders of total acres of the scheduled land of the project which is equally divisible but undivided and not demarked. After all the duesand installments are paid by the

purchaser according to the requirements and scheduleof payment and after the completion of the construction, the vendors shall execute aregistered sale deed in favor of the purchaser transferring share of land of the projectin the demised apartment. 13. After taking over of apartment of the project, the allotted must consult thecompany prior to undertaking any structural or layout changes within the apartment complex. Failure to do so will be at the sole risk of the allotted. 14. Company shall not be liable if the completion period of the construction projectsis affected by unavoidable circumstances beyond the control of the company, likenatural calamities, political disturbances, strikes and changes in the fiscal policy of thecountry etc. 15. For the purpose of effective management and maintenance of the building the purchaser of the apartment shall form and constitute a cooperative society under theCo-operative Society's Act 1940. The society shall be entrusted with the managementand maintenance of the building. The rules, regulations and by laws of the co-operative society relating to management and maintenance of the building shall be binding upon all the purchasers/owners of the apartments.

CHAPTER 6: REAL ESTATE DEVELOPERS

To fulfill the need of housing problem several business organizations have involved inRES. Here only the discussion is focused on those business organizations which areassociated with REHAB 6.1 Name of the REHAB members There are 141 members in REHAB. Their names are enlisted bellow. Name of the members: 1.Aangina Construction Ltd. 2.ABC Real Estates Limited 3.Abode Properties Ltd . 4 . A d v a n c e d D e v e l o p m e n t Consultants Ltd .5 . A d v a n c e d D e v e l o p m e n t Technologies ,6 . A g r a n i A p a r t m e n t L t d , 7.Al-Hassan Developers Ltd. 8.Alam's Real Estate Limited,

9.Amicus Corporation Limited 1 0 . A m i n M o h a m m a d F o u n d a t i o n Ltd ,1 1 . A m i n M o h a m m a d L a n d s Development Ltd ,1 2 . A n w a r L a n d m a r k L t d , 13.ANZ Properties Limited 14.Apartment Design Development(Pvt.) Ltd, 15.Arcadia Property DevelopmentLtd, 16.Artisan Apartments Limited 17.Asset Developments HoldingsLtd, 1 8 . A s s u r a n c e D e v e l o p m e n t s Limited, 19.Atlantic Developments Ltd, 20.Avenue Builders Ltd, 21.Banani Property Development(Pvt.) Ltd, 2 2 . B a n g l a d e s h D e v e l o p m e n t Company Ltd 23.Bashati Consortium Ltd, 24. Basic Prop erti es L td, 25.Bay Developments Ltd, 26.Bay To wer Limited 27.Blue Bonnet Ltd, 28.Borak Real Estate (Pvt) Ltd, 29.BRAC Concord Lands Limited 3 0 . B u i l d i n g D e v e l o p m e n t A n d Design Ltd, 31. Building For Futur e L td . 32.Building Technology Ideas Ltd ,3 3 . C e n t u r y R e a l t y L i m i t e d , 34.Charuta Homes Ltd,

35.City Axis Ltd , 36.Concord Condominium Ltd, 3 7 . C o n c o r d R e a l E s t a t e , Development Ltd, 38.Concord Real Estate, 39. Building Produ cts L td, 40.Confidence Builders Ltd, 4 1 . C o n f i g u r e E n g i n e e r s &Construction Co. Ltd, 42.Corolla Properties Limited, 43.Crescent Holdings Ltd, 44.Development Entrepreneurs Ltd, 45.Dhaka Shelter (Pvt) Ltd, 4 6 . D o m I n n o , 4 7 . E a s t W e s t P r o p e r t y , Development (Pvt.) Ltd.4 8 . E a s t e r n H o u s i n g L t d , 4 9 . E n a P r o p e r t i e s , 5 0 . E q u i t y P r o p e r t y M a n a g e m e n t (Pvt.) Ltd,51.Everest Holdings TechnologiesLtd,5 2 . F a m i l y L i v i n g L t d , 5 3 . G . K . B u i l d e r s , 5 4 . G . M . P r o p e r t i e s L t d . 55.G.M. Real Estate Company (Pvt.)Ltd,56.Globe Construction Limited,5 7 . G o l d H u n t D e v e l o p m e n t C o . , 5 8 . G r a m e e n B a n g l a H o u s i n g Limited,5 9 . G r e e n D e l t a H o u s i n g A n d Development (Pvt.) Ltd,6 0 . H a b i t a t B u i l d e r s L i m i t e d , 61.Hassan And Associates Limited,62.Hamid Real Estate ConsructionLtd,6 3 . H a p p y H o m e s L t d , 6 4 . H i - T e c h A s s o c i a t e s L t d , 6 5 . H i v e r t e c h Limited ,66.Ideal Home Builders Limited67.Intimate Home Builders Ltd,68.Ionic Builders Ltd,69.Jamuna Buil ders Limited