The Daily Star (TDS): What is the current situation of the real estate business in Bangladesh?

Md. Wahiduzzaman (MW): The real estate industry remains ever-relevant, given that housing is a fundamental necessity for individuals. Our government also prioritizes ensuring housing for those unable to meet this essential need. At REHAB, our focus has been primarily on serving the middle-class demographic for over three decades. Despite facing numerous challenges, such as the COVID-19 pandemic, the Ukraine conflict, and global economic fluctuations leading to soaring construction material costs, we continue to operate resiliently. By aligning with governmental policies and fostering collaborative efforts, we believe we can surmount these obstacles and propel the industry toward a brighter future.

TDS: In recent times, the expenditure regarding real estate has been getting out of reach for the middle-class demographic. What is your opinion about that?

MW: In alignment with governmental efforts to provide housing for all, we are dedicated to advancing the real estate sector. Our focus primarily caters to the middle-class segment, which constitutes a significant majority compared to the high-middle-class demographic. In Dhaka and its surrounding areas, approximately 90% of families fall within the middle-class bracket, with the remaining being affluent. Hence, our emphasis naturally gravitates towards serving the needs of the middle-class populace. Addressing the recent escalation in construction material prices is crucial for the industry's stability. Many Bangladeshi companies rely on imported raw materials for steel reinforcement, rods, cement, and other essential construction supplies. Establishing an authoritative body or organization tasked with regulating these prices according to global market fluctuations is imperative. The Ministry of Commerce should play a pivotal role in overseeing this sector, ensuring both the quality of materials and their pricing align with international standards. Regulating material costs could significantly contribute to making housing more affordable.

Another pressing concern is the perpetual rise in land prices. Speculative practices often drive up land values, exacerbating affordability issues. To maximize land use in Dhaka's limited space, the construction of high-rise buildings presents a viable solution. Vertical expansion allows for efficient utilization of available land while preserving agricultural areas and natural resources, such as rivers. Adopting a holistic approach that balances urban development with environmental conservation is essential for sustainable progress.

TDS: Why isn't there sufficient expansion of the real estate sector beyond major cities?

MW: In Bangladesh, real estate business has flourished in urban centers like Dhaka, Chittagong, and Khulna, while progress in other regions remains sluggish. This imbalance stems from the population's strong preference for urban living, driven by factors such as job opportunities and access to education. Consequently, developers concentrate their efforts in these areas, where demand is highest, leading to rapid growth in the housing sector.

Incentivizing real estate development in districts outside the major cities is crucial to stimulate growth. For example, offering tax holidays in emerging divisions like Barisal could attract investment and spur land development. Additionally, decentralization plays a vital role in sustaining recent development trends and alleviating population pressure on Dhaka. Prioritizing the expansion and enhancement of surrounding areas can create new urban centers, providing employment opportunities and fostering community growth. This decentralization strategy aims to mitigate excessive migration towards Dhaka, promoting balanced regional growth.

TDS: What are your thoughts on the lack of awareness regarding safety issues in the real estate sector?

MW: With the increasing reliance on technology, there has been a noticeable proliferation of high-rise buildings. Before 1996, regulations in Dhaka limited building heights to six stories. However, since the enactment of new regulations in 2008, buildings exceeding 10 stories have become commonplace. This shift highlights the need for essential amenities such as elevators and fire escape stairs in building plans approved by RAJUK, the city's development authority.

While fire safety regulations mandate these amenities for all buildings, regardless of height, RAJUK's requirements only apply to structures exceeding 10 stories. This inconsistency requires immediate rectification to ensure consistent safety standards across all building projects. Effective coordination between RAJUK and the Fire Safety Department is crucial to address this issue. Without streamlined communication and cooperation, the response to emergencies may be compromised.

In my opinion, adherence to comprehensive fire safety protocols should be mandatory for all housing projects, regardless of building height. A unified approach prioritizing safety can mitigate risks and ensure the well-being of residents.

TDS: What suggestions do you have for the government to support the real estate sector in Bangladesh?

MW: The Detailed Area Plan (DAP) formulated by RAJUK in August 2022 necessitates a revision in the Floor Area Ratio (FAR) to prevent the stagnation of Dhaka city's development. Under the regulations established in 2008, building height was primarily determined based on road width and plot size. However, the focus has shifted to density and population considerations, disregarding the former criteria. Consequently, areas like Gulshan and Baridhara enjoy higher FAR allowances, enabling the construction of taller buildings, while regions such as Mirpur, Mohammadpur, and Old Dhaka face restrictive FAR limits, inhibiting vertical expansion. This disparity deters investors and developers, stifling growth potential in these areas.

Failure to revise the FAR could have dire consequences, with over 200 linkage companies facing imminent closure and a subsequent ripple effect on related industries such as rod and cement manufacturing. It is imperative to reassess the FAR with the stakeholders' interests at the forefront to safeguard future revenue generation.

Additionally, the government should incentivize fire safety compliance by offering tax exemptions for the next five years to both commercial and residential properties. Establishing a dedicated compliance team tasked with monitoring safety measures implementation is essential to prevent tragic incidents like the recent one on Bailey Road. Imposing fines and punitive measures alone cannot ensure safety; proactive measures are indispensable for fostering economic growth without unduly burdening citizens.

Interviewed by Priyam Paul, transcribed by Sarah Bintay Shakhawat

Photo Courtesy: Rajib Raihan