Like any other country in the world, the housing sector plays vital roles both in the context of the economy of Bangladesh and in serving the fundamental human right of shelter. Apart from providing physical shelter, housing may have a significant impact on the lives of the dwellers in terms of skills enhancement, income generation, increased security, health, self-confidence and human dignity. Bangladesh, like many other developing countries, faces an acute shortage of affordable housing both in the urban and rural areas.
Moreover, housing affordability is being eroded by poor land administration policies, which have resulted in very high land prices that make urban housing prohibitive for lower-income groups. Also, there is no active secondary market for real estate, mainly because of the high transfer taxes and an uninterrupted long-term increase in land prices. In spite of all these, this sector has experienced considerable growth in the past few decades.
With a rising population and increasing housing demand, apartment culture has grown up in Dhaka. Apartments were first introduced by the formal private developers in the early 80s to the housing history of Dhaka. It first appeared in Dhaka near Central Road and subsequently, the city experienced a boom in apartment development in all residential areas including Paribagh, Maghbazar, Siddeshwari, Shantinagar, Dhanmondi, Mirpur, Banani, old DOHS, new DOHS, Gulshan and Baridhara, to name just a few. In line with this, house rent in Dhaka increased by 250 percent between 1990 and 2007.
During the last decade, the total volume of the Real Estate, Renting and Business service sector increased every year which implies a positive growth in the sector every year. But, compared to overall GDP growth, this sector expanded at a slower rate. That is why in overall GDP the contribution of this sector has a downward trend. The overall GDP contribution of the sector was 7.02% in 2009-2010.
In a crude measure, the total volume of the sector was approximately 26575.74 crore BDT in 2010-2011. The growth in this industry also facilitated fast growth in many linkage industries like glass and glass products industry, brick industry, cement industry, ceramic industry, iron and steel industry, etc over the last decade. Such consistent growth in the real estate sector is mainly due to a consistent demand at the consumer end.
Through the analysis of consumer responses, it was found that those who are looking to own a house or within a short or medium time frame have an average monthly family income of BDT 95,441.18 and on an average plan to build their houses on 4.6 kathas of land. Those who are looking for buying an apartment within a short or medium time frame have an average monthly family income of BDT 97,300 and on an average they want to purchase 1,786 square feet flats.
Among the respondents around 50% (330 out of 676) has an average family saving of around BDT 20,000. Currently, consumers are more interested in buying flats than building their own houses. People who already own a house or flat are still very willing to buy another property which actually adds to the growth in the demand. Buyers from the 40-50 years age group are more willing to build their own houses in upcoming years.
Younger segments are willing to purchase flats rather than build their own houses. But in most cases, they do not have any immediate plan. For building houses, people mostly prefer Uttara, Mirpur, Purbachal area, Bashundhara area, Mohammadpur, Dhanmondi, and Gulshan areas. For purchasing flats, consumers mostly prefer the Dhanmondi, Uttara, Mirpur, Mohammadpur, Gulshan-Banani, Basundhara, and Malibagh-Mogbazar areas. Among different occupational groups, Businessmen, Private Bankers, and Doctors (both Govt. service holders and private practitioners) are more willing to build their own houses or purchase flats. Major sources of funds are bank loans and personal and family savings.