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Masters of Business Administration: Principles of Marketing
Real Estate Market in Bangladesh
Dhaka: 18 september 2011
Master of Science Thesis Title Real Estate Market In Bangladesh: Development and Current Practice Author Md. Tarikul Islam Department Department of Real Estate and Construction Management Division of Building and Real Estate Economics The Royal Institute of Technology, Sweden Master Thesis No 428 Supervisor Professor Hans Lind Keywords Bangladesh, Real Estate Market, Porter Model, Value Chain, Decision Making, Regulation, Segregation Abstract Bangladesh is a small but one of the most densely populated countries in the world with quite a small and poor economy. Majority of its population fall in the low income bracket and therefore basic needs fulfillment is the main concern for them. One of the five basic needs is shelter and state is supposed to ensure that. But state cant do that due to resources scarcity and this is the point in which most experts stick on for the development of the real estate sector in Bangladesh. The sector is dominated by the private investors, though the government is present in the market through some housing projects. These private investors are widely treated as profit concerns, but they are working hard to meet the rising housing demand in the country too. Though the pace of growth in real estate business in Bangladesh is a bit slow now, it has been experiencing an increasing pace throughout the whole period since its birth in late 70s. In late 90s the sector got the highest pace since its origin and lots of real estate developers came to the market to invest. Current low pace can be explained by the irregular political practice in the country as there is a non political interim government in power right now. Its widely argued that the situation will change once the political government comes back in power. Initially though real estate business was limited to the Dhaka city, now the sector expands its reach to the outskirts of Dhaka city, surrounding districts of Dhaka district, and other divisional cities. But Dhaka is still paying for its indiscipline and random constructions in the city. Traffic system and the environmental condition of Dhaka city are miserable in most cases. Therefore experts and mass people are pretty much worried about the growing constructions activities in the country. Concerns go for different issues like decrease in agricultural lands because of rapid urbanization, developers care only profits and involved in random constructions, environmental degradation, and lack of II
affordability of poor people to access housing etc. More and more arguments come in favor of setting a framework by government for the industry with regulations if necessary. People dont want other areas of the country to be like Dhaka city due to unplanned urbanization. Though currently more than 320 companies are operating in the real estate market, top 15 companies hold 95% of the total market share according to the opinions of experts and available quantitative information. So one might argue that the market is rather concentrated. But there is no entry barrier to the market and the market is open to anyone to invest. Its not an oligopoly too. Above all there is a large market segment remaining yet to penetrate followed by ample opportunities for the potential investors to invest in the market. By Real estate market the author means constructing and selling new houses or flats, developing lands and selling them as plots, and buying and selling old houses or lands. Currently real estate firms are acting mainly in the divisional cities and some neighboring districts of Dhaka. In fact the sector has been developed thinking Dhaka as the target market. But in course of time when lots of investors came into the market, firms had to expand the market for their own survival at least. At the same time high population density increased the demand of housing while the land was decreasing. These two factors together helped real estate sector a lot to expand. Land scarcity and the lack of social security are the two major reasons people think lie behind the development of the real estate sector in Bangladesh. There are other important factors too for example price of houses, rapid growth in population, rapid urbanization, and complexities in buying lands to build houses etc. Though there are varied opinions for what the sector has been developed in Bangladesh, almost all the respondents and real estate experts think that the development of the real estate sector was obvious in Bangladesh mainly to meet the rising demands for houses across the country. Public sectors failure to ensure the housing for the total population enhanced the development. Majority of the population is not satisfied about the current practice of the sector. They think companies are mainly profits concern and dont care about the quality of their services.
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Real Estate market in Bangladesh: Development and Current Practice
1.1. Background and relevance of the research: The Context Bangladesh is a small country with a very low per capita income. Here people still struggle for the basic needs fulfillment. When still lots of people struggle to have a minimum shelter, real estate products that is assumed to be very expensive, is kind of extra luxury to the majority of the mass population. However, real estate sector has been developed and it is growing with a good pace along with a gradual increase of its contribution in total GDP. Investments in this sector have been increasing over time and competition has becoming sharper because of the increased number of firms as well as stakeholders awareness. Government is trying to build a proper framework for this business sector. People who are in the high income brackets are the main customers of these real estate products. But day by day involvements of the middle class in the society is increasing. In this circumstance, government is trying to involve low income people too by suggesting the real estate companies to plan for housing for these people. As the involvement increases question of quality and satisfaction also comes to the scenario. The background of this research is those factors which lead the development of the real estate business in Bangladesh along with an analysis of the market. At the same time how people think about the quality of the real estate products are also considered. 1.2. Problem definition, aim, and the added value of the research This research is basically a descriptive one with some characteristics of normative research focusing on the development of the real estate sector in Bangladesh. At the same time current business condition has been covered too along with a presentation of customers viewpoints on real estate business in Bangladesh i.e. what customers think about different aspects like quality of real estate products. Therefore the research is aimed at discussing the factors that contributed to the development of the real estate business in Bangladesh and how the market is performing now. It also focuses on various affects of the real estate business in Bangladesh along with an economic explanation of real estate sector in Bangladesh. Major values of the research come from its contribution in the knowledge spillovers system especially in the area of real estate business in Bangladesh. However the research works finally produce a report which is an academic requirement. At the same time the research also generates building blocks for further studies on the subject matter, as it can be a good starting point from where policy makers can start to go ahead. Real estate market is linked with the whole economy. It can affect the economy to some extent while economic ups & downs also affect it. At the same time government plays an important role by different policies and regulations. So its a large area to cover. But in this research the author 1 does not cover all. Therefore the scope of the research is the following.
Included are: Economic conditions of Bangladeshi people Decision making process in real estate buying Effects of the real estate business in Bangladesh Mainly residential real estate is covered as commercial real estate is a not that common in Bangladesh
2.1. History of Bangladesh Bangladesh is a small but one of the most densely populated countries in the world. It accommodates 140 millions (BBS, 2007) people in about 147570 square kilometers (BBS, 2007) areas. The country is surrounded by India from three sides and in the south part of the country it has the ocean Bay of Bengal. In this part the country has the worlds largest beach named Coxs Bazaar Beach. Bangladesh also shares a small border with Myanmar in the southeast corner of the country.
Figure-2.1: Bangladesh in the Indian Sub Continent
Bangladesh was colonized by British when it was a part of India. But in 1947 when British had to leave Indian sub continent, Bangladesh become integrated with Pakistan as East Pakistan. But this integration did not continue much. In 1971 through an independence war against West Pakistan, East Pakistan becomes Bangladesh as a new independent country. 2.2. Geography of Bangladesh In Bangladesh there are six divisions under which there are 64 districts. Under these 64 districts there are 481 upazila (police stations/sub districts) and 4498 unions. There are six city corporations in six divisions of the country. Dhaka as the capital city of Bangladesh is the most important city while Chittagong is the main industrial area where Bangladesh has all the major seaports.
Figure-2.2: Districts Of Bangladesh
In fact six divisional cities got the status of the city corporations and based on these cities urbanizations is growing up in Bangladesh. People like to move to the city areas from the rural areas due to the more facilities in daily life in the city areas. These facilities include availability of better transportations, access to gas & electricity, access to better accommodations, job opportunities etc.
Figure-2.3: Divisional Cities & City Corporations These divisional cities are important because they represent the urbanization in Bangladesh. They also represent the level of development in a particular division. Normally all the administrative offices related to the division are situated in the city. 2.3. Demographical data of Bangladesh Demography of Bangladesh mainly includes the population demography which has lots of different attributes. Some of those attributes are analyzed here. Total population: Bangladesh is one of the most densely populated countries in the world and the rate of population growth could not be controlled until the last couples of years. A recent estimate shows (July 2007) that the total population in the country is around 150 million while the total amount was 124.3 million in the latest census in 2001. The figure for total population was 136.7
& 138.6 million in 2004 & 2005 respectively. The annual growth rate was 1.42% (BBS, 2007) in both 2004 and 2005. Age: The average life expectancy in Bangladesh is 65. 01 year (BBS 2007) while the expectancy is 64.5 & 65.7 for male & female respectively. Among the total population 32.9% falls in 0-14 years age group, 63.6% falls in 14-64 years age group, and 3.5% falls in the 65 years and over age group. The median age is 22.2 years for both male and female.
80+ 75 - 79 70 - 74 65 - 69 60 - 64 55 - 59 50 - 54 45 - 49 40 - 44 35 - 39 30 - 34 25 - 29 20 - 24 15 - 19 10 - 14 05 - 09 00 - 04 14 12 10 8 6 4 2 0 2 4 6 8 10 12 14
Figure-2.4: Population at different ages (Source: BBS 2006) Male/Female ratio: An estimate in 2006 shows that the ratio varies in different times. o At birth the ratio is 1.06 o Under age 15: The ratio is 1.06 o 15-64 years: The ratio is 1.04 o Above 65 years: The ratio is 1.16
In 2004 & 2005 this ratio was 105.2 & 105.0 respectively while the expectation for 2006-20011 is 106.0 (BBS 2007). Language: Though there are some dialects in different regions, about 98% of the total population speak in Bangla in Bangladesh. English is widely spoken too specially in the urban areas. Students learn English in schools as their second language. In the corporate area most of the communications are in English now a days. Dialects are found in Sylhet, Chittagong, Hill Tracts, Noakhali, Rangpur, and some parts of Barisal. Religion: Bangladesh is a Muslim majority country and almost 89.58% of the total populations are Muslims. Hindu is the second majority having 9.34% of the total populations. In addition to these three other major groups are Buddhists (0.62%), Christians
(0.31%), and Animists (0.15%). In spite of this variety, people live coherently in the society and thats why UN declared Bangladesh a Moderate Muslim Democratic Country. Table-2.1: Religion Statistics in Bangladesh (in %) Religion Muslim Hindu Buddhists Christian Others Census 81 86.65 12.13 0.62 0.31 0.29 Census 91 88.31 10.52 0.58 0.33 0.26 Census 01 89.58 9.34 0.62 0.31 0.15
Sources: Population Statistics, BBS, 2006 Ethnicity: Though there are some ethnic groups, Bengali is the dominating ethnic group. 98% of the total population is Bengali. Other ethnic groups are Chakma, Marma, Garos, Biharis, Oraons and Mundas. Education: In case of education in fact Bangladesh is still in the development stage. Latest data shows that the literacy rate was 51.6% & 47.5% in 2004 & 2001 respectively (BBS 2007). Though male has the higher literacy rate (57.2% in 2004) than female (45.8% in 2004), in the last decade female populations made huge improvements. It might be due to the fact that government now has a lot of assistance programs to encourage female education in the country. Currently there are 78 public & private universities including engineering universities and 42 medical colleges also both private & public in Bangladesh.
2.4. Economy of Bangladesh Bangladesh is a small country with quite a small and poor economy. Since its independence the country has been administered by lots of undisciplined administrations that could not ensure the maximum utilization of the available resources let alone finding the new sources of resources. As a result the country is still a developing country. Bangladesh is basically an agrarian country. Majority of the population is involved with agriculture either directly or indirectly. But the contribution of agriculture in total GDP has been decreasing in the last few years and currently service is the dominating sector in the Bangladesh economy.
Figure-2.5: Sector Wise Contributions to GDP (Source: BBS, 2006) But from the labor involvement perspective still agriculture sector has the dominance in the economy. This sector has the highest level of direct labor involvement and one of the major findings is that though the contribution of agriculture in GDP is decreasing, labor involvement is not decreasing. Rather more and more labor force is being involved in the agriculture sector. It might happen due to the high level of unemployment in the country. Service sector involves the second highest amount of labors. The labor involvement in construction sector is increasing year to year. It well explains that the sector is a growing sector. Table-2.2: Sector wise employment (in million)1 Sectors 1995-96 1999-00 19.8 6.1 3.7 2.5 5.1 1.1 2002-03 22.9 6.7 4.3 3.0 2.7 1.5
Agriculture, forestry, and fisheries 17.0 Trade, hotel & restaurant 6.0 Manufacturing 3.5 Transport, storage, and 2.2 communication Community and personal services 4.8 Construction 1.0 Source: Statistics Bangladesh, BBS, 2006
Bangladesh imports more than it exports and therefore it always have a negative trade balance over the years. It also has huge trade gaps with different countries including neighboring India and Pakistan. Item Years 200001 -2011 200102 -1768 200203 -2215 200304 -2319 200405 -3297 200506 -2879
Trade Balance ($m)

1
Table shows the employment by major industries thats is not necessarily the total labor force.
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Still the export amount is increasing over the years. In 2006, countrys total export was 10.5 billion US$ which is 21.6% higher than previous year. The main item of export is readymade garments, which contributes 75.0% of the total export earnings. EU, USA and Canada are the major markets for the exporting products. Earlier Bangladesh could export jute & jute made products and tea to some countries in a large quantity. But gradually garments sector were getting more and more attention and for the last couple of years this sector dominates the scenario. Another most important aspect of Bangladesh economy is remittance. Lots of Bangladeshi people working abroad send money to their belongings in the country that with the multiplier affects help the total economy in greater details. At the same time total amount of remittances is also increasing day by day for which now a day its commonly believed that remittance is the backbone of the Bangladesh economy. Table-2.3: Remittance flow to Bangladesh Year 2002-03 2003-04 2004-05 2005-06 Number of Employed Persons 241425 272633 251699 286381 Remittance (Million USD) 3061.97 337.97 3848.29 4801.88
Source: BBS, 2006 In addition to these, there are other sectors like fishing, forestry, mining, constructions, electricity & gas, foreign direct investments, and real estate with different contribution ratios to the total economy. Real estate sector is one of the newest sectors in Bangladesh. Until the last couples of years this sector was not that attractive. But currently the sector has a great investment potential. It happened mainly due to the growing pace of urbanization and the scarcity of lands in the urban areas. One study on labor force in 2002-03 fiscal year shows that about 1.94 millions of the total 46.3 millions2 labor force (labor force survey 2003) are directly involved with the real estate sector in Bangladesh. In 2005-06 fiscal year the sectoral share of real estate in the total GDP was 8.04% at current price while the share for 2004-05 fiscal year was 8.36% (BBS 2006). The following table represents an overall picture of the total economy of Bangladesh.
46.3 millions are the available total labor force while the total employed labor force is 44.3 millions.
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Table-2.4: Major economic data of Bangladesh Item 2003-04 2004-05 200506 4157.28 6.63 29995 447
GDP (in Billion TK) GDP Growth Rate (%) Per capita GDP (in TK) Per Capita GDP (in US$) Sectoral Share of GDP Agriculture (%) Industry (%) Service (%) Real estate (%) Inflation (CPI, National) Source: BBS, 2006
3329.73 6.27 24628 418
3707.07 5.96 27061 441
21.04 26.60 52.36
20.14 27.22 52.63 8.36 6.48%
19.61 27.91 52.48 8.04 7.17%
5.83%
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3.0. Introduction to the Real Estate Business in Bangladesh Real estate business in Bangladesh started in the late 70s. But the business got the main attention in late 90s and in the mean time it experienced a boom too. In the following sections real estate business in Bangladesh (3.1) and the real estate market (3.2) in Bangladesh are described. Then after that real estate business in the outskirts of Dhaka city is described in section 3.3 followed by the chapter summary in section 3.4. 3.1. Real Estate Business in Bangladesh: A brief Overview Real estate business in Bangladesh is limited to some designated city areas till now. These cities are the six divisional cities which also got the status of city corporations. They represent the level of urbanization in Bangladesh too. In reality not all the cities have the same level of real estate business activities. Even some cities do not have it at all. So one might argue that the real estate sector in Bangladesh has a great potential in coming days considering the fact that there is still a large market segment remaining to penetrate. Now question might arise why there are no real estate activities in the rural areas. The answer is that in rural areas people build their houses by own efforts and sometimes with the help of construction workers especially in case of buildings. There are no architects to design houses in rural areas because they are not really needed there. Most of the houses in the rural areas are not buildings. Even when there are buildings they dont employ any architects or construction firms to build the houses. Rather they hire construction workers and discuss their preferences with them and finally reach a decision how to build the house. The same pattern is present in the small towns in different regions of the country.
Figure-3.1: Divisional Cities & City Corporations
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The major part of the preference of rural people comes from their observation of the houses in neighborhood and in the city areas. When they visit the city areas they get new ideas about housing and try to implement those ideas in their own house building activities. Another question might arise about the differences among the cities based on real estate firming activities-Why there are differences among cities? In fact development of the real estate business activities in a particular area depends on a lots of things and the whole process is much more complex in a country like Bangladesh where The level of education is variable across the country People have the differing views on the use of their lands Affordability and the housing requirements are different Government dont yet have a housing policy formally Financial sector is less oriented to the real estate business development Preferences for housing is different than that in other countries Difference in between rich and poor is significant and middle class diminishes
Like all other developing countries, in Bangladesh land is one of the crucial factors for a lot of other products which means that there is always a trade off in case of land use. These trade offs sometimes limit the use of lands toward the maximum possible welfare for both the landowners and the country in a macro level. In Bangladesh land can be used in any of the followings. As input of agriculture: Bangladesh is an agrarian country and majority of the total population is involved with agriculture either directly or indirectly. In most cases agriculture is almost the sole source of incomes for this large part of the population. As factor of production: For business firms especially for the Small and Medium Enterprises (SME), land is one of the most important factors. In fact costs of the lands are sometimes the largest or the second largest costs for these firms. As input in Business Model: This is especially relevant for the real estate business firms. Land is the most basic factor on which a real estate firms business model is developed. So it carries an extra weight when one decides on the business model.
As a result, when a farmer decides about the use of his/her lands, he/she has to think a lot because of the potential losses arising from the opportunity costs. But the reality is little bit more difficult in Bangladesh. Here some people have lands as the only source of income. So when they decide upon the use of lands they cant think it much really because this is the only option they have.
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Educational level is highly variable across the country. So there is a significant difference in thinking on housing among the people who live in urban areas and the people who live in rural areas. Therefore there is a direct link in between educational level and the preferences for housings. In urban areas the rate of educated people is higher than that of rural areas. Therefore these urban people are familiar with the newness in livelihood arising from the technological development in course of times. It affects their thinking of housing arrangements. But in rural areas the situation is reverse and the perception is different. Some people like to have house with large surroundings while some people think they dont need large surroundings as it hinders the maximum gains from the land use. In Bangladesh people like to have a house which might not be a building, but it should have the surrounding with lots of open spaces, trees, ponds, and tube wells. It requires large amount of lands as well as large amount of monetary investments which put the questions on the affordability. Therefore there is a gap in between the preference and the affordability leading the people to adaptation. Moreover, now a days one cant even think of this kind of houses in some city areas like Dhaka due to the scarcity of lands. Shelter is one of the five fundamental rights of Bangladeshis. But this is only in constitution and in real life the practice of this part of constitution is absent in most cases. It happens due to the unavailability of resources from the part of government followed by lots of slums in Bangladesh especially in city areas. Until recently Bangladesh government could not focus on the facts that There are frauds in the real estate business in Bangladesh The gap in between rich and poor is widening gradually and therefore middle class and poor people are facing difficulties to afford housing
Its surprising but true. However the good thing is that Government have started to think about the issues and they are focusing on a formal policy about the real estate business in Bangladesh. At the first step few weeks back Bangladesh government suggested the real estate firms to think about the housing for middle class and poor people considering their affordability. Bangladesh Bank, the central bank of Bangladesh, also declared a decrease in the interest rate on housing loans. It also said that gradually it will make the housing finance related issues more flexible. Availability of relevant financial services as well as access to those financial services by the mass people is one of the most important issues in case of real estate business development in Bangladesh. Banks, except a couple of banks, dont provide housing loans and those which provide housing loans have strict conditions. These banks charge higher interest
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rates for housing loans and they sometimes want the loan backed by something i.e. property as mortgage, which is difficult for a good number of people. Banks try to explain the situation saying that the scope of real estate activities is pretty narrow in Bangladesh and they always carry the potential credit risks coming from the borrowers. In addition to that there are other factors which we might say common factors around the world that can affect the real estate activities in a particular region. These factors includes but not limited to the followings. Population density of the region. Rate of urbanization. Land availability and land use pattern. Land price. Income of the people. Cultural phenomenon.
3.2. Real Estate Markets in Bangladesh It was mentioned earlier that the real estate sector in Bangladesh is yet to penetrate all the city areas. So when one talks about the real estate markets in Bangladesh its a good start to talk about the real estates markets that are already in presence or expected to be in presence in those city areas. The following sections describe the real estate activities in six divisional cities in Bangladesh. 3.2.1 Barisal: The newest city of Bangladesh Barisal is the newest division of Bangladesh and the main town of the division, Barisal, got the status of City Corporation. The division has six districts under its supervision and the city corporation has the lowest amount of population among all divisional cities.
Figure-3.2: Location of Barisal in Bangladesh map In this city and its surroundings, real estate activities have not yet been started. It might happen due to the different reasons. For example,
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The population density is not high here. The level of urbanization is very low here. One still can feel the rhythm of rural life in Barisal. The scarcity of lands to build house in the city and its surrounding areas is still low. Thats why people are not yet thinking of efficient use of the lands they do have. They rather build house in a way to put as much luxury as they can. But as the city might turn into the main gathering centre for the people coming from different districts in near future, there is a chance that lands will be scarce and real estate business will be started here too. Though the land price is growing day by day, its still not beyond ones means.
One of the major characteristics of the Barisal city is that there are lots of students staying in this city. It has the best and most famous university college of the southern region of Bangladesh named B. M. College. Almost thirty thousands students study in this college. In addition to that the city has six other colleges and one medical college along with lots of other educational institutions like Textile College, polytechnic institutions etc. A large number of students come from outside of the Barisal city and the educational institutions cant provide accommodation to all students. Therefore students stay in mess or rented apartments. But the condition of messes are not really good and its pretty difficult to rent apartments as the landlords dont like to rent their houses to students. So there is always a need of new apartments for students and it could be one of the best opportunities for the real estate business firms to penetrate in near future. 3.2.2. Rajshahi: The education city of Bangladesh Rajshahi division includes sixteen districts of the northern region of Bangladesh. In addition to the Rajshahi city corporation, Rangpur and Bogra are another two mentionable towns from this division. These two towns get attraction due to the bulky development activities in these towns in different times. Rangpur came to focus for the huge infrastructure development by that time government in 80s to 90s and Bogra had lots of development activities in the last couples of years. Both cities have lots of educational institutions including medical colleges. The total population of Rajshahi city is 447031 (BBS, 2006) that are pretty much low compared to other densely populated cities in the country. But this city is pretty much important for the country because of the following two roles. Rajshahi is the education city of Bangladesh. It has a large number of educational institutions including universities, medical colleges, engineering universities, polytechnic institutions etc.
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The division produces a substantial part of the total agricultural products in Bangladesh.
Figure-3.3: Rajshahi in the map of Bangladesh Rangpur and Bogra towns have the more or less same characteristics. Both areas have their major orientation to the agricultural products though in Bogra industrialization has got a new pace in recent years. No one of the above mentioned regions has real estate activities. It happens due to the following regions. The population density is not that high and therefore land is not yet scarce. Most of the lands are being used as the input of agriculture. So people live in self made houses normally. The growth of urbanization is very low in these areas. Majority of the population are poor in these regions and they dont afford the expensive houses. As a result real estate business firms are not pretty much interested in those areas.
But there are great potential for the real estate business in these areas especially in Rajshahi city. This could be a great market for the firms which can offer houses for middle and low income people. As mentioned earlier, Rajshahi is the education city of Bangladesh. So there are lots of students coming from all over the country stay here for educational and job purposes. They require houses, but they dont afford expensive housing. So if any company can offer housing for medium income and low income people, it might gain from the market substantially. Students especially can be a very good target market and it should be profitable business venture. Students are pretty large in numbers and they come each year. Another fact to consider is the time period. A company even can think relatively long term. A student in a university stays minimum five years in the city for completing graduation only. If he goes for master or PhD then it takes much longer time.
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3.2.3. Sylhet: The London of Bangladesh Sylhet is another new division in Bangladesh. The city, Sylhet, has the second lowest population among all the cities. But still the city has the great potential for the real estate business. The major factor behind this is the income level of people. People are pretty much rich in this area and can be the potential target market even for the luxury real estate products. The city has couple of universities and a medical college and therefore a medium amount of students study here. The only public university here in Sylhet along with the medical college is the main attraction to the students. But these institutions admit a small amount of students per year. So students here cant be a logical target market because it might not provide the expected return on the investments for the firms. A small scale real estate business activities have been started in this area already and the area is getting greater attentions from the investors day by day. But there are some problems to do business in the Sylhet region mainly due to the cultural differences.
Figure-3.4: Sylhet in the map of Bangladesh This region has some different cultures in addition to the mainstream Bangladeshi culture. They have their own dialect to speak and sometimes a lot of people cant speak in Bengali clearly. The level of education is also low in this region, but the situation is improving. Another significant characteristic is that at least one member of almost every family from the greater Sylhet region live in foreign countries (mainly England). Thats why Sylhet is sometimes called the London of Bangladesh. These migrated people send money to their families and families spend quite a large amount of money on housing. The people have some kind of ego that they are from Sylhet and they seem to be united throughout the world. Its widely believed that they dont like people from other regions. Therefore its very difficult to do business in Sylhet region if one is not
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from Sylhet region. One has to be able to speak in Sylheti, the dialect in Sylhet. Most of the developers and builders who are doing real estate business here are from Sylhet which limits the scope for others to enter into this area. At the same time some migrated Bangladeshis from London invest in the real estate sector in this market and they are pretty much favored by the local people. So this market has narrow offers for the firms not owned by the people of Sylhet or not originated from Sylhet. 3.2.4. Khulna: Industrial Zone of Bangladesh Khulna is the second most important industrial zone of Bangladesh and it is situated in the south west part of the country. The city has the third largest amount of population among the cities and there are lots of industrial units in this area. People from Khulna sometimes claim that they have a kind of multicultural environment in the city as people from different parts of the country came and settled here. But they still have their own cultures. The city has large amounts of educational institutions including couples of universities, medical colleges, engineering universities, polytechnic college etc. But except the public university, engineering university, and the medical college no other educational institute attracts students those are not from Khulna region. So there are not that much students looking for housing here. At the same time universities offer large scale accommodations for the students. So though there are lots of educational institutes in the city, students cant be a logical target market.
Figure-3.5: Khulna in the map of Bangladesh The level of education in this area is medium and in an average majority of the people are of medium income. But still there are some real estate activities are found in this area. The reasons are in point. Due to the high population density the market is attractive to the real estate firms.
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Though the city is expanding in almost all directions, the level of land scarcity is increasing gradually. People have money to spend on luxury housings also. The growth of urbanization is pretty high which motivated the real estate firms. Most importantly universities in this area have some special courses on real state developments and architecture. It means that real estate firms have some readily available local resources to start their venture. It works as an added advantage for the firms, as these local graduates know the market well than others.
Its worthy to mention here that all the real estate firms that function here are of small and medium size. They normally operate outside of the city corporation. Therefore now-a-days experts put the question on whether or not these small and medium firms will be able to meet the increasing housing demand in Khulna city arising from rapid urbanizations. 3.2.5. Chittagong: The largest industrial zone of Bangladesh Chittagong is the main industrial city of Bangladesh and its in the second position among cities based on total population. In Chittagong people speak in a different dialect and they have their own culture. The level of education was not much good until the last couple of years. Though the city has the second largest population, real estate business is not yet seen that much in this region. It might happen as because the level of land scarcity is low till now.
Figure-3.6: Chittagong in the map of Bangladesh At the same time the city expands in all directions it can which allows people to live in the outskirts of the city while doing jobs or business in the city centre. In fact as the number of industries increase city also expands. One of the mentionable characteristics of the population in Chittagong is that it is comprised of lots of labor class people who come to the city for
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jobs from different other regions of Bangladesh. These jobs are mostly low paid jobs like jobs in the garments sector. As a result people always look for the cheaper houses and they go out of the city area to live. But its also true that there is a significant amount of population in the city who has above average annual income and affords luxury houses. These people are the basic target here in Chittagong market for the real estate firms and therefore there are couples of companies are working here in the real estate sector. Initially there were some small and medium size firms, but now almost all the big firms that mainly operates in Dhaka region, focus on Chittagong market. Some have already started housing projects here. In Chittagong division, Bangladesh has two beaches among which one is Coxs Bazaar, the largest beach in the world. Coxs Bazaar is pretty much attractive for the real estate companies especially for the commercial real estate developers because of the large scale tourism activities in this area around the year. In peak season the demand for residence becomes so high that one has to book hotel or rest house well before one plan to go there. At that time price is also very high i.e. almost double or triple of that in off peak season. Some large real estate firms operate in this area mainly to build hotels, restaurants, and rest houses. There are also demand for residential houses as some rich people of the country like to have houses here in case they want to visit the city & beach sometimes. Recent data shows that some five stars and four stars hotels have already been built in Coxs bazaar and these are near to the beach. But the demand for residence is still increasing which means that this market still have large potential. In reality the market now looks for the quality services and therefore it provides ample opportunities to them who can build the houses or restaurants or hotels with quality through maintaining some pre-defined standards. Another unique characteristic of this division is that one significant part of the division is hilly. Normally tribal people live in these hilly areas and they build their own houses though the houses are not of quality at all. In fact one might argue that they live in hills not in houses. Therefore chances for the real estate companies in this region are mainly oriented to the high income people. Thats what happening here in reality too. Some small scale real estate firming is seen in the area named Khulshi, an area that is pretty close to the city centre. Its said that elites of the city has moved to this area in course of time. One of the major features of this area is that it has beautiful landscapes and proper arrangement of security, a primary concern for the people in this area.
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In future it is hoped that real estate firms attention will be moved from Dhaka to Chittagong to meet the rising demand of housing in this area. It should be mentioned here that the demand rises normally because of the high pace of industrialization in this area. 3.2.6. Dhaka: The Capital of Bangladesh Dhaka city, the capital city of Bangladesh from Dhaka division, is the main area of real estate business in Bangladesh till now. The city is expanding day by day in every direction it can and this expansion generates the opportunities for the real estate business sector. In Dhaka the population density is pretty high and its still increasing. People from rural areas and the outskirts of Dhaka city come to the city everyday which makes an enormous traffic in the city per day. All the major government offices and diplomatic offices are also in Dhaka that made the country centrally administered followed by an increase in the daily traffic to the city. 3.2.6.1. Brief History of Dhaka The city which was born during the Moghul Empire and grown with the British rule, has experienced a lots of ups and downs of history. But after the expiry of British rule in 1947, when Bangladesh has been separated from Pakistan in 1971, Dhaka city got the most attentions as the powerhouse of the country. Rapid development and growth was found in every sector. But gradually the city was lacking proper management and from the late 90s of 20th Century its growth and latter development is marked with sheer lack of proper and far-reaching planning.
Figure-3.7: Dhaka in the map of Bangladesh 3.2.6.2. Demographics of Dhaka With 816 square kilometres areas Dhaka is the largest and the most populous city of Bangladesh. This is also the capital city of Bangladesh. Currently the city has around 6.5 million populations (BBS, 2006) and the
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amount is increasing day by day. The rate of growth of population is 4.2% per year, which is one of the highest amounts among the Asian cities. In reality the population is much more which amounts to 11.9 millions when all the localities in the wider metropolitan areas are included. The city has the largest numbers of educational institutions among any city of Bangladesh and it also has the highest literacy rate in the country which amounts to 62.3% (BBS, 2006). There are several reasons why populations are increasing in the city among which some are Dhaka provides the best possible living standard in Bangladesh. Also this is the most urbanized area of Bangladesh. So people move to this city to have the better life standards. Almost all the government offices and diplomatic missions are in Dhaka for which lots of people move to the city either to work or to meet their demand. Enormous amounts of universities, engineering universities, university colleges, colleges, schools, vocational training centres, medical colleges are situated in Dhaka city and its outskirts. Therefore huge amounts of students and officials including teachers move to the city. In Bangladesh Dhaka provides the largest amount of jobs and almost all the head offices of different companies are in Dhaka. This also attracts people to move to Dhaka. Unavailability of jobs in the rural areas motivates people to move to Dhaka. In brief one can explain the high density of population in Dhaka city by the availability of jobs and educational institutions because these two are widely claimed reasons of migrations to Dhaka. This huge population in Dhaka city is the triggering point for the real estate developers. They could combine the two major factors which are land scarcity and the bulky growth rate of population in Dhaka city. This combination has become the blessing for most of them at least at the initial time of real estate business in Bangladesh. Table 3.1 shows the population scenario in different divisional cities of Bangladesh. 3.2.6.3. Real Estate Business in Dhaka While there are so many real estate developers in the market, there are also very few of them who have maintained the quality, safety and customer preferences. It is customary in the country that the first day quality and impression is lost after a while when people start getting a bit of familiarity. This happens due mainly to lack of professionalism.
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Sometimes the consumers here are in a fix to choose a particular brand out of many. A good number of real estate companies are working under one umbrella association named 'Real Estate and Housing Association of Bangladesh' (REHAB). It has been formed in 1991 with eleven (11) initial members in order to strengthen the role of real estate sector in economy. Currently 321 real estate developers are affiliated with this association. Table-3.1: Total population in different city corporations City Dhaka Chittagong Khulna Rajshahi Sylhet Barisal 2001 5333571 2023489 770498 388811 263197 192810 2006 6479751 2438403 830454 447031 394119 205166
Source: BBS (Bangladesh Bureau of Statistics), 2006 Real estate business has been started in Bangladesh at late 70s. At that time only five (05) developers were engaged in this business. In 1988 the number was increased to 42. Then after that the sector experiences a boom and in 2004 the total number of real estate developers has been increased to 250. Right now in 2008, the total number of REHAB affiliated developers is 321 while there are lot of other developers who operate individually. However, its widely argued that almost 90% of the total business is dominated by top 10-15 companies. Therefore market is pretty much concentrated. There are lots of discussions about the booming period of the real estate business in Dhaka-why did it happen? Suddenly the demand of real estate products has been increasing too much that lots of developers came to the market to invest. Discussions with the experts, customers, and other relevant persons produce the following list. Land Scarcity: Due to the large number of migrants and industrial activities, total amount of available land have been decreasing over time. At a certain point in time Dhaka become too crowded and some people argued that this city is not eligible to live in. In reality Dhaka city has not been properly managed when it started to expand. In a modern city there should be at least 15% spaces allotted to the transportation system. Dhaka does not have that amount and the transportation system suffers. There are terrific traffic jams in the city along with the pollution. 25
However random constructions in the city have not been stopped. Though there were regulations about the construction activities, they have not been followed properly. As a result efficiency of land use could not be gained followed by the scarcity of lands. Lands scarcity helped booming of the real estate sectors because people wanted to secure the living place anyhow. Hazards in purchasing land: Bureaucratic process of land purchasing motivated people not to buy lands. Therefore they started to depend on the developers who manage everything including land acquisition. Hazards in construction of building: To construct a house one has to deal with all the stakeholders including engineers, financing institutions, architects, construction workers, brick companies, cement companies, municipal corporations, tax authority etc. This brings lots of complexities to ones life and to get rid of that one does not do by oneself. Rather one like to depend upon the developers. Security: This is one of the most important reasons for which people used to depend on the developers rather than constructing by themselves. Well this is a socio cultural phenomenon. One could not be sure that one can construct the building even though one has land and all other relevant stuffs to build the house. One had to satisfy some other parties to get the final green signal. These parties includes some corrupted officials from different administrative sections like tax department, municipal office, local loafers etc. Local loafers could be so dangerous sometimes that people had to think about the total loss. To get rid of this insecurity people started to depend on the developers. Developers have power and capacity to manage all these parties and the risk becomes low. Above all in the post construction periods developers help in arranging the better security system in the buildings. Public Sector Failure: Though according to Bangladesh constitution and United Nations resolution shelter is the fundamental right of any citizen of the country. But due to the resources scarcity Bangladesh government could not meet the growing demand of houses let alone houses for the people who lack affordability. So alternatives came out from the private sectors and there is now a formal real estate sector in the country. Almost all the firms are private in this sector and they are trying to meet the growing demand of housings. But not necessarily they try to meet the demand of houses for the people who lack affordability.
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Price: Prices of land and apartments were increasing rapidly day by day. So people wanted to ensure their living place as soon as possible which puts a pressure in the supply side. Decrease in bank interest rate: Decrease in the bank interest rate has an inverse relationship with the real estate activities. So when rate was decreasing demand for the houses were increasing. Decreasing bank interest rate is pretty much helpful for the people who have the access to the financing system of the country. Increased population: Dhaka as one of the major suppliers of jobs and educational services among others attracted lots of people from the rural areas and the migration rate was very high. Increased population puts a pressure on the demand side and developers increased the supply. New investors also took this chance to get into the market. Rent variation: To meet the growing demand for houses developers developed lots of houses because rent in apartments is comparatively higher than the rent of privately constructed flats. It worked as a motivating factor. Complimentary services: garbage disposal, central services, roof top facilities, developers. It reduces the liked it much. Complimentary service facilities such as satellite TV connection, apartments lift and so on are well managed by the complexity of the daily life and people
3.2.6.4. Products of real estate firms in Dhaka In Dhaka real estate firms operate in both fields-residential and commercial. But the main attention goes to the residential real estate. Within these two broad categories there are variety of products too. For example, residential real estate products range from Duplex Home, Triplex Home, Penthouse, Luxury Home, Furnished Apartment, Unfurnished Apartment, to Condominium and Vacation-Resort etc. On the other hand commercial real estate products include Industrial Shed, Agro Farm House, Warehouse / Godown, Commercial Space, Industrial space, Office Building, Office Suite, Furnished Office, Commercial Showroom, Exquisite Office, Industrial Park, Factory, Lofts, Shopping centres etc.
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3.2.6.5. Market Segmentations The market of real estate business is highly segmented. This segmentation is mainly based on location, price of the land, size of the apartments, and the amenity. Following is a general way of segmentation. Segmentation-01: This includes Baridhara, Gulshan, Banani, DOHS, and Uttara. Gulshan, Banani, and Baridhara are three most expensive zones of Dhaka city. Majority of the diplomatic offices are situated in these three zones especially in Gulshan. In Uttara and DOHS both expensive and inexpensive houses are available. Middle class people also afford housing there. Some industrial units are also found in these areas. Segmentation-02: Dhanmondi is in segmentation two. This is a big area and it becomes famous as a residential area since the time first president of Bangladesh after independence has been living here. There are lots of universities and colleges mostly private in this area. The average income level of people is pretty high in this area. But now-a-days this area is loosing some of its reputation as a gorgeous residential area because of the introduction of some industrial activities in this area. At the same time lots of medium income people could access the housing in this area because of the introduction of large scale real estate activities in this area. This is something high income people treat as degradation of the area. So some high income people moved to Gulshan or Banani from Dhanmondi. One of the special features of this area is Dhanmondi Lake which is pretty long and covers almost all sections of Dhanmondi. Therefore there are some amazing & very expensive housing projects around the lake where houses have lake view. Segmentation-03: This segment includes Segunbagicha, Shantinagar, Kakrail, Malibagh, and Kalabagan regions. All of these regions are semi residential and semi industrial. But regions like Segunbagicha and Kakrail are famous for government offices including secretariats. However generally both high and medium income people can afford housing in these areas. Segmentation-04: This segment is bit away of the CBD (central business districts). It includes all the sections of Mirpur. This area mainly for low and medium income people. But the scarcity of land moves high income people too in this segment for housing. Lots of industrial activities are found in this area among which garments industries are mentionable. In fact majority of the garments industries in Dhaka city are situated in different sections of Mirpur.
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Figure-3.8: Dhaka City Map Showing Different Market Segments (Source: Banglapedia)
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Segmentation-05: It includes the old Town of Dhaka City. Well there are not much real estate activities in the original old town. But when one includes the expanded old town area then there are lots of real estate activities are found now a days. Mostly medium income people are moving to these areas. Once again land scarcity pushes the high income families too to buy houses in these areas. Segmentation-06: Motijheel, Dilkusha, Fakirapool DIT Extension Road, RK Mission Road, Shahidbagh, Kawran Bazar, Pantha Path etc. comprise the segment six. This segment is the main target market for the developers who develop commercial real estate products like office buildings. But due to the land scarcity, the scope of new construction activities is pretty much narrow in these areas. 3.3. Real Estate Business in the Outskirts of Dhaka City As mentioned earlier that the land scarcity is pretty intense in Dhaka city and the city is expanding in all directions it can. As a result the volume of metro area is also increasing in courses of time. Therefore real estate developers get the chances to expand their markets in the outskirts of the city too. In south part, the city expands towards Keraniganj, the police station in the border of Dhaka and Munshiganj district. Currently there are lots of real estate developers working in this area with different projects targeting different income level people. One good thing for the developers is that people are now unhappy with the living conditions in Dhaka city due to traffic jam, crowds, pollution etc. and at the later stage of life especially when one retires from ones job, one wants to get out of this city to live a peaceful and smooth life with fresh air. So these areas gets an enormous amount of attention from those people who are going to retire in the next five to ten years. Therefore pension funds enter into the market as investment in real estate sector. The same pattern is visible in other directions of the city too. In north part of the city, it expands towards Savar, the police station in the border of Dhaka and Manikganj districts. In fact Savar region got the most attention in the last couples of years from the real estate developers. The reason is the dramatic development in the communication system in between Dhaka and Savar in the last couples of years. Savar is only few kilometres away from the last point of metro area in Dhaka and the transportation system got a revolutionary improvement after the construction of Dhaka-Aricha highway in 2000. This is one of the very few busiest highways in Bangladesh.
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Figure-3.9: Dhaka city and its outskirts (Source: Banglapedia) Right now real estate firms not only covers Savar but also the Manikganj district. Its pretty rational because people who are about to retire or who plan their future well before are buying houses or lands in these areas. In fact very few people could predict that after the Dhaka-Aricha highway construction, there would be so rapid urbanization in those areas followed by the rapid movement of people from Dhaka city to its outskirts.
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Another very important place under Savar police station is Ashulia. This is a place where people come to spend some of their free times when they become bored in Dhaka city. This is kind of recreational spot in the vicinity of Dhaka city for the people in Dhaka and its outskirts. There are two amusement parks here and the spot is very close to the Dhaka airport and another famous residential area Uttara. Also its very close to the Dhaka Export Processing Zone (DEPZ), the industrial park where lots of people works in different foreign companies. So the place holds a strategic importance for which it has been targeted by the real estate developers in the last couples of years. But as there were some conflicts on the issues like real estate firms are not considering the importance of recreation for the urban people, the construction activities have not been started until the last two years. Now there are lots of construction activities are found here and the areas close to the airport. These constructions includes a range of housing projects starting from houses for medium income people to houses for the highest income level people in the country. Close to Ashulia there is another place which is called Tongi under the district of Gazipur. But now its difficult to understand whether its a part of Dhaka city or a part of Gazipur district because of rapid urbanization in this area. There are lots of real estate activities in this area and real estate developers are already pretty much inside of the Gazipur district. The main reason of this large scale real estate activities is once again the improvement of the communication systems in between the districts. People now can come to Dhaka from Gazipur very easily for jobs and can go back after the job period. The same holds for the people in Dhaka who go to Gazipur for jobs. In the east part of the city all the areas got huge pace of urbanization in the last couples of years and lots of real estate firms are working there to meet the rising demand for houses in the areas like Demra, Jatrabari etc. The focus of the real estate firms is no more limited in these areas; rather they are already inside of the border districts like Narayanganj and Munshiganj. Though in Munshiganj they started newly, the town areas of Narayanganaj is almost like another region of Dhaka with lots of real estate activities. This happened once again due to the rapid urbanizations and developments of communication systems in between the districts. Narayanganj is only 30-40 minutes away by bus or 20-25 minutes away by train. Therefore jobholders come to Dhaka in the morning and get back home in the evening very easily.
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Figure-3.10: Neighbouring Districts of Dhaka Therefore in brief one can say that the real estate developers are creating new markets not only in the outskirts of the city but also in the neighbouring districts of Dhaka. Developers think that once the market in Dhaka region becomes saturated these markets will work for them. So its better to be present in those areas well before for the competitive and strategic advantages.
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4.0. Actors Analysis Due to the lengthy production period, the amount of actors and stakeholders of real estate business is pretty high compared to some other industries. In reality lots of different actors come from different industries banks and cement factories for examples. Section 4.1 talks about the major actors in the real estate industry in Bangladesh while in section 4.2 there is a summary for actors analysis. 4.1. Major Actors in the real estate industry in Bangladesh Though from the broader view one can argue that all the stakeholders can be treated as actors, in this paper the author limits the number only to those who can play crucial role in the real estate business in Bangladesh. REHAB: REHAB goes for Real Estate and Housing Association of Bangladesh. Its an association that has been introduced in 1991 with eleven (11) members only. Currently the total affiliated members of REHAB are 321. This association works as the spokesperson for the real estate sector in Bangladesh. It also arranges REHAB housing fairs both in Bangladesh and abroad like New York, Rome, and London etc. in a regular basis. In these fairs especially in the fairs in foreign countries real estate firms get lots of new orders which helps the countrys economy as foreign currencies are getting in. Individual Firms: They are involved directly through investments and the production of real estate products. The main aim of them is earning profits as much as possible. The majority of the firms are solely involved in real estate business. But there are some firms who are basically sister concern of some well known companies in Bangladesh. These large companies invest in the real estate business mainly to diversify their portfolio and to gain from the current business opportunities. The interesting thing is that these companies have some advantages over the small firms who are involved in real estate business only. Advantages come from Costs because of their higher efficiency level compared to the small firms and Economies of scale and scope issues
Therefore in bad time of real estate business when small firms were getting out of the scenario, large firms survive and they lead the market eventually. Again individual real estate firms are in the supply side and have large influence on demand/supply mechanism in the market to determine the
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price of the real estate products. But pricing depends on lots of other factors too like land price, land value, interest rate etc. Customers: Customers are on the remaining side i.e. demand side of the market. Customers preferences, affordability, income range, tastes etc. influence the demand and supply of the real estate products in the market. The main aim of the customers is to buy houses with the highest possible quality at a given budget. How customers can influence the market is somehow limited to the different aspects like available substitutes, emergency etc. Architects: These are the professionals who transfer lots of imaginations in reality for both developers and customers. They play a crucial role in designing and construction phases of houses. To get permission from the government authority to construct buildings, firms have to submit the design done by architects. The aim of architects is to secure job and earn money from designing and consultancy. The influence of architects is limited by their goodwill, experiences, success stories, educational background etc. More and more architects are being produced in the country and they enter in the job market. But the major problem is the work field for them is limited to the situations where the laws are strict. Therefore one might argue that architects are not the critical factor in case of real estate business in Bangladesh. Financial Intermediaries: This group includes mainly banks. But there are some other sources also. For example, pension funds, insurance companies, individual savers etc. Though almost all banks have some offers for the customers in case of real estate buying, there are some specialized banks for the financing of real estate products. But its claimed that the offers from other banks are not lucrative as they dont finance the big purchase and the offers from the specialized banks are pretty much expensive due to the high interest of the banks. Central bank also plays a crucial role here. It controls the ups and downs of interest rate in the market and therefore due to the negative price elasticity, demand for the real estate products goes down. One of the major concerns in finance is the accessibility of mass population in house financing services provided by the banks or other institutions. In Bangladesh this is really a big problem because Banks put some difficult conditions on lending such as property as mortgage Credit risk of borrowers is high because of the low income level
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Therefore these are some issues that central bank cant control and its a continuous drawback for the growth of the real estate business in Bangladesh. Government & Government Units: Government is the ultimate role player in any kind of business in Bangladesh through laws and regulations. Though government interference is considered as an unfair event in terms of free market economy concept, some markets require government hand for the proper functioning. Real estate business in Bangladesh is one like that. However, in this sector there is not yet any regulatory framework. Therefore builders do whatever they find good for them. It continued for the long time and now all are in a mess. Though government is willing to fix the problems, its pretty difficult and in some cases they are too late to react. For example, due to the random construction the traffic system of Dhaka city has been broken down since the last couples of years. Initially government was not careful. Now though they are caring for it, fixing the whole issue is beyond their means due to high level of costs. In addition to government there are various units of government who plays crucial role in the real estate business. Ministry of Housing: This is the ministry responsible for the proper housing policy design in order to ensure this fundamental right of people across the whole country. But housing for all is still a dream for the ministry. The ministry works with other ministries like Ministry of local governance to improve the housing conditions of the rural people. City corporations: They provide the permission for the construction activities Tax authority: They can influence though tax quota determination
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5.0. Analyzing the Decision Making Process How buyers make decision is very important for a firm especially in case of their marketing campaign design. As success of the real estate firms is influenced largely by how effectively they could communicate with the target market, marketing plays a huge role. Therefore firms has to analyze the buyers behavior and their process of buying in order to get proper insights to communicate with them as because real estate market is pretty varied in terms of preferences and tastes. In this sections author discusses the decision making process (5.1) and then apply that process to the Bangladesh scenario (5.2) to get a better insight. Summary of the analysis is followed by in section 5.3. 5.1. Decision Making Process Decision making process involves several steps. Initially there were some general steps in decision making process such as defining the problem, collecting data, evaluating alternatives based on data etc. But in course of time when new demand emerges with new complexity, the decision making process has been adjusted to different industries. This adjustment considers the varied and specific characteristics of a certain industry or business sector or a particular situation. There is also variation in how decision makers follow the steps in the decision making process. This is pretty much dependent on the need, time, ones education & culture, ones cognitive thinking, and ones knowledge about the steps etc. It might happen that decision makers follow the steps but they do not know that they are following because of the lack of knowledge about the steps. In this section, steps in decision making process are described with an adjustment to the Bangladesh real estate scenario. In general the following steps are included in the decision making process. Defining the problem: What is the real problem to solve? Here one identifies the goals and objectives one wants to achieve by solving the problem. Developing criteria: One has to be sure about the attributes one would like to see in the objective. These attributes are used to evaluate criteria. Therefore one has to develop the set of attributes in such a way so that they do represent their wish in the objectives. Available alternatives: In this step one determines what are the available alternatives one can consider to gain the desired goal. Evaluation of alternatives: In this step one compares the alternatives in light of the pre determined attributes. One can
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assign weights to attributes too in order to put more emphasis on a certain attribute over other.
Figure-5.1: Decision Making Process (Source: www.studygs.net) Selecting the final one: After evaluation one is now up with the so called scorecard of different alternatives when they are compared against the pre determined attributes. One therefore selects the best alternative to implement based on the scores in the scorecard. Implementation: In this step one implements the selected alternative to solve the problem and to gain the predefined objectives. Feedback & Control: This is the last stage in the process. Here one collects feedback to know the success or failure stories of the implemented solution. If needed one takes the action to adjust the solution to the situation.
It should be noted here that the process employs a system approach. It means that from any of the step one can go back to start again if one thinks that one is not in the proper track.
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5.2. Fitting theory into the reality (Bangladesh scenario) In Bangladesh buyers follow almost all the above mentioned steps when they make their purchase decisions. But as mentioned earlier may be they dont know that they are following these steps. At the same time there is an overlapping tendency in following the steps i.e. some steps are pretty much short in duration. 5.2.1. Problem Defining This is the very first stage where buyers try to define the problem. They search for the answer of different questions like what is to achieve, what do they want etc. The interesting thing is that in this stage buyers abstract thinking trying to get a shape in terms of goals and objectives. When I come back home after my office hours I normally travel by two storied bus. I then see lots of beautiful houses around me. Very suddenly I start dreaming of a house like those. My dreams break up when I think about money. But at a certain point when I get enough money to think about houses, I have to think a lot really. This is the very first time I could realize the gap in between my dreams and reality. .. A university teacher in Dhaka This is pretty much the scenario of the majority of Bangladesh. They have some abstract ideas that they house. But high investment requirements constrain them However once they get money to think seriously, its not all. the buyers in want to buy a to think ahead. an easy task at
Initially buyers think that they want to have an own house. Then they think about money and try to manage the monetary investments. So there is an information search here about how much money one needs to invest in order to have a house. But this information search is not that deep and buyers sometimes make some inquiries with the real estate firms or they try to learn from the neighbors about their experience of buying houses. Based on the information they gathered on monetary investment required they start trading off. Here they try to decide what kinds of housing they afford to buy or what kind of houses they should buy for themselves. They want to maximize their preference within the available budgets. There are three major ways one can meet the demand of houses. They are described bellow.
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Buy house: In this case one buys the whole house either from the real estate firms or from an existing owner who sells the house. In any case its very expensive and it does not provide much financing flexibility. Real estate firms provide some financing flexibilities like installment payments, but still its pretty expensive because of high monthly installments and huge down payments at the beginning. Normally high income people afford it. The final outcome is a ready house for the buyers. Buyers do not need to manage any construction activities and therefore no complexities of managing stakeholders like engineers, architects, developer, brick company, and cement company etc. Buy Plot: Some real estate firms develop lands and sell those developed lands to the buyers. Buyers modify if needed and build houses according to their own preferences. This is relatively cheap initially but one has to spend much later on when one starts constructing houses. In this case one has to manage all the stakeholders which in other cases managed by the real estate firms. Therefore this option produces lots of complexities a buyer has to manage to have the own house. The final outcome in this case is the land to construct houses rather than a ready house. Buyers have the flexibilities in financing as they can pay the money in installments and the down payment is relatively low. There is a variety here. One can buy lands from other parties like individual landowners rather than real estate firms to construct houses. It works as an alternative to the buyers when they dont get any real estate firms offering the product they would like to buy. Buy Apartment/Flat: Flat as widely said in Bangladesh rather than apartment is the most common solution to the buyers of real estate products due to different reasons. First buyers get the flexibilities in financing as they can pay the money by installments. Sometimes real estate firms help the buyers to get access to the financing services available. Again as money is paid according to the predefined schedules, one can plan long term which is helpful to accommodate any changes. Secondly here one gets ready house to live in. So one does not need to handle with the complexities with the stakeholders. Thirdly buyers have voice over the construction
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of houses. Buyers can specify what they want in their houses and real estate firms make the adjustments according to the preferences of buyers. But buyers might have to pay in case they want something extra or something that was not specified in the initial contract. Fourthly buying flat goes really fine with the income pattern of Bangladeshis. Here its pretty difficult for buyers to pay huge amount of money at once. Again its pretty difficult for them too to build houses after buying lands as it includes lots of issues like stakeholders management, access to financing etc. At the end of this step buyers come up with the decision about which one of the above three categories they shall buy. 5.2.2. Developing Alternatives In this stage, buyers look at the alternative ways that can fulfill their demand. Then they evaluate the alternatives to find out the best possible alternatives. Buyers use different criteria they think relevant either consciously or unconsciously to evaluate the alternatives. 5.2.3. Developing Criteria In this stage buyers have some information about the approximate costs they have to incur. They also know what they want to buy i.e. flat or plot or house. Now its time for them to think about the properties they want in their houses. Therefore they decide on what do they want in their houses, what properties they would like/dislike to have in their houses etc. Among these properties price, quality, space, location, transportation facilities around the residence, parking lot, surrounding environment & community, access to the educational institutions from the residence, and access to gas & electricity lines from the houses etc. are mentionable. For high income group as houses are the symbol of prestige and status, location matters most sometimes. At the end buyers come up with a list of attributes they do like and dislike. 5.2.4. Looking at Alternatives After developing criteria buyers look at the available alternatives. Alternatives mean who are the suppliers in the market offering the expected real estate products. There are some people who argue that considering the Bangladesh real estate market, one should not think about alternatives based on suppliers only. Alternatives can be thought of based on locations, based on prices, and based on any other properties buyers think important for their decision making.
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In this stage buyers make an extensive information search. Some of the most frequent information that buyers look for is in point What are the real costs they have to incur? What financial arrangements are there? Facilities related to location of the house. Gas and electricity concerns. Company reputation and their previous works if available. Plans for rooms and houses i.e. how many beds are there. Facilities inside the building like lift, electricity back up, parking etc.
Buyers collect the above mentioned information for all possible alternatives they can reach. They adjust a lot in this stage what is normally referred as the pre purchase switching. For example, one might like some of the attributes of a certain property but does not like the location, one switch to another available option. Buyers make lots of trade offs also in this stage. According to the experts most trade offs are seen in between space and costs. Emotion is one of the major factors to consider here. By culture Bangladeshis are emotional and emotion is pretty much attached to the real estate purchase decision too. Buyers treat this kind of buying as a long term issue and they normally perceive that they do it for their next generations. Therefore emotions can change any decision even at the very last moment. Another factors among others are income pattern and marital status or family structure. Most of the times when financing is a big issue, income pattern plays a vital role. Low income groups may have to sacrifice some of their preferences when they dont afford them to include. Marital status and the family structure also play role in the buying process. Young couple without kids may not be willing to spend more to have houses with more beds while couples with kids might look for that. Again families with kids put a large weight on the access to the educational institutions from the houses. 5.2.5. Evaluating Alternatives Buyers have all the relevant information by this time. Now they judge the alternatives against the criteria set they did develop earlier. Sometimes buyers put weights on the individual criteria to ensure the proper role of criteria in the decision making process without violating the preference of the buyers. In most cases assignment of weights is unconscious or informal in Bangladesh. Buyers just know and keep in mind what they want to have and how much they are ready to adjust in respect to different criteria.
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Experts mark this aspect normal in Bangladesh and they say its not that complicated. In their opinions buyers put most of their emphasis on costs and therefore they dont bother as long as they are convinced that quality/standard well represent the costs. So costs benefits analysis comes to the scenario. But in Bangladesh its not common except the commercial real estate products. In case of residential real estate products, buyers buy them not with the intention of making profits from them. Rather they buy them in order to live and emotion is pretty much attached to it. So they dont go for the cost benefit analysis normally. But buyers are careful to be sure that the property deserves the particular amount of investment considering the properties of it and the market condition. 5.2.6. Selecting the Alternative In this stage buyers pick up the one they think goes best with their intention. In the previous stage buyers get a scorecard that represent the worthiness of the possible alternatives to satisfy a particular need. Based on that scorecard buyers select the one with the wish to implement. As a general rule, buyers select the one that produce the highest score. But reality becomes different when buyers add the qualitative judgment with the quantitative scorecard. Like the previous steps emotion once again plays a vital role here. 5.2.7. Implementation Buyers are almost done in the process of buying house. They have already decided about category and alternative they do want. So they contact the supplier and make the contracts that explain among others total amount to pay, the payment schedules, attributes of the houses, delivery date, quality aspects etc. One has to be very much careful when one make contracts to be safe from any kind of frauds that might arise later on. It has been claimed that frauds in the Bangladesh market has been rising in the last couple of years. After the delivery of the houses one gets the chance to compare the promised features with the delivered features. Any discrepancies can be settled by proper communication with the real estate firms. One of the mentionable issue in this stage is the post purchase switching. If after the delivery one does not like the products, one might switch to the alternative. But this is very expensive. Thats why except some high income people no one makes post purchase switching. Post purchase
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switching might require one to sell the current houses which might incur loss or gains for the seller. Loss might come up because of costs of transactions, time, and other administrative activities. Gains are also possible as because the property values normally increase rather than decrease especially in the urban areas. 5.3 Summary of the analysis (Decision Making Process) Understanding buyers decision making process is important for any company especially to put the right product at the right place at the right time at right price. This all four right determines the success of the company. In case of Bangladesh real estate sector marketing carries an enormous importance at the initial stage of decision making when one search for information and try to compare different alternatives. If a company can provide the required information at this stage properly company can gain the attentions of the potential buyers. Purchase decision depends on the companys performance in the later stages. But in the later stages when buyers are about to make the decision they dont depend on information about the company only. Rather they like to see the real works, quality of the works, and companys total offer among other factors. So one has to be very careful about the contents of information one provides to the potential buyers or existing buyers at different stages. For example one should not provide the same information package to the buyer who is in the initial stage of decision making process and the buyer who is in the last step of decision making process. In the first step buyers are looking for the information about the offers, the companies who make the offers, and different attributes of the products etc. But in the last step buyers might look for the information about the price of per square feet or the cement the company is using or the length of balcony etc. So one has to understand the buying process to design the proper strategy at different stages in order to gain attentions of the target market followed by contracts with them. Experts argue that success depends on the micro level analysis of the different stages in the decision making process of the buyers because buyers are also varied substantially in different aspects.
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6.0. Market Analysis In the real estate market of Bangladesh there are huge variations in investments. Small & medium firms also participate in the sector along with the big firms. But big firms gain more as they have major advantages arising from economies of scale and scope. However, market is pretty much open to all the potential investors. The abnormal profits in the sector attracted a lot of investors in the last few years. But with the demand supply interactions as well as the increased costs arising from the growing prices of the related components have reduced the profits in recent years. At the same time government got more attention to the sector due to its large scale contributions to the GDP and the claims from the customers about the frauds in the real estate sector. Another thing is that there is a change in the government vision; government now wants to ensure housing available for the poor and average income people. With that aim government initially took some steps like counseling to the real estate firms to tell them to think about the houses for poor and average income people. At the same time central bank provides incentives to attract the investments in this sector in coming days. But to change the way of going is not as simple as it sounds. Some professionals involved in the real estate sector argues that government should come up with fixed rules and regulations about the business practices in this sector to have any long term improvements. In this section Porters five factors model have been used to provide more insight of the Bangladesh real estate market operations. It will show the forces that well describe the real estate market in Bangladesh. Therefore theoretical explanation of Porter model (6.1) is matched with the real scenario of real estate operations in Bangladesh (6.2). One of the major limitations of this model is that it does not include government in the model. However an effort has been put to include the government to provide a clearer picture (6.3). At the there is a summary on the market analysis (6.4). 6.1. Introduction to the five forces model of Porter Michael E. Porter, an US economist and a faculty of Harvard Business School has produced this model in order to describe the five competitive forces through which a particular market can be analyzed. Porter model is a static model but goes further than traditional neoclassic economic models, including the so-called structure-conduct-performance (SCP) paradigm. Broader view in this model enables better understanding and insight into a market. Neoclassic models focus on very specific parameters like the number of suppliers and customers, barriers to entry and the homogeneity of products. Porters model also includes these
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parameters mainly within the category industry competitors that determines the rivalry among existing firms. But his model considers four additional forces too that determine the bargaining power of suppliers and buyers, and the threat of new entrants and substitutes. These additional forces can have substantial effect on the market outcome and the competitiveness of the sector. Due to the generic characteristics of the model this model can be applied to describe any industry. In this report the model is applied to the real estate industry in Bangladesh. In the following sections attributes of the model are described. The parameters have been adjusted to the real estate business in Bangladesh to some extent.
Figure 6.1: Porters Five Forces Model 6.1.1. Bargaining power of suppliers (Real Estate Firms) This is the power producers of real estate products can exert on the price and volumes of real estate products in the real estate market where producers and customers meet. This is one of the factors determining the total volume in a particular period for real estate products. This bargaining power of producers is affected by different parameters that are in point. Number of producers: This refers to the total number of real estate firms in the market. The greater the number, the lower the bargaining power a producers can exert on the purchasers. The 48
opposite is also true i.e. a small number of producers indicate a high degree of market concentration, and thus a favorable bargaining position for producers. Differentiation of Input mix: Difference in the combination of inputs and the way a firm collects the inputs create a big difference in the market when considered in total costs perspective. It provides the real estate firms to compete towards the costs in the market to influence price and profits. A firm that buys land today with plan to construct houses in five years from now on has an advantage over the firm which buys lands after five years to construct the houses. Importance of volumes to producers: A producer who depends on a few purchasers is very sensitive for a decline in sales. For example producers who produces housing only for the people in Gulshan runs the risk in case the Gulshan market is fully penetrated or the market is experiencing downturns or the market does not show positive reaction to the new houses. On the other hand producers who have many purchasers dont run this risk because its pretty unlikely that all markets experience downturns at a certain point in time. Switching costs for customers: If customers have to incur a significant costs to switch the firms, then its normal that customers dont switch unless there is a major mishap. But it also works for the companies who secure quality of products to exert some power on the buyers.
6.1.2. Bargaining power of buyers According to Porter bargaining power of buyers is, the ability to force prices down, bargaining for higher quality or more service, and playing competitors against each other. The parameters of this force are described bellow. Buyers-producers ratio (concentration): This is the relation between the number of buyers and the number of producers. If there are many producers producing products bargaining power can be limited due to competition. On the other hand if there are just a few producers serving buyers their bargaining power can be high. Ability of buyers to produce: In this case buyers build its own houses to meet their needs. This is applicable for the rich buyers. Poor or mid income buyers cant do individually. They create associations and build houses through co-operation. If this happens suppliers influence reduces substantially.
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Availability of information to buyers: Buyers can improve their bargaining power as more market information reaches them. Availability of information also helps the buyers to make a better purchase because buyers then know the information about competitors and competitive price & quality. Volume of purchase: Well it says that when one buys a bulky amount of products one can go for significant bargaining with the producers. In case of real estate this does not work that much as there are few or no bulky purchases. Buyers know the production costs: Market information can increase the awareness of consumers. Information on tariffs of competitors, production costs, profit margins etc. can be considered as market information. Therefore once a buyer knows this information, it can influence the buyers behavior especially switching behavior. Availability of substitutes: Availability of substitutes and the information about those substitutes can significantly increase the bargaining powers of buyers. Price sensitivity of buyers: Higher sensitivity to the price by a buyer, higher the chance of switching producers. It means producers have to pay more attention to their price policy to remain competitive. Price of total purchase: Buyers consider the total price that includes the price of relevant services like gas and electricity connection, lift service, parking lot price etc. Now if these services make the total amount bulky buyers get an incentive to switch the producers; at least they go for bargaining with the producers. Strategic importance of the product: This is more or less related to the concept of Giffen goods. Higher price of the house works as the symbol of status or ego for a certain buyer. At the same time buying a house in Gulshan might be a strategic reason for a buyer rather than buying a house in Dhanmondi.
6.1.3. Threat of new entrants Threats of new entrants are sometimes the result of abnormal profits in a particular sector. Its widely argued that the real estate sector in Bangladesh still produces the abnormal profits for the firms though there is not available data to prove that. Related parameters to describe this force are in point.
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Legal barriers to entry: Legal barriers that are normally imposed by the government are due to varied reasons. It can be a through patent or something else like this. In Bangladesh real estate market there is nothing like this. This kind of barriers reduces the risk of new entry in the market almost at a zero level. Economies of scale: This works as a barrier when potential new entrants perceive the market as an attractive one and wants to enter into the market. Economies of scale of the existing firms allow them to play with price and therefore they put the price in such a way new entrants does not feel any attraction to the market. Initial investments and fixed costs: Bulky initial investment can provide an advantage to the existing firms as they can use the play tough strategy to make the market unattractive to the potential entrants. Learning curve advantages: Incumbents can gain substantial learning curve advantages during the years of presence on the market. If incumbents enjoy unbridgeable learning curve advantages new entrants can experience this as a barrier. Learning curve advantages strongly depend on the related market, specifically the market openness. For example, in general several years R&D experience is more difficult to catch up then being active on the market. Brand Loyal Customers: High brand loyalty from customers to a certain brand can make a market unattractive to the potential players in the market. Therefore large firms spend their huge focus on building brand loyalty. Switching costs for buyers: High switching costs can reduce the buyers intention to switch which fade the profit potential for a new entrant. Availability of important resources: Availability and access to the critical resources is one of the very first things a new entrant has to confirm before deciding to get inside of a market. In real estate market of Bangladesh its not easy as the lands for example for the constructions is decreasing day by day.
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6.1.4. Threat of substitutes This refers to the extent by which buyers can replace their current products by another one. In the context of this report substitutes does not mean the pure substitutes of the core products. In fact here substitutes means the substitutes of different dimensions of core products. The core product is house and different dimensions include among others location, luxury, producers etc. The relevant parameters are the followings. Loyalty of customers: High level loyalty of buyers to a certain firm and its products reduces the substituting behavior and vice versa. Price, status, ego, are some other factors that continuously contribute to the substituting behavior of buyers. Switching costs: If the costs of substitutions are high buyers are negative towards substitution normally. In reality buyers try to compare the gains from substitutes and the costs of substitutions to decide whether they will go for substitution or not.
In addition to that if substitution offers innovations buyers might be attracted to the substitute products. In this case early adopters are a logical target market for a firm. Economic advantages of substitutes: To be accepted by the buyers, as substitute a product must offer economic advantages of having it. If the buyers think that the potential economic advantage is not rational, substitute products face the harsh reality. Potential new substitutes: This is related to the potential new entrants in the market with new ideas to act as substitutes. Success of these potential new products as substitute depends on the intensity of the newness of the ideas.
6.1.5. Rivalry among existing firms This refers to the intensity of competition within an industry. As in this report author talks about the real estate sector in Bangladesh, the parameters are adjusted with the Bangladesh market situation. Market concentration: Market concentration determines how many firms are in control of how much of the total market. If there is high level of concentration, competition is not fierce normally. Only few firms enjoy almost all the benefits.
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Types of market & profits potential: It refers to the market structure i.e. whether the market is monopoly or oligopoly or perfect competitive. In perfect competitive market there is no abnormal profits and entry is free followed by more innovations and new products. But in case of other market types there are abnormal profits (price is higher than the average costs), which reduces the total welfare and invites others to get into the market. Bargaining power: High rivalry among the competitors leaves low level of bargaining chances for both producers and buyers because its assumed that competitive price is either the fair price or close to the fair price. Fair price here means the price that is expected in the perfect competitive market. Threat of new entrants: In general the more significant the threat of new entrants the more is the rivalry among the existing firms. Threat of substitutes: As mention on the previous page, the threat of substitutes is composed of several parameters. The more significant the threat of substitutes the more this can increase the rivalry among existing firms. Product differentiation: Product differentiation can work as the added values for any firm in the market which also influence the rivalry among firms. Switching barriers for buyers: The more switching barriers buyers experience the less significant the rivalry among existing firms. In other word, if buyers are not able to switch from a certain producer there is no incentive for firms to compete. Barriers to exit the market: Huge initial and fixed investments force the company to stay in the market and compete with others.
6.2. Applying Porters Model to the Real Estate Market in Bangladesh The Porter model is applied in this section to describe the Bangladesh real estate market. 6.2.1. Bargaining power of suppliers (Real Estate Firms) Huge number of real estate firms in Bangladesh real estate market shows that the market is pretty much attractive to the investors. But the real scenario is a bit different which is elaborated below.
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Number of producers: As mentioned earlier that there are lots of real estate firms in the market to produce the real estate products in Bangladesh. But major gains go to some of the big companies in the market. These companies could survive at the time of crisis in the market. At the same time these firms have advantages from economies of scale and scope. Lots of real estate business can be treated as the portfolio diversifier of investors. In case of market concentration market is pretty much concentrated as only 10-15 large companies hold the 95% of the total market share.
Differentiation of Input mix: One of the major inputs in the real estate business in land. Therefore values & prices of lands affect the Bangladesh real estate business very much. They play a strong role in determining the selling price of the real estate products. For example, prices of houses vary considering the locations they are in. A house with lake view in Dhanmondi is far more expensive than the houses in other regions of Dhanmnodi. In case of commercial spaces, Motijheel is that much expensive compared to new market region. In addition to that, the time when the real estate firms buy lands is very important. Firms that have bought lands in the suburbs of Dhaka city ten years back are now in advantageous position than the rivals in the market. The price of the lands in the suburbs of Dhaka city has risen more than 5-6 times in the last ten years. Therefore early buyers have an advantage over costs and gain more. At the same time they if want can influence the rivals business by setting the price at relatively low level. So this is about the charisma of top management. The top management that could figure out todays scenario of Dhaka city at ten years back and took actions in accordance of that is now gainer to a large extent.
Importance of volumes to producers: Not all the real estate firms are capable to operate largely to cover all the segments of real estate business. But depending on the business condition in Bangladesh, experts argued that a firm should target at least two income level of the society. If one targets only one level say for example high income level, one might be pretty much limited to the Gulshan area. In bad business time one will face problem because of the limited customer base one has. But if one targets high and medium income people together one might make a tradeoff in bad business time.
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In Bangladesh market though there are a lot of small firms operating in the real estate sector and cant target more than one segment, majority of the big firms target more than one segments. Some firms target almost all segments. These are some big companies but not in the real estate sector only. In reality some big firms who were operating in other sectors came to the real estate sector too either to maximize the potential return from this market or to diversify their investment portfolio. Discussion with experts and employees in Bangladesh shows that initially real estate sector came to the scenario as a huge potential source to earn revenues which motivated them to be involved. But later on they could realize that real estate business can also be a good addition in the asset portfolio to diversify the portfolio. Switching costs for customers: Normal law is that if the switching costs are high then customers have low incentive to switch. In Bangladesh real estate market we can think about two switching scenarios. One is pre purchase scenario and the other is post purchase scenario. Though there are some companies in market having brand loyalty, this loyalty not necessarily came from their real estate business operations. It came from other business operation of them in Bangladesh. For example, Sheltech, a well known real estate company is a sister concern of Square Groups of Bangladesh, a group having huge brand loyalty and recognition in different segments including information technology, consumer products, and medicine. Therefore real estate buyers normally have no predetermined suppliers. Their choice depends on a combination of factors like available budget, location where one wants to buy the house, who are the companies operating there etc. So one might argue that before making a purchase decision one searches information and real estate companies meet the demand of that information in different ways. One of the ways is extensive marketing campaign through different marketing tools. Physical inspection of the house premise is a frequent incident in case of real estate buying in Bangladesh. Now one might switch the companies in this period and this is pre purchase switching. It has the costs of time, energy, transportation, and information collection mainly. Considering the Bangladesh situation this costs are not that high. But it could be pretty high when one switches a lot and find it difficult to get the proper offer one was looking for. At the same time in case of high income group and the blue collar job holders the costs is high mainly because of the high level value of time of them.
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In case of post purchase switching, its really expensive for all the groups in the market. The reason is that one has to go through all the steps i.e. information gathering, evaluating alternatives, deciding for one etc. again to buy another house. But in reality still switching happens mainly by the high income groups. 6.2.2. Bargaining power of buyers Bargaining power of buyers that arises from different factors is the ability to force prices down, bargaining for higher quality or more service, and playing competitors against each other. The parameters of this force are described bellow. Buyers-producers ratio (concentration): In Bangladesh there is lots of real estate developers in the market with the varied offers to buyers. This variation is something that constraint the bargaining power as the products are not perfectly substitutes of each other. Each offer has something new and producers try to manipulate that. Customers have a narrow chance to compare in reality. But in case of general real estate products customers go for bargaining though the depth of bargaining depends on the location and the fact which party is in crisis. For example if a buyer is in a position that he has to buy a certain product, seller has the advantage and buyer cannot bargain a lot. The opposite is also true. Again one really cant bargain a lot in areas like Gulshan as its pretty difficult to get any houses in those areas to buy. High level of land scarcity in these areas is the main reason behind the low level of bargaining. Ability of buyers to produce: It happens when one at least has the land to build a house. Still one has to have the access to the financing institutions to finance construction activities. This kind of ability is pretty present among rich people. But they still hire some third parties to construct their dream house according to their preference. Most importantly these rich people also have the access to the financing services in Bangladesh. On the other hand, poor and mid income people cant do that even though they have lands because they dont have the access to the financing. Sometimes they build some kind of association and through joint efforts they build their own houses. Though not in the urban areas, it pretty much common in the sub urban areas. Therefore in those areas buyers enjoy more advantages than the suppliers.
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Availability of information to buyers: Well though real estate companies offer some kind of online services to the customers, those are mostly insufficient because its widely claimed that there is a gap in between their description of properties in the website and the reality. Companies claim that they just put a general description of their ventures in their website as its not possible for them to update all the specifications of their ventures. At the same time they think that in Bangladesh still people dont rely much on online information. Rather they like to go for physical inspection. Thats why companies are focusing more on their marketing campaigns through visual medias mainly. They also trying to build reference groups in the society. This happened due to the improper IT infrastructure in the country. But the companies also noticed that the IT infrastructure has been improving in the last couple of years and the new generation is more or less dependent on the online information. Therefore to meet their information demand in coming days companies already ensured their online presence and it will be improved day by day. So in conclusion it can be said that information is not readily available. One has to collect them if one wishes to compare the products to make a better purchasing decision.
Volume of purchase: Well it says that when one buys a bulky amount of products one can go for significant bargaining with the producers. In case of real estate this does not work that much as there are few or no bulky purchases. Above all almost all companies have some offers that reduces the total price if one buys more than one unit. Buyers know the production costs: Once again this is related to the information availability. As mentioned earlier in Bangladesh one has to collect the information as they are not readily available. But if one can collect the information its helpful for one to make a better purchasing decision. If one knows about the production costs one can create more pressure on the seller to make a deal convenient for the buyer. But it depends once again who is the party with need-need to sell or need to buy.
Availability of substitutes: In Bangladesh market buyers have substitutes to a large extent. But the scenario is different in urban and sub urban areas. In urban areas though there are substitutes, they are really varied in terms of locations, price, features etc. So
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how much a buyer can substitute is mainly dependent on the buyers affordability. In sub urban areas where buyers also has significant ability to build their own houses and the price difference is not that high, availability of better substitutes gives buyer a substantial edge in bargaining with the sellers. But in urban areas one has to make a trade off in between the price changes coming from substitution and the change in benefits. Price sensitivity of buyers: High price sensitivity leads a buyer to bargain more with the suppliers. But how much the buyer will be successful depends on the location and once again who is the party with need. If its in the urban area, the chance of success by the buyer is low while in sub urban areas buyer might gain some. The main reason is that price sensitivity is offset by the scarcity of land in the urban areas sometimes. Price of total purchase: Buyers consider the total price that includes the price of relevant services like gas and electricity connection, lift service, parking lot price etc. Now if these services make the total amount bulky buyers get an incentive to switch the producers; at least they go for bargaining with the producers. In Bangladesh buyers care for this pretty much. The good thing is that they can customize the construction activities to implement their preferences. Another thing is that in urban areas the relevant costs like parking costs are more or less same. In sub urban areas the costs are relatively low compared to the urban areas. Strategic importance of the product: Well this is common among the rich people. When they plan to purchase houses their first choice is Gulshan. Gulshan is the area which associates prestige and status for a buyer. Secondly they think about Banani or Uttara or Dhanmondi. These people dont care about money; they care for status, prestige, and ego. Therefore houses in Gulshan or other mentioned areas are seen as the symbol of status and prestige. In case of commercial real estate products sometimes locations become very much meaningful strategically. For example, its meaningless to have a park like wonderland, a famous amusement park in Gulshan area, in new market area because the park will not get many visitors here as its expensive to visit the park. Again as the commercial centre of Dhaka city, Motijheel has a strategic value
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for the commercial real estate products. No one really thinks of residential housing in this area. 6.2.3. Threat of new entrants Its widely believed that the real estate sector in Bangladesh has been rewarding abnormal profits to investors and therefore lots of investors came to the market. Abnormal profits here refers to the situation where price for the real estate products is more than the average costs to produce that products. In course of time profit margin has been declined and more and more competition came up in the sector. Legal barriers to entry: In Bangladesh there is no legal barrier to entry to the real estate market. All are free to do business here. Economies of scale: There are some big companies in the market enjoying these benefits. But it does not mean that they did lower the price to put the competitor in problem or put the buyers in high satisfaction level. They rather enjoy the high profit margin by reducing the costs. The author did not find at least in the urban area of Bangladesh that any firm having economies of scale trying to be more competitive by reducing the price. Therefore advantages from the economies of scale are being used to increase profit margin rather than building competitiveness, which could be a threat for new entrants. Initial investments and fixed costs: Well it requires large amount of investment. But in most cases real estate companies has very good access to the financial market of Bangladesh. At the same time they get the down payments from the buyers and this money can be used to start the project. Learning curve advantages: Its very difficult to prove that the companies in real estate market in Bangladesh are experiencing the learning curve advantage because of the unavailability of data. But this is true that companies do not spend much money in R&D activities. They spend much money in land acquisitions rather than R&D. Brand Loyal Customers: This cant be an entry barrier in Bangladesh market as brand loyalty is low here. Here buyers justifies the alternatives first based on the available data and then decide which one to select. At the same difference in locations and needs discourages the brand loyalty to some extent. The reason is that it might happen that the company to whom one is loyal is not present where one wants to buy a house.
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Switching costs for buyers: In Bangladesh pre purchase switching tendency is common rather than post purchase switching. Therefore new entrants should not be concerned as long as it is confident that it can provide quality products. Availability of important resources: Availability and access to the critical resources is one of the very first things a new entrant has to confirm before deciding to enter into a market. In real estate market of Bangladesh its not easy as the lands for example for the constructions is decreasing day by day. Availability of human resources both in general and technical side is another important factors to think about. Though day by day due to the different initiatives of government level engineering education in Bangladesh is improving, one has to look at the availability of those technologically sound labor forces in the area where one wants to operate.
6.2.4. Threat of substitutes This refers to the extent by which buyers can replace their current products by another one. In the context of this report substitutes does not mean the pure substitutes of the core products. In fact here substitutes means the substitutes of different dimensions of core products. The core product is house and different dimensions include among others location, luxury, producers etc. Loyalty of customers: As mentioned earlier that in Bangladesh real estate buyers are not brand loyal to any brand. In other words no company could yet build up brand image in such a way that can influence the buying decision. Therefore, though well known brands can motivate buyers sometimes, purchasing decision depends on lots of factors like price, desired location, other related attributes etc. Buyers inspect the activities directly beforehand to make a good decision. Therefore brand loyalty is less here and people has more switching tendency if they have the options available to switch. It should be noted here one more time that in Bangladesh pre purchase switching is pretty common compared to the post purchase switching. Its because there are plenty of offers with varied features in the market for buyers. Switching costs: Switching costs are very high in case of post purchase switching. So there are few post purchase switching. But there are many more pre purchase switching as this is not expensive most often.
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Buyers try to justify the substitutes in terms of gains from the substitution and compare it with the substitution costs. In reality lots of buyers in Bangladesh market involve emotion in making purchase decision. Well this is a cultural phenomenon that Bangladeshis are pretty much emotional. People consider purchase of house as a very long term decision and they sometimes overlook the high switching costs if they get a better alternative. This leaves an opportunity for the innovators in the market. Their innovation gets attention easily and if they can make it affordable for the target market, they can create a high substitution ratio in the market in favor of their products. Economic advantages of substitutes: In Bangladesh real estate firms apply different techniques to help buyers to realize the potential economic benefits of substitution. They make huge marketing campaigns, they arrange site inspection events so that buyers can imagine the benefits directly being in the house premise, they arrange flat or plot fare etc. All are aimed at creating better awareness in the market among buyers. REHAB housing fair is one of the most important events for real estate firms in Bangladesh. In these fairs firms participate and let the buyers know about their offers both in home and abroad. Potential new substitutes: Well there is newness of thinking in the industry. For example, for the inhabitants of Sylhet region real estate firms build houses in such a way so that buyers feel that their houses are similar to those they are used to live in London. It finally makes the houses much expensive. But as the target population is rather rich, real estate firms employ more resources there. Therefore there are lots of luxury houses in this area. Another new idea from some real estate firms is that they started to build houses in the outskirt of the Dhaka city couples of years back. At that time lots of people questioned their aim and justification of their activities in those areas. But suddenly when communication system in between Dhaka city and its outskirt has been improved substantially, everyone could realize the justification of their operations. In fact these firms at that time could imagine that after couples of years Dhaka city will be ineligible to live and people will move to the outskirts of the city. Therefore now a days most of the luxurious houses are being built in the outskirts of the city.
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6.2.5. Rivalry among existing firms This is all about competition in the market. By nature Bangladesh market is free for all and anyone can invest here. Therefore there are lots of companies in the market who compete among themselves. However competition is much fiercer in the urban areas like Dhaka city compared to the sub urban areas like Savar, an area about 20 kilometers away from the Dhaka city. Market concentration: Market concentration determines how many firms are in control of how much of the total market. If there is high level of concentration, competition is not fierce normally. Only few firms enjoy almost all the benefits. Types of market & profits potential: In Bangladesh market all are equally welcome to operate which means by nature one should brand the market as the perfect competitive market. Therefore there should not be any abnormal profits. But real estate experts say that there are still abnormal profits in the market i.e. average costs are lower than the price, and it attracts investors to this sector. But there is not any kind of cartel or oligopolistic behavior in the market. Its not a monopoly too. What really matters is the knowledge and experiences along with availability of resources. Companies with significant knowledge and experiences in operating in the market can gain from the utilization of the available resources. One of the gains comes from the costs reduction which ultimately works as a barrier for the new entrants to enter into the market. Bargaining power: Though there is high rivalry among firms mostly in the urban areas, still there is a place for bargaining for both buyers and sellers. This happens due to the asymmetric information in the market about the competing price, quality and other relevant issues. Buyers still go for bargaining to a large extent and success depends on some factors like location (urban or non urban area), which party is with the need (for which party the situation is critical) etc. Threat of new entrants: Day by day the real estate sector is getting new orientation in the Bangladesh market. New places are being penetrated and the market expands with good pace. Thats why the business has high profit potential to lots of investors which put the threat of new entry to the existing firms. This increases the rivalry among the existing firms to a large extent.
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Threat of substitutes: In Bangladesh market, there are lots of options for buyers to substitute the real estate products. This substitution is not the substitution of core products; rather substitution of different features of the core products. As a result real estate firms face high rivalry from the competitors. Therefore they have to be careful in designing their offer with proper pricing, and marketing campaigns.
Product differentiation: When a firm can differentiate products from the products of rivals, at least at the initial stage the differentiator gets some advantages. This can be described as the introduction of new features by real estate firms in Bangladesh market. Buyers are now much more aware about the quality of the products and the difference in products. Therefore they want the best quality products at the lowest possible costs. But they are also ready to pay more for the quality products. For example they pay more for the houses with the lake view in Dhanmondi. Now a days buyers are rather careful about the finer details of their houses like which tiles is being used, which constructing firm is employed, whats the reputations of the construction firm, which architects are in charge of design process etc. They can realize the difference and the differences play important role in purchase decision making.
Switching barriers for buyers: In Bangladesh market, pre purchase switching does not incur much cost. Therefore firms have to be careful about that stage as they experience more rivalry in that step. But once one buys the product, post purchase switching is pretty much low as its very expensive. So the challenge in the pre purchase step. In this step all the marketing campaigns are put in large volume to motivate the buyers to buy certain products. More the information dissemination, customers have more knowledge about the products. At the same time companies try to build up some kind of reference groups to take the advantage of the words of mouth.
Barriers to exit the market: Like all other business sectors, in real estate sector also the hard worker is the winner. Now if some one cant work hard one has to get out from a market like Bangladesh market where there is no legal barrier to compete and there is no regulation to control the market competitive behaviors. Therefore one is free to enter and exit at least theoretically.
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But once the company invests a lot in the factors of production like labor and land, practically its pretty difficult for the firm to leave the market. If the company leaves, company looses not only the investment but also the potential profits. So its not common that firms investing huge amount of money leaves the market. In reality big firms that are operating in the market, they do invest in real estate in order to diversify their portfolio of investments. 6.3. Introducing government in the Porter model Government can influence the real estate business activities to a large extent through different policies of government. One of them could be the interest rate change by the central bank. Real estate activities have an inverse relationship with the interest rate changes. So interest rate ups and downs can influence the access of people to the financing services available in the country followed by the change in demand of real estate products in the market. In Bangladesh, recently central bank has announced that it will make the real estate financing issues more flexible. Therefore stakeholders are expecting some positive affects of this announcement in the real estate activities in Bangladesh. Government can influence the flow of financing to a certain sector by advising the financing institutions not to finance to a certain sector or the reverse. It reduces/increases not only the money flow to the sector but also the sectoral activities because of demand supply mechanism in the market. Government has lots of other ways to influence the sector. For example, government can make strict laws and regulations about the real estate operations in Bangladesh. Then it will be difficult for lots of business firms especially the small and medium firms to operate in the market. They will face difficulties to get the permission from the relevant authorities to start their operations as only few firms are maintaining quality in Bangladesh market. In addition to that government can affect the sector by changing the tax rates or by changing the land laws or by changing the construction laws or combination of all these. In Bangladesh the sector currently lacks proper framework where it can perform better. Random and indiscipline constructions thats are now in operation will ultimately work as a big negative factor for the city planners may be ten (10) years on from now.
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Figure 6-2: Porter Model Including Government as the sixth factor Therefore the author includes government in the Porter model as the sixth factor to emphasize the importance of government in the real estate business activities. Bangladesh government should come up with a proper policy regarding the real estate business in Bangladesh along with the proper modifications of the laws relevant to the real estate sector. 6.4. Summary of Market Analysis Real estate sector in Bangladesh is dominated by few firms though there are lots of companies in the market. Currently about 321 companies are affiliated with the REHAB while there are some others operating in the market individually. The sector has been experiencing growth since its birth in the late 70s until now. Right now because of the political instability in the country the pace of growth is bit low in the sector. But experts argue that the situation will be changed as soon as there is a political government in Bangladesh. Its mentionable here that there is a non political interim government in the power right now in Bangladesh. The market is not a monopoly or not an oligopoly and there is no control mechanism from government too. In fact there are no regulations about the sector yet though government is thinking on that since last couple of 65
years. Therefore the sector is open to investors to invest and experts opinions show that there is still a large segment of market remaining to penetrate. The market is suppliers dominated though they have to rely on the customers for the production as demand comes from them. Price, location, and other attributes are perceived differently by different segments of buyers and there is a continuous trade offs in between different attributes of the real estate products. It is assumed that in the coming years government will play an important role as the sector is expanding its reach to other areas of the country in addition to Dhaka city. Government got a bitter experience in case of Dhaka city coming from the random and indiscipline development by the real estate developers which has made the city one not eligible to live in. Therefore government does not want the repetition of that and try to save other areas of the country. They might come up with the regulations for the sector deciding the framework for the sector within which the firms should operate.
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7.0. Value Chain Analysis In this chapter the author focuses on the value chain model of Michael Porter (7.1.) and then applies the concept to the Bangladesh scenario (7.2.) followed by the chapter summary (7.3.). 7.1. Concept of Value Chain Michael Porter in 1985 introduced the concept of value chain in his book Competitive Advantage: Creating and Sustaining Superior Performance. He generated a generic value chain model. But now a days different value chain models have been developed for different industries based of the varied characteristics of varied business functions. Porters model was aimed at better understanding of the activities through which a business firm develops competitive advantages and the value for its shareholders. He introduced two sets of activities namely primary activities and secondary activities.
Figure-7.1: Porter Value Chain Model The model says that there are some primary activities that are more or less common to all businesses along with some other support activities that ensure the proper functioning of the primary activities. Finally margin or profits for any firm depends on the effectiveness of the firms in performing these activities efficiently.
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Primary activities include the followings. Inbound Logistics: In this function firms accumulate the required raw materials from the suppliers and distribute them among different section of the organization according to the needs Operations: This is transforming of input into output. In this stage firms uses its inbound logistics and support activities to produce final products Outbound Logistics: This is managing and distributing of finished and work in process inventory Marketing & Sales: This is making the products familiar to the target customers and generating sales Service: Its all about post sell service to keep the beneficial relationship with the buyers
Support activities are the followings. Infrastructure: This is about the organizational structure, work break down system, organizational culture, and control system etc. Human Resource development: It includes hiring, training, developing, and compensating employees Technology Development: It is the development of technologies to support value creation activities Procurement: This includes purchasing inputs like raw materials, supplies, and equipments etc.
The main theme of the model is that firms ensure the efficiency in performing primary activities that are the triggers of firms profits with the help of support activities. 7.2. Applying the concept to the reality Here the author applies the concept of value chain model to the Bangladesh real estate business sector to find out where does the values come from. At the same time it will show what are the most important activities in the values chain for the sector. In Bangladesh inbound logistics and marketing & sales are the two most important activities in the value chain in case of primary activities.
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Though value comes from all the activities in the chain, these two have more influence compared to others. In inbound logistics, one of the most critical things is the acquisition of lands for construction. Price of land sometimes is the triggering point for the potential profits of any firm from a certain projects. Therefore timing of land acquisition and the location of land are very important. Once one has the lands and all other inputs to construct the houses one has to inform the potential buyers about their products. As real estate business is a bit different and investors pay the money beforehand, marketing plays the most important role in the initial stage, as this is the mostly used way of communication with the target market. In Bangladesh very few companies has the brand loyalty from buyers and therefore buyers like to see all the details before making any decision. This is point where marketing creates value for the companies. In case of other activities very few firms could earn the customers satisfaction while others still lack of it because of the following things. Companies have high lead time Companies cant keep their words on delivery date Companies dont care that much in the post sell periods
In Bangladesh the score of power distance is pretty high and therefore organizational environment can be characterized by formal relationships and formal communications system. Most of the organizations are centrally administered. So decision comes from the big bosses normally and lower level employees are devoted to the daily operation of the firms. In real estate organizations most of the lower level employees are sales force or involved in marketing jobs. Companies sometimes arrange training and development programs for the employees so that they can perform better. Except architects most of the people are coming from business or economics backgrounds. MBAs and engineers with MBA degree are especially preferred in this sector. The reason is the assumption that these categories of people can contribute most into the business, as real estate business is a mixture of both technology and business aspects. 7.3. Chapter Summary Though value comes from all the activities in the value chain inbound logistics and marketing & sales get the high level of importance as they are very much influential for the profitability of the firms. On the other hand employee selection get the most importance in case of support activities as success of the firms depend on the effective processing of inputs and management of that process.
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8.0. Effects Analysis Real estate business activities have different types of effects in both regional and national level. In this chapter the author discusses different types of effects (8.1) followed by a summary of the effects analysis (8.2). 8.1. Different Types of effects Among different types of effects direct, indirect, and external effects are mentionable. 8.1.1. Direct effects Direct effects include the effects that are accounted to the community. Community is getting benefits or being worsened off in this regard. In Bangladesh real estate case direct effects includes the followings. Shelter: At the very first demand for housing is met partially in different regions in Bangladesh. Communities get improved conditions of living with better amenities sometimes. Economy: Economy gets the benefits of real estate activities in different ways. The sector creates employment which solves some of the unemployment problem, a burning problem of the country. The sector utilizes the resources as efficiently as possible which otherwise might not be possible. The sector contributes to the total productivity in the country which influences the GDP. The good thing is that the contribution of real estate sector to the Bangladesh GDP has been increasing over time. Traffic System: Till now this is a negative effect of real estate activities in Bangladesh. There is no regulatory framework for real estate activities in Bangladesh. Therefore developers do whatever fits to their profit maximizing motto rather than proper planning for a better community. As a result traffic system is most often harmed by the development of real estate products. Dhaka city where traffic jams are sometimes intolerable is the worst example of this in Bangladesh. Congestion: In case of congestion, in most cases real estate activities worsen the situation because of the improper planning and development activities. Environment: Though the major aim of the real estate activities is to build a community with better amenities, its hardly the case in Bangladesh. Here firms are mainly profits concerned and they dont care that much how environment is affected by their activities. In Bangladesh there is not such a rule that a firm has to summit an Environmental
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Impact Assessment (EIA) report to get the permission to operate. So environmental concerns remain untouched. 8.1.2. Indirect effects This includes the effects that are not directly experienced and not targeted to any single user but it improves the collective situation. In case of Bangladesh real estate indirect effects can be followings. Other business: When there are new projects and new community is built up, it opens the door for other businesses to get in. For example, around the new community new markets are built up normally and it includes grocery shops, hairdresser, restaurants etc. among lots of others. At the same time different industries become interested to open their branches in the community proximity. For example banks that can create further benefits for the whole community and country as a whole. Urbanization: Real estate development is positively related with urbanization and to some extent dependent on urbanization for expansion. However it can influence the urbanization process too to a particular area. 8.1.3. External effects These effects are not normally included when decisions are made, but still deserve significant attentions. Some of them are in point. Decrease of land: Real estate firms normally go out of the city area and take the vacant land to build the new projects. The logic is that the prices for lands in those areas are relatively cheaper and thus firms can maximize their profits. But it puts a negative pressure on the lands available for agriculture and therefore agricultural contribution in GDP decreases. Social Cohesion: Real estate projects build an automatic community. At a certain point when the firms deliver the flats or plots, suddenly there are lots of people at the same place. Gradually they become familiar and develop sharing system which leads to the better social cohesion.
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8.2. Summary of effects analysis In general real estate firms are profit concerns and their primary goal is to produce housing units at the lowest possible costs to maximize the profits. Therefore the effects of real estate activities in Bangladesh are a mixture of both positive and negative effects. But experts opinions suggest that in the long run negative effects are more that the positive effects. People cant realize that they are sacrificing their long term future for the short term enjoyment through random and unplanned real estate development activities. Experts argue that there should be a framework for the sector to operate properly at an immediate basis.
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9.0. Segregation Analysis This chapter is devoted to the analysis of segregation and its effects, a special case of real estate activities in a particular country. The chapter begins with the broader definition of segregation (9.1) followed by the reasons of housing segregation (9.2), types of segregation (9.3), effects of segregation (9.4), and the summary of segregation analysis (9.5). 9.1. Defining Segregation In general, segregation is the process of creating difference in population. This difference can be made based on race, gender, ethnicity, religion, poverty-richness etc. Very frequently it is referred as a tool of making discrimination. Though some people try to utter that segregation is an involuntary circumstances, there is strong opinions that this is rather a voluntary circumstances. But in practice, it is a mixture of two. One of the widely praised definitions of segregation comes from Garcia D. A. and Lochner K. in 2001. They were working in Harvard School of Public Health. Their definition is in point. Segregation refers to the differentiation of two or more population groups among subunits of a given social space. Population groups can be divided along racial/ethnic, social class, and gender or age lines. The social space can be a geographic social space such as a metropolitan area or a school district, or an economic social space such as a labour market Housing segregation is the process of creating spatial difference in population in a particular area, no matter whether it is voluntary or involuntary. In fact, when a particular portion in population fails to afford housing of the same standard with other parts, there is segregation. According to Roy Elliot Cundiff (1999), Residential segregation is tendency for individuals with different racial backgrounds to inhabit different parts of metropolitan areas in greater concentrations. In Bangladesh there are a medium scale housing segregation. This is medium scale because of the nature of construction activities. By nature both expensive and inexpensive units of housing are sometimes situated side by side. Therefore though segregation comes naturally mainly due to income differences, the intensity is not that high. But the growing concern is that the intensity is increasing. 9.2. Reasons of Housing Segregation Though many believe that segregation is natural and a self selecting process, in reality it is constructed by a variety of powerful factors like actions taken by government, housing and banking industry, and
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individuals etc. Lets have a look some of those factors which influence the housing segregation in Bangladesh. Income differences: Income differences works as an automatic tool for housing segregation due to its direct influence on affordability. Extreme levels of segregation can be stable when racial income disparities are either large or negligible, but unstable in some intermediate range (Sethi R. and Somanathan R, 2001). In Bangladesh its very common and there are a high level of segregation in this aspect The role of Government: Government plays role in segregation in different ways. They define the metropolitan areas which affects the total facilities in daily life as well as the demand and supply of housing units in a particular area. Among other factors though infrequently used by government are change in the tax rate mainly for income, and government step to encourage people to live outskirt of the metropolitan areas. In case of later one, government encourages construction activities in the outskirt of the cities, develop the transportation facilities in those areas, and sometimes expand the city toward different directions. These factors affect the demand and supply for housing in a particular areas followed by the change in house prices. Change in house prices affects the affordability of people to own houses i.e. homeownerships. Changes in tastes and preferences: Changes in tastes and preferences affect the demand for housing units in a certain areas sometimes. For example, when people have more money they want to live better. Therefore they might try to move from the Dhanmondi (one of the several most prestigious residential areas of Dhaka; recently has been claimed that it looses it status level) areas to Gulshan (still the first or sometimes second most prestigious areas in Dhaka city) areas of Dhaka city. Its also related to the status question Fragmented metropolitan regions: This is sometimes a result of narrow visions of politicians. They just divide a particular area in different parts sometimes unnecessarily to gain political interests. This fragmentation affects housing affordability of people when there is a definition of municipality.
9.3. Types of segregations in Bangladesh In fact, it is not possible to classify housing segregation, as its a multidimensional aspect. It depends on the situations and associated factors. However, some of the most common types of segregations available in Bangladesh are presented in the coming sections. Its worthy
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to mention here that there is no racial segregation in Bangladesh as there are no black and white class in Bangladesh. Income segregation: This is the most common type of housing segregation in Bangladesh. In fact, there are more or less two extremes in the society; one of them is rich and another one is poor. Middle class diminishes gradually. As a result there is a substantial gap in affordability among population followed by an automatic division of areas for each group of people. Rich people normally live in the areas like Gulshan, Dhanmondi, Uttara, and Bonani. These are the most expensive regions in the country where most of the diplomatic offices along with important government offices are situated. On the other hand poor people live in areas like new market, new paltan, university area, old Dhaka etc. Marital Status segregation: This is another very common type of segregation mostly seen in the divisional cities. In the six divisional cities of Bangladesh, there are lots of educational institutions including most well known universities and colleges, government offices, and other placements. Therefore there are lots of people including students coming to these cities from outside and stay there. But the problem is that the educational institutions like universities cannot afford accommodations to all students which lead students to rent houses privately. Same thing happens to the jobholders too who dont have own houses in the cities. This is the point from where problem expands. House owners have a kind of negative attitudes towards students and bachelors. They dont like to rent their houses to students as they think students will not take proper care for their houses and they can earn more if they rent it to others except students. There are some house owners who are that much religious and think that renting their house to bachelors will bring lot of problems. They think that bachelors have no commitments to family and they just destroy the peace in houses as they have wild attitudes towards life. So they dont rent house to bachelors and this bachelor people become the victim of segregation and are coupled with students. Religious Segregation: Bangladesh is a Muslim majority country. Approximately 85% of its population is Muslim while the second majority is Hindu comprising 10% of whole population. India, the neighboring country of Bangladesh is a Hindu majority country where almost 80% of total population is Hindu. In both countries fundamentalist groups are active and very often they try to create a division among population based on religion followed by a lot of
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crimes, murders, and criminal activities in the countries. The most important thing is that problem in one country affects directly to another country. For example, when in India Muslims are tortured by Hindu people, in Bangladesh Hindu communities become vulnerable. The reverse is also true. We can remember the demolition of Babri Mosque in 1992. That was one of the most pathetic parts of fundamentalism in the history of Indian subcontinent. At that time, in both countries minority groups have been tortured by the majority groups. Rape, murder, extortions, and other suchlike incidents were pretty much regular. Thats why, in both countries, minority group like to stay together with their own community in a particular area. They think that staying together will work against the potential domination by the majority at the crisis time it has become a trend for many decades. Its worthy to note here that this kind of segregation is decreasing now a-days due to the change in lifestyles of people in this continent since last couples of year. People are now more willing to live in cohesion. Bangladesh is a good example of it and thats why United Nations branded the country as the moderate democratic Muslim country. Gender Segregation: Bangladesh is a male dominated country and here women ownership is pretty much low. When a family buys a house normally the male becomes the owner of the house. But the situation is changing. Women are being interested in the ownership and there is an increase in the women ownership in the last couple of years. It happened due to the different steps from Government, NGOs, World Bank etc. Lots of campaigns from different groups such as banks are devoted to women to encourage them in ownerships. Banks offer different facilities to women to be owner including lower interest rates while lots of NGOs give loans to women with very much flexible condition for the same purpose. Segregation due to Government Policies: Dhaka is one of the most densely populated cities in the world. Almost ten million people live here which is beyond its capacity. But due to the availability of jobs, better access to educational and other institutions people still like to live in Dhaka and day by day Dhaka becomes ineligible to live because of lots of pollution. Thats why government decided to make Dhaka little bit unattractive to people. They decided to shift some of the Government offices to the outskirt of the city. They were encouraging people not to live in Dhaka. They ask people to work in Dhaka by living outside of the city area. Government paid attention in the development of infrastructures in these suburban areas. They stated different housing projects in those areas and one can argue that there is a revolution in
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communication system in between Dhaka city and its outskirts in the last couple of years. As a result, there is one more segregation in the areas where they implement housing projects. These locations are now much more expensive than ever followed by the inability of local people to afford houses in these areas now. In fact, rich people who were living in Dhaka city are now moving to these places to have a better environment. 9.4. Consequences of segregation The consequences of segregation are manifold. This is associated with the situations and lot of other factors such as location, culture etc. Poverty: There is considerable debate on whether housing segregation contributes to poverty or not. Some scholars try to say that poverty is often concentrated meaning that poor people tend to live in a neighborhood where other poor people live. So it is themselves who bring poverty to their lives not housing segregation. But this argument is not widely recognized as there is always a role from housing market. The avenues through which housing market contributes to poverty are in point. High rent burden: High rent, a result of competition in housing market, affects all the parties in the market. But the affect is much bitter for poor people leading them more poverty as they has to expend more on housing. Poor quality of housing and health risk: Due to the relatively lower income and unfavourable situation in housing market interaction, poor people had to live in houses of poor quality which causes various hazards to their health. There are no available data about health hazards in Bangladesh arising from the poor living standards of people. But the experience of the author in Bangladesh proves that its present in Bangladesh at quite a large extent. We can refer to a study in USA where it is found that health hazards do not vary among black and white. But it differs between poor and rich irrespective of ethnicity (John Yinger, 2000). Poor people thus face both monetary poverty as well as health poverty. Neighbourhood effects: Poor people dont afford house in neighbourhood with better amenities and they are deprived of lot of modern facilities such as better education, access to park and other recreational areas, and pollution and crime free environment. Spatial mismatch: Due to segregation, inferior group sometimes remain not urbanised and they have to live without proper access to job and updated information.
Crime: Segregation disallows poor people to have access in updated information, jobs, better education to improve morale, and lot of other
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things of modern societies. People fail to develop their standard and sometimes get frustrations which lead them to be part in crime. So crimes like burglary, criminal damage (vandalism) and car crimes etc are sometimes very common in the clusters where poor people live in. Other things being equal, property crimes tend to cluster in areas those are globally or locally segregated particularly includes footpaths and rear dead end alleys (Chih-feng, Shu S, 2000). In fact, in absence of better culture, there is no reference group in a society to follow to develop own standard. Unemployment: Segregation increases the difference between work place and living place followed by an increase in commuting costs. It hinders workers mobility and increase unemployment. The situation becomes worse when there is not proper arrangement of public transportation or people are charged more, especially for those who dont won car. As a result, a big portion of ones wage is consumed on transportations and the job becomes lees attractive followed by unemployment. On the other hand, Distance to job opportunities may also discourage job search (when it is too costly) or even deteriorate its efficiency. In this respect, it has been shown that the quantity and quality of information workers have about job opportunities within a specific metropolitan area decrease with distance to jobs, which in turn reduces the efficiency of job search (Rogers, 1997; Ihlanfeldt and Sjoquist, 1990; Ihlanfeldt, 1997). Even the scenario gets more complexity as job recruiters place their ads in selected areas and make it restricted for certain types of people (Turner, 1997) and job seekers normally search for jobs within a limited range of their living place (Davis and Huff, 1972). Some specific impacts of segregation on unemployment are in point. Link between segregation and poor schooling results unemployment due to competitiveness in the job market Youngsters affected by the poor culture from a neighbourhood with poor amenities make themselves not competent for jobs. The propensity of youngsters to adopt a socially deviant behaviour (for instance dropping out of schools or yielding to criminality) depends on the proportion of same-behaviour individuals in the neighbourhood (Crane 1991). People in segregated areas suffer from network facilities and find it difficult to get jobs as A significant proportion of jobs are usually found through personal contacts (Mortensen and Vishwanath, 1994) Job recruiters do not like to recruit people from disadvantaged communities as considered inferior in quality. Employers draw an imaginary red line around a stigmatized neighbourhood and beyond which they discriminate against residents (Zenou and Boccard, 2000). Unemployment decreases per capita income which ultimately puts a multiplier effect on local retailers and other service providers.
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Education: Segregation puts question on the educational level of segregated sector (inferior part). Some people like to believe that in segregated regions people lack from quality education as there are no high quality teachers to teach, and the neighbourhood amenities cannot provide any help to improve the standard of education. Moreover, poor cultures in those poor neighbourhoods sometimes encourage youngsters not to join school followed by the increase in loafers in the society. As a result society experiences more criminal actions in segregated areas. Other consequences Consumption decreases due to the distance from the market areas. It affects the economy negatively Sometimes issue of sustainability comes in front due to the poor quality of housing, living standard, and neighbourhood amenities (Glenn Pearce-Oroz, 2001) 9.5. Summary of Segregation analysis In reality there are varied opinions about segregation. Some people argue its involuntary while some others argue its voluntary. Whatever the reason the reality is that there are segregations and Bangladesh is not an exception. Major reasons of segregation here is income discrimination and the policies of government. Due to huge gap in between two extremes-rich and poor-in the society housing segregation occurs and there are some areas eventually only for rich people. Medium income or low income people can never access housing in those areas. Again different policies of government influence the housing segregation in the country indirectly. Government is tired of the indiscipline developments of the real estate developers in Dhaka city. Therefore they want the city to expand in any directions it can to reduce the pressure on Dhaka city. As a result outskirts of the Dhaka city is no more outskirts; rather they are being included in the metro areas gradually. Here is the harsh reality for the low and medium income people. The more the city expands to outskirts the more it becomes difficult to afford housing in those areas by poor and medium income people followed by segregation. Government tries to do something better but as the by-product they get segregation in the housing sector. A major effect of segregation is that poor becomes poorer and in poor amenities youngsters dont find any role model to follow. Therefore crimes and social disorder is common in those areas followed by less education and more unemployment.
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10.0. Primary Data Analysis This section is devoted to analyze the data that have been collected by interviewing customers and real estate experts in Bangladesh. Interviewees are from Dhaka city and its outskirts. Customers have been interviewed by structured questionnaire (added in appendix) while informal discussion was the mechanism in case of real estate experts. Experts include the real estate professionals mainly in different firms in Dhaka. Therefore in the following sections the author summarizes the quantitative data along with the inputs from qualitative data. At the end there would be a summary of the analysis. In total 100 respondents have been interviewed from seven regions of Dhaka and its outskirts. 10.1. Personal Information Total sixteen respondents are from Savar and Ashulia while fourteen from each of the six other regions. The rationale behind this is that Savar area is the major beneficiary of the real estate sector expansion in Bangladesh.
Figure-10.1: Sampling of population (Source: Survey) Though majority of the respondents are 30-39 years of age, majority of the people who owns houses are from 40-49 years age category. 63% of the total respondents are from 30-39 years age category while 49% of the total respondents who own houses are from 40-49 years age category. Second highest figure comes from the 50 & above age category in case of owning houses and the figure amounts to 37%. Respondents are equally distributed among three income levels.
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Figure-10.2: House Ownerships in Bangladesh (Source: Survey) This reflects the real scenario in Bangladesh. In Bangladesh medium income people normally cant think of buying houses before 40 years of age. At this age they are almost close to their retirement from the jobs or they hold good position in the jobs for which they might have kind of easy access to financing. At the same time at this age they have matured kids at home. To ensure a good future for the kids almost all feel an urge to own houses to live in the own way with family members. Medium income people face the problems especially if they have big families and therefore they sometimes cant start buying houses until 50 of their age. On the other hand low income people cant do it even after 50 of their age because of the lack of access to financing. But some high income people own houses even at thirty or mid thirties. 10.2. Knowledge of the Real Estate Sector Almost all (95% of the total respondents) respondents think that it was the necessity to have a real estate sector in Bangladesh especially for the better and planned urbanization. But there are some people (05% of the total respondents) who think that it was not required. In their opinion it should be done by the state not by some people who come in front line mainly due to own interest not for greater social interest. They think it creates division in between people in the society. But they also admit that they are biased by their political philosophy. Low income people think that rapid growth of urbanization helps the country but put a pressure on them and make their life miserable somehow. They cant afford this kind of expensive housing and feel inferiority sometimes in the society. At the same time they think that rapid growth of real estate sector increases the land exploitation and thus reduces the amount of land for other uses.
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Among the various reasons of real estate sector development in Bangladesh land scarcity and the lack of social security got the most attention from respondents. But respondents think that other factors like population growth, price of lands and houses, and complexities of purchasing land & building houses are also important factors behind the development of the real estate sector in Bangladesh. Following table summarizes the respondents opinions. Total responses are more than 100 because respondents found more than one option appropriate. Table-10.1: Factors affecting the real estate sector in Bangladesh Attributes Income pattern change Hazards related to lands Lack of social security Price increase of lands Scarcity of lands Capitalist mood of economy Luxury life Land owners problem in financing Rapid population growth Rapid urbanization and migration Decrease in bank interest rate Source: Population Survey Majority of the respondents think that the sector is now in the growth phase though currently the business condition is not good. Well this happens due to the political change in the country. Right now there is an interim government in the country and they want to change a lot of things in the administration. Thats why all the business sectors including real estate sector are getting some kind of negative effects of that. Number 57 63 94 68 90 34 38 67 71 53 56 Percentage 57% 63% 94% 68% 90% 34% 38% 67% 71% 53% 56%
Figure-10.3: Stage of Real Estate Business in Bangladesh
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Current government puts high importance on tax payment by the residents among other issues to root out corruptions from the administration in the country. It reduces the flow of money to the economy. More and more money becomes idle, as people are scared of being interrogated about the sources of money and tax payment. Thats why growth in the real estate sector is bit low now but experts hope that when there will be any political government in power, growth will resume as there is a vast market to penetrate yet. 10.3. Property Ownership & Satisfaction In the high income level people own houses when they are in the age range of 30-39 years. But in the medium income level sometimes it takes more than 50 years or even never in the life time. Low income people mainly build their own houses in their own way. Sometimes their houses are not buildings; rather they are made of woods and steels. There is variation among the people who own houses too. Some rich people think that real estate developers cant comply with all of their preferences and therefore they construct their own houses in their own way. But the situation is reverse for the low income people. They cant afford the highly priced houses and thats why they build their own houses. Respondents focus more on overall quality and location when they buy houses. But they also think that ease of financing is very important. When they buy houses most of the respondents (98%) visit the location of the houses or at least some other projects of the company to get an overall idea about the company and its products. One of the interesting findings is that majority of customers are not yet treating amenities as something important.
Figure-10.4: Most valued attributes (Source: Population Survey)3

3
Total percentage is more than 100% because respondents could select more than one option
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According to respondents they get their first orientation to any company mainly through their advertisements. If they become interested they look for the people in the community who own products from the same company. It means that advertisement plays the major role in the initial stage. Most of the respondents fall in between happy and somehow happy categories in terms of the quality, post purchase care, financing terms, and luxury aspects. But almost all the respondents are somehow happy in case of time to hand over aspect. It happens because companies cant keep their promises on the delivery date. Respondents think that this is the negligence of the companies rather than something unavoidable. Some high income people are not satisfied with the luxury aspects of houses but they said that they have the chances to change the components by discussing with the developers. Table-10.2: Customers Satisfaction of real estate products Very Happy Happy Somehow Need Happy Modifications 52% 33% 56% 52% 87% 19% 8% ~~ 1% 3%
Quality Post purchase care Financing terms Luxury aspects Time to hand over
~~ 19% 11% 2% ~~
29% 40% 33% 45% 10%
Source: Population Survey 78% of the total respondents argued that their companies just look for profits rather than social responsibilities. But they think the efforts of these companies can be redirected toward the better social welfare if managed properly. A small number of the respondents argue that they have the chances of customization of their houses according to their own preferences and their companies offer them that flexibility. 10.4. Customers Recommendation 69% of the total respondents think that low quality of the houses will force the companies to redesign their offers in near future to stay in the market. Otherwise people will loose interest to their offers. A growing concern goes to the exploitation of landowners by real estate companies in case of land acquisitions. Respondents think that it increases the number of frauds in the sector as most of the time companies just exploit the landowners rather than satisfying them.
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In reality what happens is that when there are some lands eligible to construct multi storied housing project in the city, companies try to convince the land owner by offering him/her some advantage package. But questions come up because this package is not sufficient and even companies force the land owners to adjust the package offer negatively in the post construction phase. Some land owners are so simple that they cant understand the complexities of the tricks companies play with them and finally get high level of dissatisfaction. Therefore 87% of the total respondents think government should come up with proper regulations to set up an exact framework for the sector so that all the efforts of the sector go in favor of the welfare of the country and society. They think demand supply mechanism is not a proper way in Bangladesh market till now because supply is less than demand and demand is increasing day by day in the Bangladesh market and developers just exploit the pace of demand not the social welfare. They also argue that if demand supply mechanism would be good enough then the city would not be so vulnerable to the earthquakes. It has been claimed for a long time that an earthquake with the medium level intensity can destroy the majority of the buildings in Dhaka city. Old city area is the most vulnerable to the earthquakes. Experts also argue that Bangladesh market is not yet ready for the demand supply mechanism to decide everything due to various reasons. Some of them are undue influences by some big companies to modify the way of business in the sector, less awareness of the mass people, corruptions in the administration, and demand is far more than the supply etc. They argue that due to the above mentioned reasons the condition of Dhaka city is miserable now. If government would be taking care of it well before rather than today, Dhaka could be a very good place to live. Therefore they suggest to the Bangladesh government to think not only about Dhaka city but also about other cities in the country for a better Bangladesh. 10.5. Chapter Summary Though land scarcity and the lack of social security has led Bangladesh to have a formal real estate sector, most of the dwellers are not satisfied with the products of the real estate companies for various reasons. Among them less quality, high lead time, random constructions by the real estate firms, and the profit orientations of the firms are mentionable. Therefore they suggest government to come into the scenario to design a proper framework with regulations if necessary within which real estate firms will operate towards the better Bangladesh.
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11.1. Conclusion In this section attention goes back to the original research question why real estate market has been developed in Bangladesh and how its functioning now. Before focusing on the main question lets see the sub questions. Demographic information of the population in Bangladesh: Though the per capita income of people has been increasing in the last couples of years in Bangladesh, still majority of the population have below average income. Its claimed that there are now two extremes in the society-rich and poor. Middle class is diminishing gradually and becomes poor. Though some middle class people have access to the housing, low income people dont have. Government got this concern recently and advised the real estate sector to arrange housing for medium income and low income people too. The society is male dominated but participation of female in the national account has been rising with a good pace in the last couples of years. Total number of women in jobs increases while girls also do well in the education compared to boys. Decision making process of buyers: As investment in the real estate products is bulky in nature, buyers go through an extensive buying process where availability of information is the key success factor for real estate developers. Almost all buyers visit the project site or at least some other works finished by the same developer before they make any contract. Real estate market and real estate products: Since its birth in late 70s the sector has been expanding its reach to the other areas of the country in addition to Dhaka city. Dhaka is city where most of the real estate firms operate. Currently all the six divisional cities along with the outskirts of the Dhaka city and surrounding districts of Dhaka districts are the major fields for real estate firms. The market is neither a monopoly nor an oligopoly. More than 500 companies operate in the market among which 321 companies are
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affiliated with REHAB. But only 10-15 large companies hold the 95% of the total market share, which means that the market is pretty much concentrated. However, the market is open to all investors to invest and there is no entry barrier. Residential real estate products dominate the market though there are small scale commercial productions too. But its assumed that in near future the scope for commercial real estate business will be expanded in the other regions except Dhaka city. Major players in the market: Real estate firms, customers, banks, and government are the major role players in the real estate sector in Bangladesh. Firms control the production while they have to be dependent on the demand arising from customers. This demand is affected by some other factors like price of lands, income level, complexities in building houses, and population growth etc. among others. Government as the chief commander of the country can influence the whole market through different relevant policies, but there is not yet anything like that from government. Effects of real estate business: Though the sector has both positive and negative effects, experts argue that it can be much better if organized properly. Dhaka city as the victim of the indiscipline and random developments by the real estate developers is suffering from severe traffic jam and large scale pollutions. Value chain and segregation: All the activities in the value chain add value to the final products. However, acquisition of land and timing of acquisition is very much value creating to the real estate developers. The reason is that these two factors largely influence the profit margin from a particular project. Though most of the segregation is involuntary, resources scarcity produces lots of by products which are pretty negative and taken by the people as the effects of segregation. Among them crimes and lack of proper educational services are mentionable. Customers reaction: In reality customers are pushed to accept the available offers in the market even though thats not the exact demand from them. Therefore majority of the customers think that their investments in the real estate products are not fully justified. They also dont like the fact that the developers are caring for profits only rather than total welfare. Main research question: The answer of the main research question can be get once one combines the answers of the above mentioned sub questions. To meet the varied demand arising from the change in
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demography of population in Bangladesh, a formal real estate sector has come up in scenario in late 70s. Since then it has been growing with a good pace and it experienced a boom in late 90s. Why did that boom occur? Some other factors along with the change in population demography contributed to this boom. Those factors include rapid urbanization, rapid population growth, scarcity of lands, lack of social security, complexities in buying lands to build houses, and changes in the income of people etc. among others. The sector expands it reach to the different areas of the country in addition to the Dhaka city, the main firming area for the real estate developers in Bangladesh. Six divisional cities are the basic target for expansion. Outskirts of Dhaka city and the surrounding districts Dhaka has become target well before and a good portion of these areas are already captured by the developers. But still a large segment of the total market is remaining to be penetrated which means the sector has a good potential in coming days. Currently the growth in the sector is a bit low because of the irregular political practice in the country. But experts argue that the sector will get back its normal face once the regular political government gets back in power. Majority of the customers are not satisfied with the services from real estate developers. Therefore they think government should come up with proper directions for the sector. They also favor regulations, as they believe that Bangladesh market is not yet ready for the usual demand supply mechanism. 11.2. Recommendations Real estate sector in Bangladesh is not regulated yet and government currently has no mentionable intervention to control the firming of the firms in this sector. Therefore developers are doing what meets their interest best. This made the whole sector chaotic and cities like Dhaka suffers for the unplanned urbanization activities. Therefore its time to save other areas of the country along with the protection for the Dhaka city in case situation goes worse. With that aim recommendations from the authors are in point. Government should ensure the proper policy design and most importantly proper implementation of those policies in case of urbanization, in case of real estate firms operations, and in case of government involvement in the business of the sector.
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Corruptions and bureaucracies from the administration should be removed. Government should ensure that large companies dont get any unfair advantages. Decision making should be more decentralized but without any corruptions. Proper control mechanism should be designed and properly implemented. Trade license procedure for the developers should be more strict and strict conditions should be put on the unplanned development activities. Government should take initiatives to help the mass of people in case of real estate financing. Low income people should get priority in this case as they suffer most. Government should come up with different projects too in addition to encourage the private investment in the country. The sector really requires regulation and government should bring that in order to save people from fraud and cities from unplanned urbanizations. Government might think about moving different government offices from Dhaka city to its outskirts to reduce the traffic in Dhaka city. It will also work as the decentralization of the country.
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As mentioned earlier Dhaka is the major victim of random and indiscipline constructions by the real estate developers in the country. No one was following the existing rules and regulations to construct buildings. Therefore its argued that an earthquake of medium intensity can destroy the major part of the Dhaka city. Above all traffic system and the environment have been harmed so deeply that the city is now ineligible to live. Further research can be carried out on what can be done to minimize the negative effects of the random constructions and to improve the living standard in the city. The research will include the study of surroundings of Dhaka, water system of Dhaka, transportation system of Dhaka, potential improvement in the transportation system of the city, and cleaning system in the city. It might include the study of the potential rules & regulations, improvement of the existing rules & regulations, and strict implementation of rules & regulations etc. Secondly research might be carried out in the area where real estate can be added in the asset portfolio to diversify the portfolio. Real Estate business in Bangladesh has proved that it is worthy to invest in this sector as still the sector provides abnormal profits though the margin is not as healthy as it was earlier. Another area could be the designing of the framework within which real estate sector should operate. In this case one needs to study the current rules and regulations, what is needed additionally, why there is a gap, and what is the practice in the developed countries etc. One can take input from the Swedish real estate sector too.
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Masters of Business Administration: Principles of Marketing

Real Estate Market in Bangladesh

Dhaka: 18 september 2011

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Figure-2.1: Bangladesh in the Indian Sub Continent

Real Estate market in Bangladesh: Development and Current Practice

Figure-2.2: Districts Of Bangladesh

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Trade Balance ($m)

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

3329.73 6.27 24628 418

3707.07 5.96 27061 441

21.04 26.60 52.36

20.14 27.22 52.63 8.36 6.48%

19.61 27.91 52.48 8.04 7.17%

Real Estate market in Bangladesh: Development and Current Practice

Figure-3.1: Divisional Cities & City Corporations

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice

Real Estate market in Bangladesh: Development and Current Practice