1

Chapter One: Orientation to The Report

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

Background

The study reflects the identification of the Real Estate Sector in Bangladesh in terms of its significance in our country. It offers a literature review of the major environmental factors in line with the enacted environment of the Real Estate Sector of Bangladesh.

Objectives

To define the enacted environment of the Real Estate Sector of Bangladesh To illumine the values of 6 major environmental factors of Real Estate To focus upon the context of Bangladesh in terms of Real Estate Sector To pave the path of further research on Real Estate Sector of ha!a.

Scope of the Study

The study has appraised the prospect of Real Estate Sector in Bangladesh and the students have experienced the virtual tour inside the "oncord and #avana $ead %uarters.
BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

The primary and secondary sources of data are as follows& Primary Source of Info 'irtual tour ( Real Estate $ead )uarters -orum with Real Estate *fficers Secondary Source of Info Real Estate *riented +e,sites Evaluation of .nnual reports of Real Estates

!ethodo"ogy

Out"ine of !ethodo"ogy /ethodology reveals the entire process that is followed for the completion of the study successfully. This study is carried out in several steps. -ollowing methodology has ,een adopted to fulfill the o,jectives& #ata Co""ection ata 0information from primary and secondary sources are useful to evaluate the total research regarding Real Estate Sector of Bangladesh.

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

4 #ata $na"ysis The collected information from primary and secondary sources has ,een analy1ed thoroughly. -indings from the forums have ,een used to formulate policies and factors of Real Estate Sector of Bangladesh.

%imitations

The confidential part of Real Estates was not disclosed Some of their Environmental factors were without apt documentation *verall factor analysis is not availa,le with the Real Estates

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

Chapter T&o: $ %iterature Revie& of the !ajor 'nvironmenta" (actors

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

"

.n environment can ,e defined as anything which surrounds a system. Therefore2 the ,usiness environment is anything which surrounds the ,usiness organi1ation. It affects the decisions2 strategies2 processes and performance of the ,usiness. The micro environment consists of different types of sta!eholders 3 customers2 employees2 suppliers2 ,oard of directors and creditors. The macro environment consists of factors which are ,eyond the control of the ,usiness 3 Social2 Technological2 Economical and 4olitical. 5 /ajor Environmental -actors can ,e illumined as follows&

Techno"ogica" environment

Technological

environment

involves

systematic

application

of

scientific or other organi1ed !nowledge that changes very )uic!ly. Technological environment hold new technological innovation2 new products2 the state of technology2 the utili1ation of technology for maximum inputs and outputs2 the o,solescence of technology and the dynamic changes that fre)uently occur in technologies which ena,le firms to get a competitive advantage. .vaila,ility of electric power2 natural gas2 drin!ing water2 sewage collection2 telecommunications2 roads and highways2 postal service2 gar,age collection2 and pu,lic transport.
6

1 2

http://en.wikipedia.org/wiki/Business_environment#Socia _environment http://en.wikipedia.org/wiki/Business_environment#!o itica _environment

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

Po"itica" environment ) *overnment

The political environment includes regulatory ,urden and red tape2 taxes2 levels of political corruption2 pu,lic wor!s services2 la,or mar!et regulation2 policy predicta,ility2 property rights2 contract enforcement2 regulations controlling startup and ,an!ruptcy2 competition law2 and entry to finance and infrastructure mar!ets. 4olitical environment7s influence is exerted ,y three institutions&3 8egislature04arliament 9 ma!e the laws Executive0:overnment 9 implement the laws ;udiciary 9 ensures that ,oth legislative and executive ,oth act in the interest of the pu,lic and within the constitution The 8egal environment plays a very important role. The laws of the country2 the judicial system2 and the laws which affect ,usiness are important. -or example2 there might ,e a sudden prohi,ition of to,acco. . government is the organi1ation that is the governing authority of a political unit and the ruling power in a political society2 and the apparatus through which a governing ,ody functions and exercises authority. :overnment2 with the authority to ma!e laws2 to adjudicate disputes2 and to issue administrative decisions2 and with a monopoly of authori1ed force where it fails to persuade2 is an indispensa,le means2 proximately2 to the peace of communal life. .
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' compulsory territorial monopolist of protection and jurisdiction

e)uipped with the power to tax without unanimous consent. . state or province of sufficient si1e and complexity will have different layers or levels of government& local2 regional and national. < In law2 the judiciary or judicial system is the system of courts which administer justice in the name of the sovereign or state2 a mechanism for the resolution of disputes. The term is also used to refer collectively to the judges2 magistrates and other adjudicators who form the core of a judiciary2 as well as the support personnel who !eep the system running smoothly. =nder the doctrine of the separation of powers2 the judiciary is the ,ranch of government primarily responsi,le for interpreting the law. It construes the laws enacted ,y the legislature.> The legal0political aspect is very important in glo,al mar!eting. ?International law? can ,e defined as rules and principles that states and nations consider ,inding upon themselves. This raises two interesting characteristics of international law. The first is that ?law? ,elongs to individual nations and international law only exists to the degree that individual nations are willing to relin)uish their rights. The second is the lac! of an ade)uate international judicial and administrative framewor! or a ,ody of law which would form the ,asis of a truly comprehensive international legal system. The international ,usiness is also su,ject to political decrees made ,y governments ,oth in ?home? and ?host? countries. $ome governments can apply pressure not to deal with disapproved parties. These measures may ta!e the refusal to grant an export licence2 or withdrawal of export
3 4

http://en.wikipedia.org/wiki/$overnment http://en.wikipedia.org/wiki/%udiciar&

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

* guarantee cover. The host government may ta!e measures li!e taxation2 ownership controls2 operating restrictions or expropriation. @

*"oba" 'nvironment

:lo,al Environment refers that world is ,ecoming one mar!et and competition is now ,eyond the ,orders. :lo,ali1ation in its literal sense is the process of transformation of local or regional things or phenomena into glo,al ones. It can also ,e used to descri,e a process ,y which the people of the world are unified into a single society and function together. This process is a com,ination of economic2 technological2 sociocultural and political forces. :lo,ali1ation is often used to refer to economic glo,ali1ation2 that is2 integration of national economies into the international economy through trade2 foreign direct investment2 capital flows2 migration2 and the spread of technology.

!acro 'conomic 'nvironment

/acro Economic Environment offers all forces that have an economic impact on ,usiness. It includes forces li!e national income2 industrial and agricultural production2 population2 money supply2 interest rates2 etc. /acroeconomics is a ,ranch of economics that deals with the
5

http://www.(ao.org/docrep/)5*#3+/w5*#3e,'.htm#chapter 4: the ega - po itica trade environment

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

1, performance2 structure2 and ,ehavior of a national or regional economy as a whole. .long with microeconomics2 macroeconomics is one of the two most general fields in economics. /acroeconomists study aggregated indicators such as : 42 unemployment rates2 and price indices to understand how the whole economy functions. /acroeconomists develop models that explain the relationship ,etween such factors as national income2 output2 consumption2 unemployment2 inflation2 savings2 investment2 international trade and international finance. In contrast2 microeconomics is primarily focused on the actions of individual agents2 such as firms and consumers2 and how their ,ehavior determines prices and )uantities in specific mar!ets.

Socia" environment

The social environment is the identical or similar social positions and social roles as a whole that influence the individuals of a group. The social environment of an individual is the culture that he or she was educated and0or lives in2 and the people and institutions with whom the person interacts. . given social environment is li!ely to create a feeling of solidarity amongst its mem,ers2 who are more li!ely to !eep together2 trust and help one another. /em,ers of the same social environment will often thin! in similar styles and patterns even when their conclusions differ. Social environment refers to a person7s relation with the society that he lives in.

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11

Cu"tura" environment

"ultural environment refers to the factors that affect the employee outside the office. It includes people7s attitude to wor!2 family2 religion2 ethics2 and social responsi,ilities. Social and cultural aspects of a society form its very nature. .s ?culture? is the essence of a society2 this chapter will concentrate on a discussion of it only. *f all the so called ?environmental uncontrolla,les?2 culture2 or at least the study of it2 is one of the most difficult to comprehend2 ta!e account of and harness to advantage. This is particularly so when the product or service is ?culture ,ound?. Such products and services include those which are generally indigenous ,y nature and0or of relatively small value and very common. This is particularly true of foodstuffs. Sad1a in Aim,a,we2 a staple food made from mai1e meal2 would not go down well in Beverley $ills2 "alifornia. #either would /iddle Eastern sheeps eyes menus. 4roducts of a more technical nature2 li!e computers2 on the other hand2 have a universal appeal. $owever there is plenty of evidence to suggest that2 with shrin!ing communications and with more people than ever traveling2 even the most culture ,ound product or service can2 and is2 finding a world mar!et niche. So even the infamous 'eldschoen footwear of the South .frican pioneers has found its way into most corners of the world.

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

12 Researcher $all B5CDDE has suggested the concept of high and low context cultures as a way of understanding different cultural orientations. In low context cultures messages have to ,e explicit2 in high context cultures less information is re)uired in the ver,al message. In low context cultures2 for example li!e #orthern Europe2 a personFs word is not to ,e relied on2 things must ,e written. *n the other hand2 in high context cultures2 li!e ;apan and the /iddle East2 a personFs word is their ,ond. It is primarily a )uestion of trust. 6

"

http://www.(ao.org/docrep/)5*#3+/w5*#3e,#.htm#chapter 3: the cu tura environment

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

13

Chapter Three: Overvie& of Rea" 'state Sector in Bang"adesh

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

14

Overvie&

Enactment implies that a ,usiness creates an environment for itself2 aggressively narrowing and scanning only parts that it considers relevant. Enacted Environment of the Real Estate Sector of Bangladesh thus should ,e identified right from the roots of the capital. ha!a "ity2 ,orn during the /ogul Empire and grown with the British rule2 is expanding rapidly. -rom the ,eginning of the 6Gth "entury its growth and latter development is mar!ed with sheer lac! of proper and far3 reaching planning. The impact is now ,eing felt at the end of the century. ha!a "ity is

undergoing terrific growth phase throughout the last two decades. +hile there are so many real estate developers in the mar!et2 there are also very few of them who have maintained the )uality2 safety and customer preference. In this journey of real estate2 factors of multifaceted relevancy have arrived to its path. . good num,er of real estate companies are wor!ing under one um,rella association named FReal Estate and $ousing .ssociation of BangladeshF BRE$.BE. .lmost H< "ompanies are at present affiliated with this association2 while more than 6GG companies are wor!ing independently. BTI too! a leading role in the formation of the industry association and is one of the founder mem,ers of the RE$.B. #ot many people consider investing their hard3earned money in Bangladesh real estate ,ut it is something worth considering. #ot only are properties in Bangladesh very good value for money when converted from the local currency2

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

15 ,ut there are a num,er of homes in all shapes and si1es availa,le. If you prefer to start from scratch2 you will find that construction is afforda,le too. Real estate in Bangladesh is not everyone7s cup of tea2 ,ut it can ,e a real adventure for those who are willing to give it a try.

Objectives

aE To offer finest apartments in excellent locations to the clientsI ,E To provide sound construction with aesthetic design to the clientsI cE To install ,est possi,le fittings and fixturesI dE To satisfy clients ,y expert3oriented serviceI eE To help solving the residential pro,lems of ha!a cityI fE To perform social responsi,ility for a happy future.

!arket:

Real estate ,usiness especially apartment projects has started in late 5CDGs in ha!a "ity. But from early FHGs the ,usiness started to grow and flourish. .t present2 more than 6@G companies are active in ,usiness ,ut C@J ,usiness is still dominated ,y of top 5G "ompanies. 4resent mar!et is growing at the rate 5@J.

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

1"

Reasons for deve"opment of the industry:

The main reasons why real estate ,usiness developed in are as follows&

ha!a city

aE Scarcity of open space in the important areas of the city ,E $a1ards of purchasing land cE $a1ards of construction of ,uilding dE Rapid increase in population of eE ha!a ecrease in the rate of ,an! interest

fE 4rice of land and apartments is increasing day ,y day gE Rent of the apartments is comparatively higher than the rent of privately constructed flats hE *pen /ar!et Economy. Remittance of foreign currency is very easy iE Security jE Service facilities such as gar,age disposal2 central satellite T' connection2 apartments services saves time2 roof top facilities2 lift and so on

!arket segmentation:

The mar!et of real estate ,usiness sector is highly segmented. This segmentation is mainly ,ased on the location2 price of the land2 and si1e of the apartments. The segmented areas are&

aE Segmentation 3 I &Baridhara2 :ulshan2 Banani2

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

*$S2 =ttara

1# ,E Segmentation 3 II & hanmondi cE Segmentation 3 III &Segun,agicha2 Shantinagar2 Ka!rail2 /ali,agh2 Kala,agan dE Segmentation 3 I' &/irpur eE Segmentation 3 ' &*ld Town of -a!irapool ha!a "ity il!usha2 fE Segmentation 3 'I &B-or office ,uildingE /otijheel2 Ba1ar2 4antha 4ath etc.

IT Extension Road2 RK /ission Road2 Shahid,agh2 Kawran

P"aces in #haka city &here residentia" and commercia" projects has been congregated:

hanmondiI :ulshanI BananiI Es!atonI SiddeshawariI 4anthapathI BaridharaI Elephant RoadI /irpur $ousing Estate2 /irpurI il!usha "0.I Ka!rail Rd.I /ali,aghI 8almatiaI Indira RoadI 4alla,i2 /irpurI *ld .irport RoadI -armgateI Inner "ircular RoadI /oha!haliI .shulia2 Savar. The development projects for apartments and residential purposes range from uplex $ome2 Triplex $ome2 4enthouse2 8uxury $ome2 -urnished .partment2 =nfurnished .partment2 to "ondominium and 'acation3Resort 4roperty. "ommercial projects includes Industrial Shed2 .gro -arm $ouse2 +arehouse 0 :odown2 "ommercial Space2 Industrial space2 *ffice Building2 *ffice Suite2 -urnished *ffice2 "ommercial Showroom2 Ex)uisite *ffice2 Industrial 4ar!2 -actory and 8ofts.D
#

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

1'

Rea" 'state Business $ffairs in Bang"adesh

ha!a is one of the /ega "ities of the world. Real Estate ,usiness in Bangladesh is mostly concentrated in and around severe scarcity of land in the locality adjacent to ha!a city and the ha!a. The owners port city "hittagong. The )uestion is of availa,ility of land. There is are holding land to get advantage of higher land value. The land owners are mainly from the higher income group specially the ,usiness magnets and the industrialists. There are small plots of land owned ,y small income group and such plots are not suita,le for multistoried apartment ,uilding under the present R.;=K Rule3 6GGD. =r,an population in Bangladesh is the highest amongst the south and South Eastern countries of .sia. There are continued influx people of the ur,an area ,ecause of availa,ility of government machineries2 private trade facilities2 existence of industries2 academic institutions2 social cultural centers2 health and other facilities in the capital city as well as the charm and fascination of living in the capital. These facilities are attracting the people from various wal!s of life. The people are inclined to stay in the capital city. /oreover2 deteriorating economic condition in the rural areas2 increasing poverty2 lac! of wor! and opportunity are also pushing the people towards the capital. In spite of increasing the demand of residential houses in the capital city2 the growth of construction of residential apartments is not

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

1* ade)uate. The private ,uilders and land developers are encountered with innumera,le pro,lems. The rising demand canFt ,e met ,y the government alone. The private sector has limitation and ,ottlenec!s. The other reasons of unusual depression in the real estate ,usiness is the a,olition of opportunity of whitening ,lac! money paying tax under Section3 5CB2 5CBB of Income Tax *rdinance. It is expected that depression will not last long and Real Estate ,usiness will overcome regressive situation. Sale of ,oth apartment and developed plot BlandE fell drastically since one eleven. Real Estate ,usiness has undergone serious set,ac! this year. The Real Estate ,usiness under the private sector has ,een passing a dreary time due to tightening and stringent measures and policy coupled with a num,er of o,stacles. Because of indiscriminant fixation of eed 'alue of different areas in which seemingly contri,utes the increase the value of land. .ccording to RE$.B source apartment sale has dropped D5J during ;anuary 3 /arch 6GGD. 4ro,a,ly it was more in .pril3 ;une 6GGD. Statistics reveal that only @5G apartments were sold during the first < months of the calendar year against 52DC> in the corresponding < months in the previous year. 4lotFs BlandE sale dropped significantly since the clients are critical and scares. They are also cautious ,ecause of credi,ility gap and suspicion a,out the ownership of land ,eing sold ,y the land developer. .,normal price hi!e of construction materials has also pushed the real estate sector in to deep straits. Every type of construction materials including mild steel B/S RodE2 cement2 ,ric!2

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

2, electrical goods2 galvani1ed iron pipes2 wood along with material such as paint aluminum nails etc. registered sharp rise in the local mar!et in the last a few months. 6G grade /S Rod is now selling at T!.>C2@GG03 a tone against T!.>62GGG03 in last year. "ement are selling at varying rates from TK<<@03 to T!.<@G03 per ,ag as against T!.6DG03 to T!.6HG03 per ,ag in the last year. 4rice of electric wire has increased ,y cent percent. Bric!s are selling at T!.>2@GG03 to T!.>2HGG03 per thousand as against T!.<2HGG03 in last year. Stone2 crushed stone2 coarse sand and white sand have also registered 6GJ to @GJ increase. "onse)uently2 the per sft. "ost of apartment is expected to rise ,y T!.@GG03 per sft. /oreover2 higher price of fuel2 and transport cost also pushed price of construction materials. To add salt to the injury2 the unprecedented increase of the daily essential items li!e rice2 flour2 edi,le oil2 cereals2 onion2 garlicFs2 ,a,y food etc. has diminished afforda,ility so to say purchasing power of the middle class and lower income group. The )uestion of saving does not arise left alone the payment of installments. There is growing demand for the low cost apartment ,ut due to price hi!e of construction materials as stated in the forgoing paragraphs it is not possi,le to ,uild residential apartments within afforda,ility of the middle income group let alone the small income group even with 1ero profit.

The low lying land in some areas needs 5D36G feet earth filling and such plots also re)uire @G to 6G feet piling. The price hi!e of rod2

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

21 cement2 sand2 stone etc. increased the cost of piling. In turn land developer will increase the price of plot. In our last report we stated that our country is predominantly an alluvial formation and is located in the earth )ua!e prone 1one. Ta!ing the note of the earth)ua!e apprehension2 our architects had to ma!e extra structural provision which also contri,utes to a some extent in the increase of the construction cost. There is apprehension that the capital city ha!a would ,ecome an

un3ha,ita,le city ,y the year 6G6@ due to a,normal growth of population. There are multifarious pro,lems ,eing encountered ,y the citi1ens such as house to live in2 insufficient water supply2 insufficient power2 lac! of well designed communication and sewerage system2 water logging even during moderate rainfall due to illegal gra,,ing of rivers and canals and lac! of educational institution in the save the ha!a city. There is no master plan to provide these facilities to citi1ens and to ha!a city from all these pro,lems. There appears to ,e no effective measure towards solution of these pro,lems. Even ground wor! is not in sight. It has ,een noticed in the meanwhile that the apartments are selling at varying increased rate from T!.<2GGG03 to T!.62GGG03 per sft. on area ,asis which had ,een T!.62@GG03 to T!.>2@GG03 one year ago. .s the sale of apartment and plots of land have decreased significantly this time their contri,ution to : 4 also decreased. The Real Estate Entrepreneurs may have to retrench their employees as the ,uilder are contemplating to cut3,ac! on projects since the sale of apartment and the plots of land have dipped in recent months. Even the progress of

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

22 apartment ,uildings under construction are !ept in a,eyance ,y the entrepreneurs for want of expected num,er of ,uyers and those ,uyers who paid the down payment have ,een wailing ,ecause of stuc! up of investment.

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23

Chapter (our: 'nacted 'nvironment of Rea" 'state in "ine &ith the + 'nvironmenta" (actors

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24

!acro

'conomic

'nvironment

of

Rea"

'state

Sector

of

Bang"adesh:,

/any events too! place in the world my contri,uting growth rate and per capita income. The growth of world economy in 6GG6 was @.>J against >.CJ in the previous year and it was highest since 6GGG. The growth was achieved on rise in the : 4 growth rates of =nited States2 ;apan2 and Euro Aone etc. South .siaFs H.DJ : 4 growth in 6GG6 matched the : 4 growth rate of 6GG@. In this su,3region2 /aldives achieved a spectacular reversal in : 4 growth scenario. In 6GG6 /aldives topped the su,3regional : 4 growth ta,le with 5H.6J growth rate against minus growth rate of >.@J in 6GG@. The economy of Bangladesh seemed a ,it sta,le with persistent price hi!e of num,er of essential commodities causing high inflation rate. The national ,udget -L 6GGD36GGH appears to ,e speculative and am,itious li!e that of previous year. 4ro,a,ly many unforeseen factors li!e flood2 tidal upsurge2 drought2 excessive rain2 loss of crops etc. are not pro,a,ly ta!en into consideration while compiling the ,udget as are already ,ecoming apparent. Spearheaded ,y higher growth of industrial and service sectors2 the : 4 in 6GG636GGD was 6.@5J and the : 4 for 6GGD36GGH has ,een estimated at DJ and the per capita income at =S M >HD for -L 6GG636GGD compared to =S M >>D in -L 6GG@36GG6. "ontri,ution of agricultural sector including forestry and fishery to the : 4 at current mar!et price stood at 5H.HDJ. "ontri,ution of industry
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25 and services sector to : 4 was 6H.@@J and @6.@CJ respectively in -L 6GG636GGD. +ithin industry2 the share of manufacturing and construction sectors was 5D.C@J and H.5@J respectively. country2 account for more than =S M H ,illion. .s a result of certain corrective measures ta!en ,y Bangladesh Ban! such as remittance through electronic fund transfer system2 opening of foreign remittance monitory cell2 action against un3official hundi system of remittance etc. the total remittance ,y the wage earners increased to =S M @2CDH.>D million BH.DDJ of : 4 in 6GG636GGDE against =S M >2HG5.HH million in 6GG@36GG6 recording an increased of 6>.@J. "onsidering the huge development fund re)uirement the si1e of . 4 B.nnual evelopment 4rogramE has ,een3estimated at T!662@GG03 crore B@J : 4E compared to T!.6526GG03 crore Brevised from T!.662@GG03 croreE. Aero Tax 8imit has ,een enhanced to T!.52 @G2GGG from T!.526G2GGG for individual tax payers. The capital trowel remained ,ullish most of the time in -L 6GG636GGD especially from one eleven change in the government. Statement of the compliance of Bangladesh accounting standards2 the financial statements of the Real Estates have always ,een prepared in accordance with the applica,le Bangladesh accounting standards BB.SsE adopted ,y the ,ased institute on of "hartered .ccountants of Bangladesh BI".BE International financial Reporting espite a

few set3,ac!s the export of the ready made garments industry of the

Standards BI-RSsE.

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

2" It is often said that the housing industry is a fair ,arometer of the countryFs economy. Invaria,ly2 a successful and thriving economy is represented ,y a ,ooming real3estate mar!et. . few good examples are $ong Kong and Singapore in the recent past2 and India2 "hina2 u,ai at present. This ?,arometer? has also performed pretty accurately in Bangladesh2 or2 more specifically2 in ha!a. -or certain periods of time over the last ten years2 our economy has ,een prospering2 and during that time the housing industry has witnessed a ,oom. In the last five years2 the mem,ers of the Real Estate and $ousing .ssociation of Bangladesh BReha,E constructed the following num,ers of apartment units in ha!a& 6GG< 3 >>6@ units2 6GG> 3 @GD@ units2 6GG@ 3 @DH@ units2 6GG6 3 6><< units2 and 6GGD 3 @HGG units. .s we can see2 the rising trend of growth was suddenly jolted in 6GGD. *ne )uarter of the way into 6GGH2 from the unofficial information availa,le. So why is this important sector of our economy ailingN It directly employs a,out 5 million people2 contri,utes a,out 5@J to the countryFs was : 42 and to has either provided poorly a lucrative paid and respecta,le jo,s. employment to the countryFs engineers and architects2 which hitherto limited government -urthermore2 the housing industry has ,een responsi,le for the setting up of the numerous factories 33 cement2 sanitary ware2 ceramic tile2 =4'" pipe2 ,ric!2 electric ca,le2 and aluminum section 33 and has single3handedly revived the fortune of the doomed /.S. rod industry. The housing industry along with other related sectors contri,utes 6G percent to the national : 4 . .round 6.@ crore people are directly and

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

2# indirectly dependant on the housing sector in which 5@ la!h s!illed and semi3s!illed people wor!.

*"oba" 'nvironment of Rea" 'state Sector of Bang"adesh

The country7s ,ooming housing sector has hit a huge snag as flat and land plot sales plummeted following the government7s move to collect information a,out the ,uyers7 sources of income. The sales of flats and plots dropped ,y @G percent at the latest fair of Real Estate and $ousing .ssociation of Bangladesh BRE$.BE compared to the last fair in 6GG@. O-ear and uneasiness have affected potential ,uyers of apartments and flats ,ecause of the move initiated ,y different government agencies as part of the ongoing anti3corruption drive2P Tanveerul $a)ue 4ro,al2 RE$.B general secretary said at a press conference organi1ed ,y RE$.B at a city hotel. Besides the illegal money holders2 general people as well as remittance earners are also ,eing discouraged to invest in the housing sector. This has cast a glo,al degradation over the Real Estate Sector of Bangladesh. .

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

2' Techno"ogica" environment of Rea" 'state Sector of Bang"adesh

Transportation "onstruction is now ,eing done at night ,ecause of the rule for truc! transportation after H at night until 6 in the morning. The transportation ,eing the major focus of the Technological environment of the Real Estate of Bangladesh is now too confined.

*overnment ) Po"itica" 'nvironment of Rea" 'state Sector of Bang"adesh

*overnment Intervention Bang"adesh Rea" 'state -ousing %oan Refinance Scheme:

Bangladesh Real Estate .partment loan enjoys at CJ interest rate under Bangladesh Ban!7s $ousing 8oan Refinance Scheme. Bangladesh Ban!Fs $ousing 8oan Refinance program in now getting responses after the central ,an! relaxed some conditions of the scheme. In /ay 5@2 6GGH the Bangladesh Ban! has reduced the interest rate to C percent from 5G percent and raised the monthly income ceiling of ,orrowers. Bangladesh Ban! in the financial year 6GGD3GH launched the T!.<GG crore $ousing 8oan Refinancing Scheme for housing loan. But only
BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

2* T!.D.DC crore was dis,ursed ,y the ,an!s ,etween ;uly 6GGD and .pril 5@2 6GGH out of T!.5GG crore earmar!ed for the fiscal period 6GGD3GH. But on ;une <G2 6GGH2 the refinancing figure stood at T!.>6.<> crore. .ccording to Bangladesh Ban!7s Statistics of the T!.>6.<> crore2 crore. The other major lenders are Industrial -inancial Services 8td dis,ursed T!.<.HD crore. .ccording to the revised policy2 any person with a monthly income of less than T!.@G thousands will only ,e eligi,le to get the housing Breal estate apartmentE loan upto T!.6G la!h from 5@ commercial ,an!s and non3,an! financial institutions either for ,uying or constructing an apartment of maximum 526@G s)uare feet in six divisional cities along with Tongi2 :a1ipur2 #arayanganj and Savar areas. The scheme has ,arred government employees and others who are entitled to housing loans from their respective organi1ations from receiving the special housing loans and if a person has already ta!en housing loans from a ,an! or financial institution will also not ,e considered under the scheme. *enera" terms and conditions of a""otment avai"ing the %ega" 'nvironment:, 5. .pplication for allotment of apartments should ,e made on the prescri,ed application form duly signed ,y the applicant along with the earnest money. The company has the right to accept or reject any application without assigning any reason thereto. elta Brac $ousing -inance "orporation 8td B B$E2 alone dis,ursed T!.<5.5G evelopment 8easing "ompany BI 8"E dis,ursed T!.>.@@ crore2 4eoples 8easing and

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

3,

6. *n acceptance of an application2 the company will issue allotment letter to the applicant on which the applicant0allottee shall start ma!ing payment as per the schedule of the project. .llotment of apartments is made on first come first serve ,asis.

<. 4ayments of earnest money2 installments2 car par! costs2 additional wor!s and other charges shall ,e made ,y ,an! draft or pay order directly in the name of the respective company against which the receipts will ,e issued. Bangladeshis residing a,road may remit payments in foreign exchange ,y TT or company. >. 4ayments of installments and all other charges are to ,e made on due dates according to the schedule. The company may issue reminders to the allottee2 ,ut notwithstanding the issue of reminders2 the allottee must adhere to the schedule @. The company may arrange $B-"0Ban! loan Bif availa,leE for allottees according to the existing rules and regulations 6. elay in payments ,eyond the schedule date will ma!e the allottee in the name of the

lia,le to pay delay charge Bamount varies from company to companyE for every <G days on the amount of the payment delayed. If the payment is delayed ,eyond 6G days the company shall have the right to cancel the allotment. In such an event2 the amount paid ,y the allottee will ,e refunded after deducting the earnest money and after allotment of the canceled apartment.

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

31 D. "onnection fees0charges security deposits and other incidental expenses relating to gas2 water2 sewerage and electric connections are included in the price of apartments. The company will ma!e those payments directly to the authorities. H. 8imited changes in the specifications2 design and0or layout of the apartments and other facilities may ,e made ,y the company in larger overall interest or due to unavoida,le reasons.

C. The company may cancel an allotment for non3payment of installments in disregard of reminders and after final intimation to the allottee ,y registered post at the address given in the application form. 5G. The allottee shall ,e re)uired to execute an agreement with the respective company for safeguarding the interests.

55. The possession of the apartment shall ,e duly handed over to the allottee on completion and full payment of installments and other charges and dues. Till then the possession will rest with the company. If the project is completed ,efore the stipulated time2 the allottee shall have 56. to The ma!e allottees full will payment ,ecome ,efore ta!ing possession. and

e)ually

divisi,le

undivided

undemar!eted shareholders of total acres of the scheduled land of the project in respective apartment. .fter all the dues and installments are paid ,y the purchaser according to the re)uirements and schedule for payment and after the completion of the construction2 the vendors shall execute a registered sale deed in favor of the purchaser transferring share of land of the project.

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

32

5<. .fter ta!ing over of apartment of the project2 the allottee BsE must consult the company prior to underta!ing any structural or layout changes within the apartment complex. 5>. "ompany shall not ,e lia,le if the completion period of the construction of the projects is affected ,y unavoida,le circumstances ,eyond the control of the company2 li!e natural calamities2 political distur,ances2 stri!es and changes in the fiscal policy. 5@. -or the purpose of effective management and maintenance of the ,uilding the purchaser of the apartment shall form and constitute a mutual ,enefit cooperative society under the "o3operative SocietyFs .ct 5C>G. The society shall ,e entrusted with the management and maintenance of the ,uilding. The rules2 regulations and ,y laws of the co3operative society relating to management and maintenance of the ,uilding shall ,e ,inding upon all the purchasers0owners of the apartments. RI*-TS $.# R'%$TIO.S /IT- S-$R'-O%#'RS "ontrol rights of shareholders& .t annual general meeting2

shareholders have rights of participation and supervision. They have the right to as! )uestions of and re)uest of information from the ,oard regarding items on the agenda to the extent necessary to ma!e an informed judgment of the Sector7s affairs. Relations with shareholders& The annual general meeting B.:/E is used as an important opportunity for communication with ,oth

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

33 institutional and general shareholders. In addition2 the Sector

maintains relations with its shareholders through the corporate affairs secretarial department.

The following information can ,e addressed through the secretarial department& o o o o o ividend payment en)uires& ividend mandate instructionI 8oss of share certificateI #otification of change of addressI and Transfer of shares.

The Sector ,elieves that it is important to respond ade)uately to all the )ueries of ,oth institutional and general shareholders. .t the .:/2 the shareholders are offered an opportunity to raise with the ,oard any specific )uestion they have concerning the Sector. In addition2 meetings are also held ,etween individual directors and institutional shareholders at various times during the year.

Cu"tura" environment of Rea" 'state Sector of Bang"adesh

The real estate ,usiness is passing thought a recession at present and the clients are reluctant to invest in this sector. /oreover high price of construction materials have pushed the apartment cost s!y3high which have ,ecome a ,arrier for the middle income earners to own flats.

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

34 "onceder this2 Real Estate sectors have deferred wor!ing on new project2 rather concentrate on completing projects in hand. The directors of Real Estate Sector are responsi,le for the companies system of internal financial control. .lthough no system of internal control can provide a,solute assurance against material misstatement and loss2 the company system is designed is provided the directors with reasona,le assurance that pro,lem are timely identified and dealt with appropriately. Key procedures to provide effective internal financial control and communicative aspects can ,e descri,ed in the following areas& /anagement Structure The Real Estate Sector operates a well defined management structure headed ,y managing directors under whom there are various department heads and according to hierarchy2 various senior and mid level management staff. The departmental heads meet at regular interval. -inancial Reporting There is comprehensive the preparation management of annual reporting ,udget discipline all which

involves

,y

operating

departments. Executive management reviews the ,udgets and actual results are reported against the ,udget and revised forecasts are prepared at regular interval.

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

35 .sset /anagement& The Real Estate Sector has sound asset management policy2 which reasona,ly assures the safeguarding of assets against unauthori1ed use or disposition. The Real Estate Sector also follows proper records and policy regarding capital expenditures. -unctional Reporting& In pursuance with !eeping the relia,ility of financial information used within the ,usiness or for pu,lication2 the management of Real Estate Sector has identified some !ey areas2 which are su,ject to monthly reporting to the /anaging irector. These include monthly treasury operations and financial statements. *ther areas are also given emphasis ,y reviewing on a )uarterly ,asis. These include information strategy2 environmental and insurance matters. *ther areas are also given emphasis ,y reviewing on a )uarterly ,asis. These include information strategy2 environmental and insurance matters.

Socia" environment of Rea" 'state Sector of Bang"adesh

/ajor case studies ,ear the testimony of the Social Responsi,ility of the Real Estate Sector of Bangladesh.

Case Study One: Concord Rea" 'state:,

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

3" "oncord intensely feels for the #ational values and $eritage of our country. .nd they have shown it in various ways. -or examples2 "oncord is the first Real Estate who has ta!en the first initiative to construct3 The National Monument at Savar, Zia International Airport, Heritage Park and many more. "oncord has ,uilt many government infrastructures with a very surprisingly reasona,le charge. Because they thin! it is something worthwhile to help government with a high3 )uality construction. -or examples2 The Prime Minister's Secretariat , The 24 store !anata "ank Hea# $%%ice "uil#ing, The a#ministrative &uil#ing o% "angla#esh T'T "oar#, The hea# o%%ices o% Titas (as Transmission ' )istri&ution *o+ ,t#+ ,"angla#esh $il, (as ' Mineral *orporation, "angla#esh Steel an# -ngineering *orporation+

.s one of the largest Real Estate companies of Bangladesh2 "oncord has ta!en some initiatives for the development of the medical facilitations. -or example they have constructed The 2.. &e# hospital in Nara angan/ without any accusation. "oncord Real Estate "o. has constructed various infrastructures to enhance the tourism facilities and to create demand or entertain people of Bangladesh. .s examples2 The 00IP 1esi#ence at Hare 1oa#, The 00IP 1est House at Testa "arrage *omple2, 3antas 4ing#om, 5ater 4ing#om, 3o 6s ,ake an# Zia theme parks etc+ -or diminishing the social demand concord has ta!en many initiatives. Such as2 for ma!ing life easy concord has ,uilt on of the most attractive and useful shopping complex O"oncord .rcadiaP at /irpur road2 #ovo Theater at Bijoy Shoroni and so on. "oncord Real Estate "o. has made several constructions for the ,eautification of the ha!a "ity. 8i!e as2 at 6GG6 they have ,eautified

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

3# various roads B-or example /ain! /ia to Bijoy ShoroniE with small sculpture and other stuffs. Still they have plan for esta,lishing many other ,eautification scheme for ha!a "ity.

"oncord does not use environment polluting ,ric! !iln products as they ,elieve in social responsi,ility and the conservation of healthy environment. They consider the )uality of their construction is their ,est asset2 they ,uild to the highest international standards. In fact2 they ,uild to safety standards ,eyond the re)uirements of the ,uilding codes of Bangladesh. "oncord is the only real estate company to ,uild using their own independently )uality tested tiles2 construction ,loc!s and concrete to ensure that their )uality is never compromised. To create awareness among the youngster and amongst the people of Bangladesh "oncord arrange concerts. Especially at Savar2 -antasy Kingdom and mostly they donate that money among the needy people. They arrange concert for2 creating awareness a,out $I'2 rugs2 and +omen 4ower etc.

"oncord adores the cultural values of our country. They organi1e programs2 fair and concert to cele,rate many especial occasions which are deeply related with our culture and tradition. -or example2 they arrange "oncert for cele,rating #o,o,orsho2 "ele,rating International /other7s ay2 "ele,rating Boshonto etc.
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http://www.concordgroup.net/corporate_social.html (Access ime! 23r" #$l%&200'(

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

3' Case Study T&o: Orienta" Rea" 'state In the emerging shape of the capital city of ha!aFs present ur,an

outloo! Q life style2 *RIE#T.8 Real Estate 8imited is the name of ,elief that has already mar!ed its success as one of the distinct Real Estate "ompany in the hori1on of Real Estate ,usiness in Bangladesh. *riental has done more than fifty projects in different locations. /oreover they are doing twenty projects in different locations. "orporate accounta,ilities of *riental Real Estate 8td.& 5. Employees Training2 promotion& *riental Real Estate 8td. provides

,etter training program for their employee. .lso *riental real estate provides different compensation for their employee. 6. %uality of services& *riental Real Estate provides high )uality for their services. Because they ,elieve that success is its pride and satisfaction is its pillar. It promises the essence of time and ,est )uality within the reach of the ur,an dwellers.

<. Ethical mar!eting& *riental Real Estate ltd. maintains ethical mar!eting. They attend RE$.B fair to provide their authentic information to the customers.

>. :overnment paying taxes& *riental Real estate ltd. Is pays taxes to government under *riental group. Social Responsi,ilities of *riental Real Estate Q 8td.&

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

3* 5. *riental Real Estate 8td. do not use environment polluting ,ric! !iln products as they ,elieve in social responsi,ility. 6. *riental Real Estate 8td. assists their customers to get the loan facility. 8oan is offered on the ,asis of client7s repayment capacity.

3) *riental Real Estate ltd. ,uilds to safety standards ,eyond the

re)uirements of the ,uilding codes of Bangladesh. C

Case Study Three: .avana Rea" 'state:, #avana Real Estate 8td. B#RE8E was formed in late 5CC6 under the "hairmanship of /r. Shafiul Islam Kamal to cater the ,oom in Real Estate evelopment in Bangladesh. #RE8 within a short span of time turned out as one of the most trusted company in this sector and has already ,een wor!ing in various num,ers of apartments2 commercial and land projects. The motto of #RE8 is not only to deliver apartment or land ahead of schedule ,ut also to maintain the highest3grade construction )uality that has gained trust and respect in customers. #avana group does some "SR activities for our society. Sometimes they provide free small plant seeds for the people. It7s helpful for our natural condition. #avana provides education facility for the street children. It7s a great thing for those people in terms of their social responsi,ilities. "orporate .ccounta,ility&3
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BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

4,

5. .ccounta,ility to employees& #avana :roup has signed a medical service agreement with the =nited $ospital 8imited for providing medical service to the staff of the #avana group. #avana group provides different !inds of training facilities for their employees. It helps the employee as per their wor!ing process. #avana has varieties of promotion opportunities for their employees. 6. .ccounta,ility to "onsumers& #avana Real Estate always provides high )uality good and service for their customers. It always promotes ethical mar!eting.
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htt+!//,,,)na/anasoft)com/in"e.)+h+0+a-e_i"12*3ie,/A$-04)+"f

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar

41

References

http&00www.,dtradeinfo.com0yellowpages0search.aspNsearchR"SR B.ccess Time& 6Hth ;uly76GGHE

http&00www.idlc.com0/onthlyBusinessrev B.ccess& 6@ ;uly6GGHE www.,usinesslin!.gov.u!0 ,dotg0action0layerNtopicIdR5GD@>GH>6H 3 6D! B.ccess& <5 ;uly6GGHE http&00www.,angladesh.com0real3estate0 B.ccess& 6 .ugust 6GGHE http&00myrealestate,d.,logspot.com0 B.ccess& 6 .ugust 6GGHE http&00www.,angladeshinfo.com0,usiness0estateG5.php B.ccess& 6 .ugust 6GGHE http&00www.,angladeshnews.com.,d06GGD0G<0650housing3sector3 saps3on3anti3graft3drive0 B.ccess& 6 .ugust 6GGHE .nnual Report of Eastern Real Estate and Shinepu!ur2 6GG@36GG6 4ersonal Interview with /r. ..K./. Re1aul Karim2 consultant2 RE$.B B@ .ugust2 6GGHE

BUS203_Real Estate Sector Samia/Polen/Rofiq/Sabbir/Iftekhar