Status of REHAB in Bangladesh

INTRODUCTION

Real Estate and Housing Association of Bangladesh (REHAB) is a state owned organization
which is conducted under the Ministry of Ministry of Housing and Public Works of
Bangladesh which was founded in 1991 with 11 members. The ever increasing of the country
people and economic growth of Bangladesh lead to increase the demand of Plot or Flat, so it
is also necessary to ensure the rights of the consumer or buyers of the Plot or Flat for
Bangladeshi people as well as foreigner also. Taking this responsibility REHAB encoded
some rules and regulations to ensure better services to its members with the help of United
Nation Building Codes, prescribed for Bangladesh. Now its total members are above 1200
with 260 developers companies. REHAB plays a vital role to make better in housing business
sectors and generates revenue for Bangladesh Government from registration fees, tax, vat and
Utility Service Charges.
The real estate sector is one of the fastest growing and thrusting sectors in Bangladesh.
Infrastructural development is highly important for a country to rise as a developed nation
and to ensure housing facilities for the citizens of the country. But in spite of compared to the
importance of this sector, there have been studies which are far below the required number on
the real estate sector and its accessibility to financing. This study is exploratory in nature and
may work as the basis of knowing the present scenario and indicating any future study.
1.1 OBJECTIVE OF THE STUDY
1.1.1) BROAD OBJECTIVE
The broad objective of this report is to do a widespread analysis of the status of REHAB in
Bangladesh for the reason of gathering information regarding real estate sector and to help
decision makers to come in this sector.
1.1.2) SPECIFIC OBJECTIVES
The specific objectives of this study are:
To know about REHAB broadly and precisely

 To measure the contribution of Real Estate Sector in national GDP of Bangladesh

To assess the causes behind the price hike of Real Estate
To know the Code of Conduct of REHAB with different parties
1.2 METHODOLOGY OF THE STUDY
The study is conducted following a process from data collecting to final analysis.
1.2.1 SOURCES OF DATA
All the material data for the study is collected from secondary sources like as from REHAB
website and other online publications.
1.2.2 DATA ANALYSIS
All the relevant data are analyzed with the help of MS Excel and MS Word.
1.3 CRITICALITIES AND LIMITATIONS
While conducting the study, our team faced some problems those are listed below.
Accurate data of GDP contribution is very much complicated to calculate because all
records are not provided to REHAB by real estate sectors institutions and REHAB
also do not disclose all income contribution clearly.
Unavailability of required data sources, specially the Government sources, was
another major obstacle in completing the study
Even in the Bangladesh Bureau of Statistics (BBS), data are not at all organized.
Though undocumented economic activity holds a large portion of the national
economy of Bangladesh, the usage of undocumented money in the Real Estate sector
cannot be measured precisely because no authentic information is available anywhere.

REHAB

2.1 REHAB AT A GLANCE

Name of the Association
Year of Establishment
No. of Member in 1991
No. of Member in 2010
No of Apt. units Delivered by the Developer in
last 20 years
No. of Apt. units Delivered by REHAB Members
per year
No. of Plot units Delivered by the Developer per
year
Approx. turnover per year
Revenue to Govt
Direct EmploymentArchitects
Graduate Engineer
Diploma Engineer
Management Official
Direct Labour skilled & unskilled
Contribution to GDP

Real Estate & Housing

Association of Bangladesh
1991
11
1081
100,000
9,000-10,000 Units
5,000-6,000 Units
BDT 28,000 m
BDT 2,000 m
Real Estate Sector
500 nos
3,000 nos
10000 nos
20,000 nos
2.5 m
12-15

2.2 FORMATION OF REHAB

With the number of companies increasing gradually, various problems concerning the
housing sector cropped up requiring early solution. At this stage it was necessary to form a
trade association of the Real Estate developers to protect the overall interests of the sector. To
strengthen the role of real estate sector Real Estate & Housing Association of Bangladesh
(REHAB) was formed with only 11 members in 1991. The objective of REHAB was to
promote formal private sector Real Estate Development in Bangladesh.
2.3

REHAB ACTIVITIES

REHAB organizes its major annual event, REHAB Housing Fair, each year in Bangladesh
for the members, financial institution, building material providers and above all, the potential
clients. Due to the political turmoil in the country, REHAB was unable to hold the Housing

Fair planned for November 06. However, the grand, yearly event will now be held in the third
week of February, 2007. Besides, REHAB had already organized a few Housing Fair in New
York and London during the past years. These fairs proved to be vary rewarding for the
REHAB members from the business point of view, and these also served to enhance its
reputation. With the requesting support and encouragement

from its members and other

stake holders, REHAB will continue to uphold the sprite with its was conceived that of
providing shelters with modern amenities for the citizens of Bangladesh and render social
service to our society.
2.4

THE SPRITE OF REHAB

In third world countries, urbanization is an outcome of population growth and inadequate

development. Migration of the people from rural areas towards the cities also increases when
their means of livelihood gradually diminishes. Bangladesh is one of the least developed
countries of the world, where the basic needs of the people are not addressed effectively. At
the present, with the constitution of our country being extensively and exhaustively discussed
by people at all levels, the crucial issues like shelter for all, which is one of the basic rights of
all citizens, still remain on the back bummers. To all intent and purposes it is not possible for
the movement alone to ensure shelter for its people. Therefore, the role of the private sector
developers becomes critical. In Bangladesh, Real Estate business stared its journey in Dhaka
sometime in the late seventies. During this sector, with Eastern Housing and property
development leading the way. In 1988 there were 42 such firms in Dhaka and now, in 2007,
there are 289 companies dispensing similar service.
2.5

PRESENT SCENARIO

REHAB is the only trade organization of Real Estate Developers with a current membership
of 260 Developers. All major institutionalized Developers are members of this organization.
REHAB is also the "A Class" member of the Federation of Bangladesh Chambers of
Commerce and Industry (FBCCI). In the recent years REHAB has played a very significant
role in nation building through Real Estate Development by its members. The members of
REHAB contribute a large amount of revenue to the Government exchequer in terms of
Registration Cost, Income Tax and Utility Service Charges.
REHAB organizes its most colorful annual event REHAB Housing Fair each year in
Bangladesh for the member developers, financial institutions and building material providers.

It has already successfully completed some Housing Fairs; most recent fair was held in
Chittagong in 2014. To foster the growth of Real Estate Sector REHAB plans to organize
Housing Fair abroad for the Bangladeshi individuals who are living different countries of the
World to buy apartment, land and commercial spaces in their home country. Accordingly, the
first - ever Housing Fair abroad organized by REHAB on 2014 at New York, USA.
2.6

REHAB SECRETARIARIAT

REHAB has its own office premises (2100 sft.) in the NationalPlaza situated in a beautiful
location just opposite to Pan Pacific Sonargaon Hotel and adjacent to Sundarban Hotel.
REHAB has a strong Secretariat with high professional and technical staffs and outsourcers
consultants. Some of the services of REHAB secretariat are outlined below:

Contribute and participate in the planning and policy making of Housing Sector.

Development public awareness for highlighting the objective of REHAB is to protect

the interest of the customer and development as well.

To provide support to the Foreign Investment to invest directly in the Real Estate
Sector of Bangladesh and in its linkage industries on a joint venture basis.
Press and publication

Customer service

Social welfare

Conduct seminar and training

Organize Housing Fairs in Bangladesh and abroad.

2.7

QUALIFICATION

Save as provided herein in the regulation contained in form B third Schedule of The Act and
Trade Organizations Ordinance 1961 under Section-8 all such amendments incorporated vide
Govt. order No. MC/ABA-6/CA-4/20021421 dt. 31.7.2002, shall apply to the Association.
2.8

MEMBERSHIP

The members of the Association shall consists of persons, firms, companies and corporate
bodies engaged in Real Estate Development and Housing Industry who apply to the
Association for Membership in the manner herein provided and whose applications are
accepted by the Executive Committee.

 The Association shall have only one class of members called General Members. The
Annual Subscription of the members shall be Taka.25, 000 The Admission Fee to Association for members shall be Taka.25, 000i Every candidate for Membership shall sign and deliver to the General Secretary, duly
proposed by a member and seconded by another application in the prescribed Form
together with the Admission Fee and the Annual Subscription.
The decision of the Executive Committee for or against any candidate for admission
as a member of the Association shall be final. The Committee may admit or decline to
admit a candidate as they may in their discretion think fit. The Executive Committee
shall not be bound to give any reason for refusing admission of any candidate.
A candidate thus elected by the Executive Committee, shall forthwith become a
member of the Association, subject to all rules and regulations of the Association.
Members representing firms or other body, whether corporate or not, shall be
severally. As well as jointly liable for payment of all subscriptions and dues in respect
of their membership.
A list of members shall be kept in a register which shall be set forth the names and
addresses of the members for the time being and in which all changes in membership
from time to time taking place be recorded. The Register shall also show the trade and
industry

in which they are engaged together with the names of the authorized

representatives.

FINDINGS OF THE STUDY

3.1 MEMBERSHIP TREND OF REHAB

REHAB was established in 1991 with only 11 members but gradually the number of
members increases. From the available data assessed, the membership trend is shown here
graphically.

1400

Number of Members

1200
1000
800
600

Members' Increase

400
200
0
1991

2008

2010

2014

Year

Graph 01: Membership Trends of REHAB

From the graph it is revealed that in the initial years number of members were increased
slowly up to 2008 then the number of members started to increase rapidly. The cause behind
such rapid increase is that the popularity and necessity of real estate sector increases, the real
estate related organizations understand the advantages to be a REHAB member.
3.2 CONTRIBUTION OF REAL ESTATE SECTOR TO NATIONAL GDP
Here we show the contribution of the real estate sector of Bangladesh to the countrys GDP
where the contribution of the REHAB members are considered. Gross Domestic Product
(GDP) is a measure of all goods and services produced in the economy. The Real Estate
sector contributes directly and significantly to overall production activity and thus to GDP.
The two line items in GDP directly associated with the Real Estate sector are residential fixed
investment and housing service. Residential fixed investment consists of value-put-in-place
of new housing units, brokers commissions on the sale of existing residential properties, and
expenditures related to improving and additions to existing units. Housing service is a
component of personal consumption expenditures, purchased by residents in Bangladesh,
usually in the form of rent for tenants or as rental equivalence for homeowners. It is
important to note that this approach measures the value to the homeowner of the daily
consumption of the flow-of-services provided by a home (a place to fix meals, relax,
entertain, garden, etc.) and not the value of an investment in a long-lived asset (home). Rental

equivalence or implicit rent is the amount of rent that homeowners could charge if their
homes were leased to others instead of living in the homes themselves. Because implicit rent
is not a market transaction, such as the payment to a landlord from a renter, it is estimated by
measuring the change in market rents for rental housing units with similar characteristics and
in similar locations as the homeowner units.
The contribution by REHAB members to national GDP is given below for some period.
Year
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10

GDP Contribution %
8.63
8.48
8.3
8.12
7.87
7.64
7.49
7.34
7.2

The trend of this contribution is graphically shown below.

Real Estate Contribution to GDP in Percentage

9
8.5
8
7.5
7
6.5
6
2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

Graph 02: Real Estate Contribution to GDP

From the above figure, it is seen that share of Real Estate, Renting and Business service
sector that means share of all REHAB members has a downward trend. But that does not
show the real picture. To better understand the growth scenario, we have to analyze the
growth of real estate sectors contribution. The growth trend is here.
Year

2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10

GDP
Contribut
ion %
8.63
8.48
8.3
8.12
7.87
7.64
7.49
7.34
7.2

Contribution (in
Crore Taka)

Growth %

19,440
20,106
20,913
21,678
22,404
23,147
24,097
24,970
25,981

--3.43
4.01
3.66
3.35
3.32
4.11
3.62
4.05

It is seen from the table that contribution of real estate sector is increasing every year because
the growth is positive as in the last column of the table.
3.3 CAUSES BEHIND PRICE HIKE AS REVEALED BY REHAB
Apartment price hike is an important issue from the perspective of both the clients and the
developer companies. The price hike of apartment mainly depends on 2 parameters.
1. Increase in the price of the land, and
2. Increase in the construction cost of the apartment.
Average Price of Apartments (Taka/Sq. feet)

% increase

Year

Between 2000
to 2010

Area
2000

2005

2010

Dhanmondi

2400

3300

14000

483%

Gulshan

2450

4500

14000

471%

Banani

2200

3100

12500

468%

Baridhara

2150

4000

20000

830%

In the first decade of 21st century, the price per square feet is increased to 400% to 800%
particularly in Baridhara, Dhanmondi Gulshan, and Banani area Compared to the price
increase of the earlier decade. Now, the 2 main reasons for which the price of the apartment
is increasing will be discussed below.
A. Increase in the price of the land:
In the first decade of 21st century, the percentage increase in the price of per katha land is
very high about 500% to 1000%, particularly in Baridhara, Dhanmondi Gulshan, and Banani
area Compared to the price increase of the earlier decade. There is no control of the govt.
over the price increase of land so this increased land price have a direct impact on apartment
price and potential buyers.
Price of land (Taka/Katha)

% increase

Year
Between 2000 to 2010

Area
2000

2010

Dhanmondi

5000000

40000000

700%

Gulshan

2200000

25000000

1036%

Banani

2000000

15000000

650%

Mahakhali

1800000

12000000

567%

B. Increase in the construction cost of the apartment:

Construction cost includes the use of some of the major materials such as bricks, fine sand,
60 grade rod and cement. A sudden increase in these materials increases the price of the
apartment at the end.
Price hike trend of bricks:
Item

Bricks

Town

Unit

2005-06(Tk)

2011-12(Tk)

Dhaka

1000

3192

7116

Narayanganj

1000

3206

6100

Chittagong

1000

3308

6600

Rajshahi

1000

2615

5500

The price of bricks increased about more than double. This price hike of bricks directly
increases the apartment price.

10

Price hike trend of fine sand:

Item

Fine sand

Town

Unit

2005-06(Tk)

2011-12(Tk)

Dhaka

1 Bag

724

1300

Narayanganj

1 Bag

729

1260

Chittagong

1 Bag

708

1300

Rajshahi

1 Bag

739

1231

The price of sand increased by 90 100% in the recent years. In 2005 it was cheap. This
recent hike in sands price increases the construction cost.
Price hike trend of 60 grade rod:
Item

60 grade rod

Town

Unit

2005-06(Tk)

2011-12(Tk)

Dhaka

50 kg

1875

3157

Narayanganj

50 kg

1898

3100

Chittagong

50 kg

1876

2900

Rajshahi

50 kg

1831

2850

The price of rod is increased by between 50-60 %. It is a major element of the construction
work so increase in its price will result in the price hike of the apartments.
Price hike trend of cement:
Item

Cement

Town

Unit

2005-06(Tk)

2011-12(Tk)

Dhaka

1 Bag

284

430

Narayanganj

1 Bag

288

370

Chittagong

1 Bag

280

424

Rajshahi

1 Bag

274

465

The price of cement increased by 30 60% in the recent years. In 2005 it was cheap. This
hike in cement price increases the construction cost.

11

The Real Estate developer companies are criticized of charging a lot of money for an
apartment but after above discussion we knew that due to rise in the price of related materials
the apartment price hike takes place. REHAB is also bound to do so for the same reasons.
3.4 CODE OF CONDUCT OF REHAB WITH DIFFERENT PARTIES
Bye- Laws on Code of Business Conduct
REHAB is devoted to the growth of real estate sector in Bangladesh. To conduct their
business with a high degree of professionalism the executive committee of 2008-2009 period
approved and adopted the bye-laws on code of business conduct. Any violation of code of
business conduct by any member of REHAB shall be considered to be prejudicial and
detrimental to the interest of the Real Estate Sector and the association and the Executive
Committee may issue a show cause to the offending member. Such notice shall specify the
date, place and time of hearing so as to allow the member an opportunity to defend himself
before the Executive committee. If the Executive Committee finds enough grounds to
conclude that the said member has violated the Code of Business Conduct as outlined in this
Bye-Laws, then the Executive Committee may impose an appropriate financial penalty on the
said member or may even suspend or cancel the membership.
A. Code of Business Conduct with Customers:

The members of REHAB are not allowed to run construction work or sell an
apartment without obtaining the plan and project approval from the appropriate
authority of the Government like RAJUK, CDA, KDA, RDA etc.

The members of REHAB may issue letter of allotment in accordance to their own
format or in accordance with the standard format of such agreement as prepared by
REHAB. The deed of agreement must clearly specify the size, price of the amount for
reserve fund for the apartment owners association. It must also state whether the
customer or the REHAB member will pay for gains tax, registration fees, stamp duties
e.g. defaults in payment of installments may result in penalty charge by the REHAB
members.

The gross area mentioned in the deed of agreement shall mean the area of the
apartment plus the proportionate share of the common area meaning stair landing
area, reception area, committee room area, drivers waiting room, mosque etc.

12

If the promised area is more or less than 2% the party shall be liable to compensation.
If the customer does not accept the agreement then REHAB will refund the money
within 3 months upon a written request.

If the customer is a defaulter the members of REHAB may cancel the allotment of
land upon a 30 days notice of cancellation.

The members will deliver the allotted apartment as per the schedule date. In case of
delay the customers are entitled to rental compensation that is agreed and mentioned
in the deed. This payment may delay due to natural disaster.

REHAB members are not responsible for the non-payment of govt. utility bills by the
customers.

If the price of construction materials increase by 10% or more REHAB members may
charge a price increase for the apartment. REHAB members may use material of
equivalent standard in case of scarcity of materials inscribed in the agreement. The
customers can supply their own finishing materials during construction.

The REHAB members might not complete the work due to natural disaster but it must
be informed in writing. REHAB members need not to compensate. If the project is
abandoned for any other reason they are entitled to compensation.

REHAB members can avoid cash flow problems by mortgaging the apartment to a
government approved bank but they should clear all loans before giving the plot.

REHAB members will help the customers in availing loan from any bank.

The members will send notice to customers for the registration of the said property.

After handing over the apartment to the customer, REHAB member shall give the
customer free services for a maximum period of one year for defect liability of
construction work

B. Code of Business Conduct with Land Owners:

In case of outright purchase of land for development of an apartment project, REHAB

members shall make sure that the land is dispute free, unencumbered and the seller
has clear title to the land. The REHAB member shall make payment to the landowner.

In case of joint venture development, the REHAB member will ensure that a deed of
agreement is made with the Land Owner clearly specifying the percentage share of
the Land Owner and the percentage share of the REHAB member in the completed
building. A schematic diagram should be attached to the deed of agreement for the
sake of clarity. The deed of agreement with the Land Owner must also state the cash

13

amount (if any) payable to the Land Owner must be specified along with the schedule
time of payment, who will pay the utility connection charges.

REHAB member shall use construction materials as specified in the deed of

agreement with the Land owner. REHAB members may use material of equivalent
standard in case of scarcity of materials.

The gross area mentioned in the deed of agreement shall mean the area of the
apartment plus the proportionate share of the common area meaning stair landing
area, reception area, committee room area, drivers waiting room, mosque etc.
In case the Land Owner is handed over less than his due percentage of the total built
up area, the deed of agreement between the REHAB member/ Land Owner will
specify at what rate per sq. ft. the Land Owner will receive compensation.

REHAB member shall not mortgage the apartments or change or substitute the
apartment originally allotted to the Land Owner without the written consent of the
Land Owner.

REHAB member shall deliver the apartments allotted to the Land Owner as per the
schedule date of handover mentioned in the deed of agreement. In case of delay, the
Land Owner will be entitled to rental compensation.

REHAB member shall not be held responsible for the failure of government agencies
to provide the necessary utility services e.g. gas, water sewerage, electricity etc.

The Land Owner can to supply his own finishing materials to the REHAB member
during the construction of the apartment only if the REHAB members permit it.

After handing over the apartment to the Land Owner, REHAB member shall give the
Land Owner free services for a maximum period of one year for defect liability of
construction work.

In the event that the REHAB member is forced to abandon a project due to
circumstances beyond his control e.g. act of GOD, political turmoil then the two
parties shall first try to resolve the dispute through mediation as outlined in section E
of this Code of Business Conduct.

C. Code of Business Conduct with other REHAB members:

REHAB members will conduct their business with honesty and integrity and refrain
from any practice that cause harm to fellow REHAB members.

REHAB members shall not make derogatory statements about any other fellow
REHAB member.

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REHAB member shall always try to extend cooperation to a fellow REHAB member
and try to enhance the unity of the REHAB members.

REHAB members shall not try to lure away another REHAB members employee by
offering higher benefits.

In case of dispute between REHAB members which cannot be solved bilaterally, the
matter must first be referred to the mediation cell of REHAB as stipulated in Section
E.

REHAB member shall not make any negotiation with Land owner in connection with
any particular plot of land for the purpose of development where any other REHAB
member has already entered into an agreement for the same land.

D. Code of Business Conduct with the Public:

REHAB members shall deal with the public honestly, diligently and cordially.

REHAB members shall ensure that wherever they are carrying out their project, a
friendly and cordial relationship is maintained with the neighbors and the local
community.

REHAB members will be socially responsible citizens and ensure that their project
premises is kept clean and free from any health hazards and that there is no
environmental damage to the surrounding area.

REHAB member will follow the government guidelines and will not disturb
neighbors of their project site with noise pollution or undisposed garbage.

Care and candor must be exercised so that any party interested in receiving or
otherwise benefiting from the REHAB members offer will have a clear
understanding of the offer.

E. Settlement of dispute through mediation:

REHAB will do all that is possible to ensure a fair and amicable settlement through
mediation of any dispute relating to a REHAB member. The mediation cell shall be formed
comprising of 5 members out of which 2 members shall be from REHAB Executive
Committee, two members shall be from the general REHAB membership and one member
shall be a prominent citizen of the country. The disputing parties shall equally share the cost
of mediation and REHAB will try to ensure that the dispute is resolved in the quickest
possible time.

15

CONCLUSION

As with the increasing population and economy housing demand also increases sharply in our
country specially in Dhaka city. With the increasing demand housing business is also
increasing as a consequence the work of REHAB is expanding. REHAB continuously
arranges different events in several times in a year. But in recent times it face problem of
arranging Housing Problem. This indicates a major problem in near future because of
political condition. After formation of REHAB real estate business expand rapidly in our
country because people believe this association but if the problem but to politics continued
the real estate business will face recession and people will face a great problem of housing
specially in urban area. The real estate sector nowadays contribute a huge to the national
GDP of our country this is possible because of the proper supervision and control of REHAB
on real estate sectors business institutions. Because of overall increase in inflation price of
relevant materials needed by real estate businesses also increases for that housing cost also
increase but REHAB always tries to keep housing expenditure within a range for people for
that so it make real estate business to keep price in pace of inflation but not more. The
association sets different codes for the sectors business organizations so that general public
can easily avail all relevant information regarding housing and can expense money to get an
actual property without any ownership or other problems. So REHAB is the association
which regulates the real estate sector of our country to fill both demand and quality of general
people and real estate sectors business organizations.

REFERENCES

REHAB, At a Glance. Available from: <http://www.rehab-bd.org/rehab_at_a_glance.php>.

[02 November 2014]
REHAB, Profile. Available from: < http://www.rehab-bd.org/rehab_profile.php>. [02
November 2014]
REHAB, Code of conduct. Available from: <http://www.rehab-bd.org/code_of_conductREHAB.pdf> [02 November 2014]
A comprehensive study on the real estate sector of Bangladesh, REHAB thesis. Available
from:s<http://www.rehabbd.org/rehab_new_Comprehensive_Study_On_The_Real_Estate_Se
ctor_Of_Bangladesh.pdf> [02 November 2014]

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Statistical Yearbook of Bangladesh 2012, Published on August 2013, Bangladesh bureau of

statistics. Available from: <http://www.bbs.gov.bd/WebTestApplication/userfiles/Image/Subj
ectMatterDataIndex/YB-2012.pdf > [02 November 2014]

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