It is now a boom time for the real estate sector that has witnessed a rebound in sales in the last one year, bucking a two-year sluggish trend. According to homebuilders and developers, the changed environment following an elected government's accession to power reawakened the market.
It is expected that a stable political and economic environment will help boost sales of apartments, commercial spaces and offices and plots in days to come. But many have expressed fear that any unusual hike in property prices might affect apartment sales. Last month, a real estate firm alone registered around Tk 1.0 billion in bookings for apartments, commercial space and offices. The same company expects to get orders of Tk 1.5 billion this month. It is almost the same story with other housing development companies as well.
The market environment looks good. Demand is apparently soaring. Market watchers say real estate has seen a real boom in the last six months. But rising land prices and labour costs may put a damper on the market. Property prices have escalated by up to 50 percent in the last one year. Real estate companies are now opting for more housing projects outside Dhaka, as the soaring land price and its scarcity in the capital have pushed apartments beyond the purchasing capacity of many potential buyers. Some realtors have recently embarked on projects in different areas surrounding Dhaka, including Narayanganj, Comilla, Gazipur and Mymensingh, to provide flats at affordable prices.
As these places are comparatively nearer to the capital, many customers now prefer to find a permanent housing in these places due mainly to price advantage. Apartment price outside Dhaka ranges from Tk 2,000 to Tk 3,000 per square foot, while it is not less than Tk 3,500 in the capital. Some time back, a real estate firm launched a satellite township at Bhuigar off Dhaka-Narayanganj link road with 784 ready flats at comparatively lower prices. It received instant success and following its trail, many real estate developers are now coming up with a host of satellite township projects in places near the capital city.
Many retired officials want to buy apartments at comparatively lower prices outside Dhaka to settle in. This trend will grow in the days to come. Mobile internet accessibility has already made staying outside the capital easier as now people can meet their information need with the cellular technology from outside. Constructing buildings in major cities like Sylhet and Chittagong began quite a long time ago due to a huge demand pushed by a large population and growing purchasing capacity created by remittance inflow in the regions. The sector people now want the government to make a good transportation link between Dhaka and the surrounding areas so that people can live outside the capital with ease.
Besides the private sector, the government also wants to develop massive housing projects outside the capital to reduce the pressure in the overpopulated city. The government plans to build four satellite townships on the outskirts of the capital and announced this year to develop 22,800 plots and construct 26,000 apartments in the next three years.
While addressing the inaugural function of Real Estate and Housing Association of Bangladesh (REHAB) Vision Fair-2010 last week, Prime Minister Sheikh Hasina said additional 0.2 million people will be given houses in four satellite towns planned to reduce pressure on the capital. Smooth and fast road communications between the capital and the satellite towns will be ensured. Besides, the planned elevated express way can also be used for the communication.
As the high-rise buildings have earth quake risks, the prime minister asked the real estate developers to design and construct multi-storied buildings that can withstand the risk of earthquake and ensure all modern amenities. Already many places have been identified as the earthquake-prone areas. Before finalising any project, it is necessary that the developers ensure arrangement of earthquake-resistant technologies.
Expressing her concern at gradual loss of the agricultural lands, the prime minister said accommodation for all should be ensured and at the same time agricultural lands will be preserved. The builders and developers have to be more farsighted in drawing out the designs of apartment buildings and housing projects. Besides, the design of flats and apartments should be made in such a way natural lights and fresh airs can enter the apartments.
According to available reports, the land price increased by 25 times and the apartment price ten times during the last one and a half decade making Dhaka's real estate most costly in the region after Mumbai and Delhi. In the backdrop of high demand, price hike of the real estates has turned country's capital one of the costly cities in South Asia. As a result, the pressure on limited land in Dhaka has not only intensified urbanisation, it has also led to indiscriminate filling of lowland in and around the city to make room for unplanned urban development. The increasing rate of urbanisation is the effect of growing population and migration from rural areas. The mounting population pressure on Dhaka city has a severe impact on housing, infrastructure and employment sectors, which require land to meet the demand.
Dhaka city has seen the most unusual rise in land price for lack of serviced land compared to the demand. Age-old land record system, taxation structure and cumbersome land transfer procedure have made the whole system unmanageable in the city where the land-man ratio is among the lowest in the world. The real estate companies have had land development and housing projects all over the city driving up the land price, as they compete with each other for a single piece of land. Transformation of land use from residential to commercial scales raised the price further.
The land ministry should immediately settle the pending case and bring the land registration directorate under the jurisdiction of the land ministry. One-stop service should be introduced in the land registration directorate and land survey, recording and land management process should be computerised immediately.
There is a need for setting up of an information database to regulate the market, avoid artificially created land crisis, ensure equitable access to land by citizens and overcome the problem of speculation. Information about land price help the policymaker and the planners understand and analyse the dynamic urban structure of Dhaka as the capital city and its future growth in a planned way.
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