A. MEANING OF REAL ESTATE:
In our everyday life, we use real estate in some manner; we make use of real estate resources to provide shelter, comfort, convenience, and privacy, a place of work, recreational facilities and related services. In an estimate real estate represent more than 40% of national wealth. Therefore, the manner in which the resources of this magnitude are used has an important effect on the well-being of our people, the success or failure of business firms and the general prosperity of the country.
The term Real Estate as commonly used has two meanings:-
- It is name given to the commodity “reality” which includes not only land but also all human improvements placed on the land,
- It is the name given to the business engaged in by those persons who conduct commercial transactions in real estate.
The basic component of reality as a commodity is land. It means not only the surface of the earth but also the property rights and interests that attach to ownership of reality, including subsurface minerals. Thus the real estate means acquirement of land and building which is called inherent right. The men who are the owner, user, maker, financier or marketer of the property have some rights to the property.
B. INCREASING POPULATION GROWTH RATE AND HOUSING NEEDS:
Bangladesh, the eighth most population country of the world, is overburdened with its huge population and alarming growth rate. In 1989, the population of Bangladesh was around 110 million of which 20.2 million lived in urban areas. The growth in urban population has been alarmingly fast, almost 11% annually against the population growth rate of below 3%. There has been more than 10 fold increase in urban population from 1950 to 1989. The urban population in 1950 was 1.78 million, which grew up to 2.65 million in 1960. In 1970 it became 5.15 million while in 1980; the total urban population was 9.53 million. It has been projected that total population of Bangladesh would reach 141 million by year 2000 with urban population of 37 million i.e.; 26% of the total population. Taking 1970 as base one will find that the urban population has nearly doubled from 1970 to 1980, has increased by nearly four times from 1970 to 1990 and if the trend continues, the urban population in 2000 will be six times as much as the population in 1970.
The trend is much higher than Asian urbanization trend where between 1970 and 1980, the urban population increased by 1.5 times and by 1990 it was projected to be nearly double, while by the year 2000, the urban population will be thrice as much as that of 1970. For all the less developed regions, the trend in urban growth has been and will be more or less the same as the Asian trends. All these go to show that:-
- The urban growth has been alarmingly high in Bangladesh, and
- The growth rate in urban population is higher in Bangladesh compared to Asian less developed region and world standard. This growth in urban population has been concentrated around four major cities, namely Dhaka, Chittagong, Rajshahi and Khulna. The situation of excessive urban population has resulted in a very serious housing crisis all over the country especially in the capital city, Dhaka. The population of Dhaka city was 1.6 million in the year 1974 and doubled to 3.4 million by 1981. At present Dhaka is a city of 7 million people with the 32% of the total urban population. The densities of population in concentrated areas are 200 people per acre. 70% of the total populations in Dhaka city do not possess any land. 80% of the total land is owned and used by only 30% of the total population, while the rest 20% of the land is resided by the 70% of the people.
The population is increasing day by day and the Dhaka city will be one of the five most densely populated cities of the world.
Table-1 revels that the population is expected to reach 9.5 million by 2000 and the number of houses that will be required can be seen from table-2.
Table-1: Population growth of Dhaka city
Table-2: Distribution of Demand for House in Dhaka city
|Place||Population in 1981||House Need||Projected population in 2000||Projected House Need|
Source: Rahman, Atiar, Grihayan O Unnayan: Pariprekkhet, BIDS, Dhaka, Bangladesh, p. 125.
C. OBJECTIVE OF THE STUDY:
The study attempted to explore and examine the present patterns and problems of the real estate business in Dhaka city and its future trend. Specially the objectives of the study were as follows:
- Implementation co-ordination with NSPDL, Beneficiaries and Government.
- To minimize the enduring housing problem in our country, by making important contribution in private sector along with public sector.
- To promote the private and public sector initiatives taking this kind of programme.
- To create the opportunity of affordable housing for all income groups of people in accordance of short, medium and long-term planning.
- To collect the donation and endowment from various organization of home and abroad and disseminate them among the low income people in order to improve the housing condition and quality of life.
- To use the latest and cost effective technology in order to make affordable housing for the low income people.
- To generate opinion in native and abroad by arranging and participating meeting, seminar, symposium etc.
D. METHODOLOGY OF THE STUDY:
The study is mainly an exploratory one and survey method was used to collect information from primary sources. Attempt was also made to get in touch with the information available in the related field.
As published information about real estate business is scanty, primary data were collected for the purpose of the study. Two sets of structured questionnaires were used to collect the necessary data. The first set of questionnaire was used to collect data from the company and the second set of questionnaire was designed to collect data from a sample of 25 buyers.
Both of these samples were selected purposively due to the non-availability of suitable sampling frames. The questionnaires were designed in keeping with the objectives of the study and utmost care was exercised for ensuring objectivity in data collection.
Real Estate Business in Bangladesh
A. Background of Real Estate Business in Bangladesh
In Bangladesh real estate business is a recent phenomenon, although such activities have been started sometime in 1964. Ispahani group was the pioneer in this sector. But early 1980s with the inception of Eastern Housing Ltd. the business started flourishing. Now this is a booming sector of the economy. Since late 1980 it came into the purview of business field. As a fast growing city of Bangladesh, such business was initially concentrated in Dhaka; of course, some limited scale of activities has been started later on in Chittagong and Khulna cities. At present there are about 96 firms operating real estate business in Dhaka city. Considering the population and development the real estate business has bright and luminous future in Dhaka city.
Real estate business is a new area and still to get attention of the researchers, planners of our country. The business has got some peculiarities relating to law, valuation of cost, fixation of price, method of contract for sale etc. Theoretically product falls in the group of primary demand but considering the cost and other related factors it can be termed as a luxury item.
Real Estate is pure asset. Therefore transactions and business related to it assume significant importance. Today the Real Estate situation in Bangladesh has crossed the boundaries of the time honoured “zameen” concept. In fact, in Bangladesh, Real Estate traditionally meant office and residential space. But today the scope of the Real Estate sector is in the process of undergoing a paradigm shift, to include sectors like retail & entertainment, hospitality, insurance, etc and a significant amount of capital are tied up with this sector. Some factors have played important role behind this trend such as Concept of “Capsule Family” is growing in the social structure. So younger couples like independent but affordable living, affordable self-owned permanent, accommodation in desired locations, secured living, very attractive as investment of idle funds, financing in housing creates direct wealth highest rate of value appreciation of property and in view of the realities of land scarcity and growing upper and upper-middle class (with annual income of Tk. 240,000 or more) as well as Dhaka has no alternative than going vertical Add to that a burgeoning population in and around city area and the demand is likely to increase.
Another report shows that there was 90 real estate development companies in 90s. At present there are near about 320-350. That can produce 12000 unit of apartment per year as a whole, and increasing growth rate is 15%.
2. B Present situation and future trends of Real Estate Business in Bangladesh:
Food, clothing and shelter, or home, constitute the basic rights of a human being. But it is a matter of concern that in Bangladesh the shelter aspect is most neglected and even over looked in our political agenda. But fact of the matter is the benefits of investing in the housing sector are unparalleled, not just in social terms, but in economic terms as well. For example, negative wealth effect from falling shares price is being offset by booming housing prices and that keeps consumer to continue spending and to save the economy falling into deep recession. The extent of development of housing is one of the major indicators in gauging the health of economy.
Real estate industry plays a significant role in the socio-economic development in Bangladesh. There are so many real estate companies engaged in this sector. However a few of them are operating efficiently and profitably. High quality, responsible price and commitment are main determinants of this sector to run efficiently. Real Estate Operators (REOs) erect or build multistoried apartments or commercial buildings in different lucrative areas in Bangladesh, mainly in Dhaka city, to sell the apartment units or commercial spaces to the targeted customers.
b. How Real Estate Operators develop their land:
REOs develop the land in two ways such as (1) self-development by purchasing the land at their own cost and (2) the joint venture agreement. Most of the organizations are doing first one. However, those companies who have high reputation in the market are doing one. It is the best available opportunity for the REOs in which land cost need not be provided to the landholder. The landholders look for the trusted quality-based and highly committed organizations to develop their lands. In case of this type, price becomes reasonable and within the capacity of the more potential customers. Joint-venture agreement is done on the basis of factors such as location of the land, demand, reputation of REO and the relevant terms and conditions etc. If the REO erect or build the building by purchasing land, they have to invest a large land value. As a result, the cost contributions to the reduction of the profit margin. That is why joint venture is more profitable and easier to develop the land as well as marketing the products.
c. Product Offering:
Currently our housing companies offering variety of features and facilities for apartment holders such as affordable accommodation in desired locations, health club, roof top garden, and arrangement for children playing, stand by generator, mosque, loan facility available, 24 hours security system and after sales service.
d. Financing in Real Estate:
In needs to focus on financing opportunities 7 structure in real estate sector, until recently, the public sector was the only institution providing long term housing finance. The deregulation in financial sector started in the early 80s, in 1990s National Housing and investment Ltd. and Delta Brac Housing Finance Co. were established in private sector with the objective of providing long term loan for acquisition of flats & apartments, for construction of single unit house, for financing extensions and major repairs, acquisition of housing plots in recognized housing development schemes etc. Private sector house financing companies also provide financing to developers for financing constructions of multistoried apartment blocks to increase the stock of apartments/flats. The most important consideration of housing financing is the rental value of the house. When taking a loan for a house, the owner is always considering the economics. He should cover the repayment of the loan or his ability to recover the principal and interest that is usually the rent, if the total apartment value is considered. The main problem in the country is availability of capital at cheaper rate of interest. But in other countries of the world, the housing sector is given a preference interest rate for housing. According to M. Motiul Islam, Chairman of National Housing and Investment Ltd. the ways of promoting housing loan among the general people are development of low cost housing and providing long-term loans at subsidized rate of interest.
e. Contribution to Economic Development of Bangladesh:
The importance of Real Estate is recognized as a significant growth instrument. The greater volume of investment and development of real estate will drive economic development and stimulate capital formation in an increasingly competitive environment. To illustrate the importance of housing, consider the following:
According to some economist, the total activities of real estate contributes approx 2% of Bangladesh’s GDP. In addition, there are a number of forward and backward linkages that are difficult to identify due to the accounting process. It is an important factor of production-a key resource that assists in overall wealth creation, efficiency of business operations and combines with other resources to offer products in a competitive market place. REOs play the decisive role in developing and effective utilization of land that is very much essential for solving the housing problem. The people who are owners of pieces of land often cannot erect or build building because of lack of adequate capital. However, REOs undertake those lands and build multi-storied building with joint venture buildings.
In the era of globalization, changing mindsets have recognized real estate as an important tool for economic growth and investment. Organizations both in the public and the private sector are increasingly looking towards converting their real estate assets such as vacant land holdings, other surplus real estate etc. into revenue earners or profit centers. There is multiplier effect-other direct benefits include backward linkage such as constructions, cement, rod, bricks, paint and forward linkage sectors such as household durables home furnitures and electricals, etc. Directly or indirectly few millions people are involved in this sector. Real estate companies also contributed Tk. 600-700 crore revenue to the exchequer in the last fiscal in form of VAT, duty, and registration fee. In contrast trade financing that does not benefit the economy directly, funds in housing financing adds to the GDP growth of a nation. And it keeps capital within country.
North South Property Development Limited: A History of Success
3. A. Background of North South Property Development Limited (NSPDL):
Bhashantek Rehabilitation Project is the first partnership project lead by Bangladesh government of building a satellite with all the basic amenities for slum dwellers and low income earners. Government’s land, private sector's initiative and contribution and beneficiaries' support – these three together have contributed to implement the Bhashantek Rehabilitation Project. For this reason, on behalf of the government the Land Ministry has allotted around 150 bighas of land in Bhashantek's Dhamalcoat and Lalashorai mouja at Mirpur section no.15 under Kafrul Thana of Dhaka Metropolitan area. The project is approved by the Executive Committee of National Economic Council (ECNEC). North South Property Development Ltd. (NSPDL) will turn the project into reality with its own finance. North South Property Development Ltd. and the Land Ministry have signed an agreement on that basis at 29th September 2003.
The company is running by a well organized team of Proficient Architects, skilled Structural Engineers, Management experts, and other competent professionals engaged in supportive functions. A number of highly qualified consultants from various disciplines also make significant contributions towards enhancing the capabilities of the company. NSPDL follows a policy of making contracts for utilizing the expertise and skills of eminent technical and other professional consultants, as and when necessary for its projects. The company also has a Research and Development Department that fine tunes the designs, plans and strategies for its building constructions and related activities.
1. RATIONAL OF THE PROGRAMME
There lies serious housing problem in populous Bangladesh. This problem is much more acute especially at the case of housing for low income group. At present 35 lakh slum dwellers live in Dhaka Metropolitan area. Altogether 80% low income people live in inhuman condition lacking the proper hygienic living condition, housing, pure drinking water and basic civic facilities.
Slum dwellers should not be considered as the burden of city. They have significant contribution in urban development and economy of the country. Though the city is benefited with the help of this people but no one even think about upgrading the quality of life of this people. Beside this it is also observed that there are severe problem of lack of housing including the basic civic facilities of life in the urban region. In consequence of this situation NSPDL is determined to provide planned housing facilities for slum dwellers and low income people. In this respect NSPDL has taken the initiative to implement the ONE MILLION FLAT PROGRAMME under VISION-2025.
2. DESCRIPTION OF THE PROGRAMME
In the primary stage including Dhaka Metropolitan Area various city corporation, Pourashava, Upazila and some other locations would be available for the Flat and Plot programme.
According to the Dhaka Metropolitan Development Plan (DMDP, 1995-2015) and Upazila Master Plan some areas are considered for development region. In this respect Dhaka and adjacent areas of Dhaka have given the priority on:
2.2 Application Form and Submission Procedure
- Price of Application Form (non-refundable) : 500/-
- Processing Fee for Registration (non-refundable): 2000/-
- Payment Procedure: In case of selling of application form, processing fee, payment of flat and plot would not be acceptable in cash. Only pay order, bank draft in the addressing the “NSPDL VISION-2025 Programme” will be accepted.
2.3. Pricing System for Plot and Flat
2.3.1 Pricing System for Plot
- Plot Size: 2160 sq ft (3 katha), 2880 sq ft (4 katha) and 3600 sq ft (5 katha)
- Pricing: According to the location of plot area Tk 100-500 per sq ft has been determined.
- 5000/- will be deposited at the time of booking and the rest will be paid by monthly installment.
- Every one year increase in installment the total land price will increase at the rate of 10%.
- The following Installment system (monthly) will be available for the beneficiaries:
- 36 installments
- 48 installments
- 60 installments
- 72 installments
- 84 installments
- 96 installments
- 108 installments
- 120 installments
2.3.2 Pricing System for Flat
- Flat Size: Flat size of 250 sq ft, 300 sq ft, 400 sq ft, 500 sq ft and 750 sq ft will be allocated within the affordability of the low income people.
- Pricing: To make the VISION-2025 NSPDL, ONE MILLION FLAT PROGRAMME successful, two types of package system will be available. These are:
- Package-1: Pricing of flat is determined
- Package-2: Pricing of flat is not determined
Payment system of flat is divided into following two portions:
- Land Price According to size of flat
- According to the location of land, price of land may differ from 100/- to 500/-.
- In case of land price, payment procedure will be available for 3, 12, 24 and 34 monthly installment
- In case of payment in 3 monthly installment 30% discount on total price of land will be offered
- In case of payment in 12 monthly installment 10% discount and 24 monthly installment 5% discount on total price will be offered.
- At the stage of MOU signing period clients of 250-300 sq ft have to pay 5000/- as the portion of total price of flat and plot. In case of 400-750 sq ft clients will have to pay 10000/- in this regard.
- The payment of rest of the balance has given below:
- Flat Price
- In case of payment of flat price minimum 36 monthly installments and maximum 120 installments system will be available.
- Total price of flat is determined assuming 2000/ per sq ft for the maximum duration (120 installment).
- Reduction in duration of installment (one year) 5% discount will be offered on total worth of flat.
- After the 13th month of booking date client have to deposit 5000/- per sq ft to the company till the handover date.
- The company will arrange for bank loan as a guarantor to pay the rest of the balance amount.
- In accordance with the income and savings of the low income people, the installment amount has designed from minimum 555/-.
- The flat price has not fixed in package-2 rather as per demand (handover date) of the client the maximum cost between PWD rate and local market price will be charged.
In this case land price as per flat size and the deposit system will be same as package-1
Aims and goals:
a) To solve the housing problems of low-income earners and slum dwellers and to develop their living standard.
b) A goal of building 9024 'A" type flats of 215 square feet for slum-dwellers and 6000 "B" type flats of 395 square feet for the low-income group have been determined.
Other establishments and community facilities:
If an estimation of 6 members are there in each of the 15024 families in Bhashantek Rehabilitation Project, 90144 people all together along with management of the different establishments and the employment of people in different works total population which amounts to more than a hundred thousand in the satellite. According to the above statistics, Bhashantek satellite's population may be more than the population of any of the wards in Dhaka city. Realizing it, to provide modern services and facilities, the following preparations have been done in the plan of the project:
(1) Community facilities:
Administration house, bank, post-office, and community center cum auditorium will be established for economic-social activity functions like wedding, cultural programmes, meetings etc. of the beneficiaries. Bus terminal and telephone exchange will also be established to develop easy communication systems. Establishment of deep tube-well for providing pure water, maintenance of the roads for keeping a good environment, cleanness, change places of dirt, and good drainage system along with sewerage and other community services will be confirmed. Other than this, trade center, mosque, kucha bazar, fire brigade and security barrack will be established within the project area.
(2) Power supply:
Generation and distribution of electricity will be managed by installing an electricity plant with a power of 30 megawatt confirm a steady power supply for the beneficiaries in the project.
(3) Medical service:
A modern six-storied hospital will be built in the project area to confirm medical service.
(4) Education Facilities:
Three six-storied buildings will be built where school, college and vocational training center will be established for education and training of the beneficiaries and their children.
Parks with lots of open space will be built for refreshment of the residents of this satellite and indoor games facilities with ground will be structured for allowing the children to play. An internal satellite TV channel will be provided for telecasting various programmes.
(6) Shopping and exhibition center:
Modern air-conditioned trading center of three stages will be established at a basement floor of around six million square feet in the project area. Super market, permanent exhibition center, entertainment center and medical center will be there in the trading center.
(7) Extra internal facilities of the flats:
The beneficiaries can increase the internal facilities according to their wish after getting the allotted flats and within six months of allotting, they must write to NSPDL if they want to modernize it. In this case, the manager will demand the amount of expenditure on the extra work and will charge 25% on the expenditure as service charge to the beneficiaries. Mosaic/tiles, distemper/plastic paints, kitchen cabinet, sink basin, commode, tube-light, fancy light etc will be referred as extra facilities.
Around three and a half bighas of land is kept for graveyard in the project area. Only the allotted beneficiaries and their heir will get the facility of this graveyard.
Finding of the Study
4.1 Characteristics of North South Property Development Limited
1. Duration of the company:
A study shows that a large proportion of this companies existed between moreover 10years age. On the other hand 25% of the Real Estate companies were 6-9 years of age. So it appears that most of the real estate companies are newly established.
2. Ownership patterns of the NSPDL:
To get an overview of the character of real estate business practice in Dhaka city, we have noticed that 8.5% are sole-proprietorship, 50% are partnership type, 16.5% are joint-stock companies and the rest 25% are private limited company. The following table – 3 reveals an overview of the ownership characteristics of real estate business:
Table 3: Ownership characteristics of real estate business.
Private Ltd. Company
Another study shows that the majority of real estate companies are private limited companies (60%) while 15% real estate companies were owned as sole proprietorship.
NSPDL is a Private Limited company, four enthusiastic Architects is the owner of the company. The reason behind such pattern of ownership may be due to the fact that the real estate business involves comparatively large amount of capital.
3. Source of fund for Business:
Real estate business firms are still to get any special privileges from the government which an industry generally gets. In this regard, the picture in developed world is quite different. Thus regarding finance they are to depend mainly on personal fund and this is estimated to be about 58% of the total capital requirement. Financial institutions, particularly commercial banks advance credit to the real estate firms like that of other business concerns. This source accounts of 23% of the total capital requirement of the real estate firms. Besides, the firms can meet some amount of their capital requirement which they receive as an advance sale of the property and this is calculated about 19%. the sources of fund for NSPDL real estate business. And Government gives us a land.
Table 4: Source of fund for real estate Business:
|Source of fund||Percentage|
Advance sale of the property
4. Employment status/opportunity:
The Company of NSPDL 30% employer are department of sales division , 20% is Engineers , 25% account division and 25% labors.
5. Reasons for engaged in this Business:
A study identified various reasons for which the present real estate business companies came into this business. It has been observed that 80% of the companies have come into this business as they thought it would help solve housing problem of the city. Data also show that 55% of the real estate companies have come into this business as they thought it had lucrative profit potential and 35% of the companies have come into this business as they considered it would create job opportunities. 35% of the companies did not have any other business. On the other hand, 65% of the companies had other business such as consulting firms, trading and manufacturing, pharmaceuticals, food processing and cold storage. But This Company NSPDL want to solve the low income earners and slum dwellers and to develop their living standard.
6. Project size:
Government’s land is Bhashantek. Land Ministry has allotted around 150 Bighas of land. But other real state comapany has been revealed that 40% of the companies had 1-10 Katha of land for their first project. 20% of the companies started with 10-20 Katha while 10% of the companies had more than 40 Katha of land initially. So its different from others real sate company.
7. Invested capital:
It has been found that 45% of the real estate companies had invested working capital above Tk. 50 lacs while 15% of the companies had working capital between Tk. 30-40 lacs. NSPDL is a government project so that there are some companies which gives a loan.
|BANGLADESH HOUSE BUILDING FINANCE CORPORATION|
|Company Address||22, Purana Paltan, Dhaka-1000, Bangladesh.|
|Loan Facilities||Housing Loan Type:
General Loan: For Husband/Wife or both
Group Loan: For Joint Owners Apartment/Flat Loan, For Flat Purchase Refinancing, Improvement, Extension, For Owners Small Size House Building, For Middle Class/ Lower Middle Class Semi Finished (Semi-Paka), For Owners Loan Term (Maximum).
|DBH: DELTA BRAC HOUSING FINANCE CORPORATION LTD.|
|Company Address||LANDMARK BUILDING (5th and 9th Floor), 12-14, Gulshan North C/A, Gulshan-2, Dhaka-1212|
|Telephone||8822374, 9882112, 0171816671-2|
|Loan Facilities||Delta Brac Housing Finance Corporation Ltd. (DBH) is a public limited company and a Financial Institution licensed by Bangladesh Bank. DBH Housing Loan for individual Clients:
Scope of DBH Housing Loan: – To purchase apartments/flats. – To construct own houses – To extend existing houses – To repair and renovate existing houses/flats – To purchase housing plots from recognized land Developers – To acquire professional chamber/office space by recognized institutions and professionals
Types of Housing Loan: We have Fixed Rate Housing Loan (FRHL) Scheme and Adjustable Rate Housing Loan (ARHL) Scheme. You can get Housing Loan up to 80% (eighty percent) of total investment except for Home Extension Loan, which is 75% (seventy five percent). Highest repayment term is 20 (twenty) years and interest rate is 15.75%.
|HSBC: The Hong Kong and Shanghai Banking Corporation Ltd.|
|Company Address||ANCHORE TOWER, Free School Street, Sonargaon Road, Dhaka1205.|
|Loan Facilities||Loan Amount: – Minimum loan amount is BDT.7, 50,000/- – Maximum loan amount is BDT.1, 00, 00,000/- .
Loan to value ratio (LTV): – For purchasing apartment: Maximum 70% of the apartment value plus registration cost. For renovation purpose: Maximum 70% of the land value of the customer owned property area. Loan tenure: – Maximum loan tenure is 15 years; loan must be repaid prior 60 years of age or retirement age, whichever is earlier. Interest rate: – 14% per anum.
|IDLC of Bangladesh Ltd.|
|Company Address||Head Office & Dhaka Main Branch: HADI MANSION (7th Floor), 2, Dilkusha C/A, Dhaka-1000.|
|Loan Facilities||Loan Amount: – Apartment or House Purchase: Maximum 70% of Property Value (Property Price + Registration Cost). – Construction: Maximum 80% of the total construction cost.
Loan Term: – Household Loan: The maximum term for businessman – 15 years. The maximum term for professionals & service holders – 20 years. – Commercial Loan: The maximum term is 7 years.
|NATIONAL HOUSING FINANCE AND INVESTMENTS LTD.|
|Company Address||Corporate Head Office: NATIONAL PLAZA (7th Floor), 1/G, Free School Street, Sonargaon Road, Dhaka-1205.|
|Loan Facilities||National Housing Finance and Investments Ltd. is offering loan for House/ Apartment purchase, Construction of House, Extension or renovation of existing house, Purchasing plots, etc. Loan is allowed up to 70% of total purchase price of Apartment / Flat or Construction considering borrower’s capacity of loan repayment. Highest term of repayment is 25 years.|
|PRIME BANK LIMITED|
|Company Address||29, Rajuk Avenue, Dhaka-1000.|
|Telephone||7160324, 9567265, 0174088931|
|Loan Facilities||Maximum loan amount will be Tk.50 lac.
Loan Period: – Maximum 20 years, including 6 to 18 months grace period.
Competitive Rate: – Attractive interest rate.
|Company Address||2, Dilkusha C/A, Dhaka-1000.|
|Loan Facilities||Maximum Loan: BDT.60,00,000/- –
Minimum Loan: BDT.5,00,000/- –
Maximum loan amount up to 70% of the property value (including registration cost)
Processing Fees: – Loan Processing Fees: 0.25% of the loan amount. – Documentation Fees: 1% of the loan amount.
8. Completed projects:
It appears that 40% have already completed 1-5 projects. During the study it was also observed that there are some companies who have completed only one project and no plan to continue their business.
9. Number of Floor/Storied:
It appears from the study that 55% of the companies have 11-20 storied building and 45% of the companies have 1-10 storied building. But Bhashantek Rehabitation Project is the 1-6 storied building.
10. Duration of project:
It has been found that 65% of the companies needed 1-2 year to complete a project and hand over the project while 20% of the companies needed 3-4 years. Because of Nspdl is government project so it held for 2025.
4.2 Selling method:
- Terms and Conditions
In Bhashantek Rehabilitation Project, beneficiaries will be selected among the slum-dwellers and low class families with the purpose of allotting the flats.
In order to nominate the beneficiaries among the slum-dwellers:
Women garment workers, Rickshaw-pullers, Van pullers, drivers of baby taxi, bus, truck and low income earners from different jobs will get privilege.9024 'A' type flats will be allotted for them which is 60% of the total.
In order to nominate the beneficiaries among the poor people:
Among the low income earners, third and fourth class of government workers or workers of same class in the private organizations, women garment workers, workers living in abroad and families of freedom fighters, beneficiaries will be chosen.6000 'B' type flats will be allotted for them. Among which a) women garment worker b) workers in abroad c) freedom fighters' families d) 3rd and 4th class workers e) normal low class are included.
Application procedures for getting the flats:
The slum dwellers and the low class people can buy the application forms from the chosen bank by paying Tk 100 and Tk 200 respectively. They will get brochures with it for free. The slum-dwellers and the low income earners must pay Tk 10,000.00 and Tk 50,000.00 respectively in cash as mortgage when submitting the application form in the bank.
Allotment Procedures of the flats:
NSPDL will first choose the beneficiaries on basis of the application forms in the primary stage. Computer will then test the status of all the information connected to the application forms and will make an advanced list which will then be sent to the land ministry by NSPDL. The land ministry will make the final list of slum-dwellers and lower class and NSPDL will then allot the flats according to that. It must be said that if computer gives same number, then the one who submitted the form first will get the privilege and their names will be in the first numbers of the list.
Procedures of handling the flats:
The area administrator on behalf of the government will present the documents related to the handling of the flats to the beneficiaries after the complete amount for the flat has been paid. All the expenditures related to handling of the flats along with government tax will be paid by the beneficiaries through NSPDL.
Procedures of returning the money:
The people who didn't get a place in the final list will get the money they paid during submission of application forms back without any interest. Within 90 days of taking the application forms, beneficiaries will be chosen and within 120 days, the money will be paid back to those who won't be nominated. Otherwise, money will be paid with interest. This money will be added to the cost of buying the house for those who gets the land.
Procedures of paying the cost of the allotted flats:
For the slum-dwellers, each flat's price will be Tk 2,00,000.00 which will be accepted as monthly installments for ten years. If it can be financed by loans, then the amount can be fully paid in less than ten years. Each flat's price will be Tk 3,90,000.00 for the lower income group. This amount can be paid at once or in installment for one year. The ones who will pay the amount at once will get the privilege of choosing the floors and taking them.
National Financial Statement of NSPDL
Review in Brief: The management feel our Company Faced a challenging year involving law and order situation with increased political agitation greatly affecting the corporate sector. Moreover with the worldwide increase this real state sector. It has been difficult year for this Company. In as much as prices is to be increased for different materials of the raw materials and others.
The management feels our company continued to maintain a satisfactory performance during the year in spite of the prevailing circumstances. Company tries to met all financial commitments as soon as possible.
Corporate Financial Statements And Reporting:
This comprises Balance Sheet, Profit and Loss Account, Statement of Changes in Equity, cash Flow Statement and Explanatory Notes covering Accounting Policies.
The Board of Directors is responsible for preparing and presenting the financial statements including adequate disclosures, who approved and authorized for issue of these financial statement.
The preparation of financial statements in conformity with international accounting standards requires board of directors to make estimates and assumptions that affect the reported amounts and expenses, assets and liabilities and the disclosure of contingent assets and liabilities at the date of and during the reporting period.
Following are the accounting policies relating to recognition and valuation of items in financial statements which are material and critical in determining the company’s result of operations for the year and financial position as on the balance sheet date and are consistent with those adopted in the financial statement for the previous year:
- Recognition: Of Income: Sales and accounted for on preparation of invoices along with sale of apartment.
- Depreciation: The annual depreciation rates applicable to the principal categories are:
- Buildings of Apartment………………………… 10%
- Machinery And equipment…………………….. 15%
- Furniture & Fixtures…………………………… 15%
- Tools & Accessories…………………………….. 20%
- Vehicles……………………………………………. 20%
- Office Equipment………………………………… 15%
- Plastic Container……………………………….… 20%
- Other Fixed Assets………………………………. 20%
- Capital work: Advances paid to acquire fixed and the cost of assets not put to use before the year ended are disclosed under Capital work –in-progress.
- Cost of Post Employment Benefits: There is no benefit scheme for the employees.
- Advertising and promotional Expenses: All Costs associated with advertising and promoting the company of NSPDL is expensed in the incurred.
- Profit And Loss Account: The results for the year were not materially affected by:
- Transactions of a nature not usually undertaken by the company;
- Circumstances of an exceptional or non-recurring nature ; and
- Changes in accounting policies.
- Reporting Currency: The amounts shows in these financial statements are presented in Bangladesh currency (Taka), which have been rounded off to the nearest Taka except where indicate otherwise
North South Property Development Ltd.
Dhaka –1206, Bangladesh
1Jul-2006 to 31-Jul-2007
Liabilities as at 30-Jul-20007
Assets as at 30-Jul-20007
Profit & Loss A/c (-)31447831.00
Opening Balance (-) 36818351.00
Fixed Assets 5929736.00
Office Equipment 2082184.00
Office Equipment (Project) 578753.00
Office Renovation 621939.00
Project Office Decoration 130764.00
Vehicle A/c 2720820.00
Depreciation Reserve (-) 1378930.00
The annexed accounting policies and other notes from an integral part of the financial statements.
Approved by the Board on November04, 2007 and singed on its behalf by:
Md. Abdur Rahim Miss.NasimaBegum Chairman and Managing Director Finance Director
Subject to our separate report of even date.
Place: Dhaka Md.Shafiul Alom
Dated: November 04, 2007 Director(Sales &Accounts)
North South Property Development Ltd.
Dhaka –1206, Bangladesh
Profit & Loss A/C
1Jul-2006 to 31-Jul-2007
Particulars 1-jul-2006 to 31-Jul-20007 Particulars 1-Jul-2006 to 31-Jul-20007
Sales Accounts (Projected) 41960000.00
Sales A/c 41960000.00
Sales Bills to make
Indirect Expenses 27500131.00
Commission on Sale 74250.00
Financial Expenses 6686916.00
Indirect Incomes 1193949.00
From Sale 699400.00
Net Loss 68266182.00
|Total 69460131.00||Total 69460131.00|
The annexed accounting policies and other notes from an integral part of the financial statements.
Approved by the Board on November04, 2007 and singed on its behalf by:
Md. Abdur Rahim Miss.NasimaBegum Chairman and Managing Director Finance Director
Subject to our separate report of even date.
Place: Dhaka Md.Shafiul Alom
Dated: November 04,2007 Director(Sales &Accounts)
North South Property Development Ltd.
Dhaka –1206, Bangladesh
Problems that face NSPDL
The real estate business operating in Dhaka city NSPDL is governed by any rules and regulations but it has own rules and regulation of saleing flat.
Prices of apartments are such that are affordable only by a highly middle class family for low income people.” Most of the people of this fortunate group have house of their own in modern city areas. So they do not feel strongly to buy an apartment. And one type of slum people they do not have enough money to buy this apartment.
Eighty percent of the respondents recognize the changing social concerns, attitudes and life style as the most important driving force in the real state business. From the sociological point of view, people buying apartments are heterogeneous in nature and character. This has created some community problem living together. Existing owners have expressed mixed felling in this regard.
There are some other problems in this business of Rehabilitation Project which have been identified at the time of conversation with builders/users of apartment buildings. The problems are: i) scarcity of open space in the city, ii) high cost of registration and transfer, iii) lengthy procedure for getting the flat, iv) water scarcity in the high rise apartments, and v) the failure of electricity.
The Real Estate industry in Bhashantek Rehabilitation Project Bangladesh is relatively unorganized and suffers from a number of drawbacks. Restrictive legislation’s and lack of transparency in transactions are major impediments to the growth of the Real Estate sector.
Improvement of technology levels in the industry will enable offering better quality products at lower prices. Appropriate reforms could transition the industry from a barrier to a facilitator of investment.
As awareness of the potential of real estate is gradually growing, the challenge before the sector is to embrace global standards and professional practices and utilize them to develop stronger linkages with other sectors of the economy. Such a transaction, however, requires expertise and technology.
Lacks of effective foreclosure laws mean that it may take years to realize funds from loan defaulters. It needs to bring the archaic legal system and ensuring an effective foreclosure of mortgages in the event of loan default.
According to lenders point of view, the lack of information available about an individuals credit history of net income and other obligations. So they require credit rating services to analysis the creditworthiness of a potential borrower.
Promoting housing development and ownership should be made a national agenda and meeting the housing needs of the population should be seen as satisfying a major need of the voting electorate. Promoting home ownership has indeed been and continues to be a voting strategy in many countries of the world. A strong political will with long term vision is required to address these problems and there is no better time to start the process than now.
Problems faced by the Apartment Building Companies
In the context of increasing housing needs of Dhaka city, apartment building and marketing apparently seems to be a quite lucrative business. Although the demand supply interaction is still is favour of apartment marketers, there exist a number of problems in different phases of this business. The major problems as indicated by the apartment building companies in their business are listed below:
Table: Different types of problems faced by the companies in performance of
|Sl.||Problems||% of Companies|
|1.||Scarcity of managing process of the company||100|
|2.||Intricacies and troubles involved in buying land||100|
|3.||Inadequate loan facilities for meeting working capital needs||90|
|4.||Irregular supply of construction materials||90|
|5.||Instability of prices of construction materials||75|
|6.||Improper government policy and bureaucratic complexities||75|
Note: Total percentage exceeds 100 as companies indicated more than one problems.
Dhaka is considered as a populous and busy city not only in Bangladesh but also of the world today. So, the present housing problem in Dhaka city will take a mountainous shape unless certain long term realistic measures are adopted by the government. Of course, government of the then East Pakistan tried to tackle the situation by developing housing areas and distributing plots among different sections of the people. Similar measures have also taken by the past Government of Bangladesh. But this has failed to solve the problem to the extend desired. In many cases construction work has not been done even in the plots, which has been allotted during Pakistan period. Considering all these, real estate business in Bhashantek Rehabilitation Project can play an important role in this regard, provided its activities are shaped in the following manner:
- North South Property will be suffer from financial crisis. This acts as a barrier in expanding their scale of operation. Credit opportunities should therefore be extended at a reasonable rate of interest by the financial institutions. This will not only solve the present economic crisis of the firms but new entrepreneurs will be attracted to the area.
- In possible case government gives land to the NSPDL at a reasonable price. But as financial problem it may create a problem. So need to solve the scarcity of money.
- As it is necessary to create healthy competition among the business firms to solve the growing housing problem of city dwellers; it is similarly important to ensure competition among the buyers. With this end in view, financial institutions can extend credit facilities to the buyers at a reasonable rate of interest. Such practice is widely used in developed countries.
Future Model of North South Property Development Ltd.
Construction of NSPDL
The finding of the present study confirms the notion that housing needs have been increasing in Dhaka city which have led to the emergence of companies who are building and apartment houses. Although apartment living is a recent social phenomena people are developing favorable attitudes towards apartment living which is gaining increasing cultural acceptance.
The present study reveals certain features of apartment marketing on the city. These are:
- the present market for NSPDL apartment house is still limited among the lower income people,
- apartment houses are being built in the central areas of the city,
- in many cases quality of apartment houses is not satisfactory,
- terms and conditions for sale are set unilaterally by the companies which often goes against the interest of the buyers,
- Competition in apartment marketing is still low.
Although apartment buildings are contributing in solving the housing needs of the lower living city people, an overall evaluation of its present marketing system indicates that,
(a)It is not yet appropriate to cater to the needs of middle income people of the society. These people are large in number and form a sizable portion of city dwellers. So to meet the needs of the middle income people of the society, and also most importantly slum people.
(b)For this purpose, peripheral areas of the city can be chosen for new apartment projects.
(c)In crease in the number of apartment building companies will also increase competition among apartment sellers which will bring benefits for apartment buyers and will improve the marketing system as a whole.
(d)As is a capital intensive project the companies should be provided with adequate finance. Banks and other financial institutions should come forward to help meet the working capital requirements.
(e)As apartment houses are contributing in solving problems, government’s role in this connection is also important.
(f)There should be better co-ordination among apartment builders, buyers and financiers for protecting their interests.
(g)Finally, apartment building companies should strengthen their promotional efforts for popularizing apartment houses among the people lower and higher living people.
By considering the above features, problems and suggestions North South Property Development limited has successfully established itself as one of the leading Real Estate Developers in Bangladesh.
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