Documente Academic
Documente Profesional
Documente Cultură
Collection of Data
A. Selection of the topic: The topic selected for the Project was assigned by
the company supervisor. Before assigning the job it was discussed just to
help to prepare a well-organized internship report.
B. Identifying data sources: Essential data sources as secondary data were
identified which was needed to complete and workout the study. To meet
up the need of data primary data are used and the study also required
interviewing the officials and staffs where necessary.
C. Collection of data: Primary data are collected through 100% physical
inspection as there is no provision and scope for using sampling
technique. Questionnaire preparation is also required to collect the data.
D. Classification, analysis, interpretation and presentation of data: To classify,
analyze, interpret and presentation of data here is used some arithmetic
and graphical tools to understand them clearly.
E. Findings of the study: After scrutinizing the data problems of the study are
pointed out and they are shown under concerned heads.
Recommendations are suggested thereafter to overcome the problems.
F. Finally report has been prepared and printed,
Research design: Descriptive study was followed in the study.
1.6 Limitations
Through I tried level best to produce a comprehensive and well-organized report
on Marketing Practice of the Real Estate Industry in
The Housing policy sets out the following amongst its objectives:
1 Mobilize resources for housing by developing suitable financial institution.
2 Develop institutional and legal frameworks to facilitate the operation of
house building finance companies.
3 Develop new strategies and undertake revision of the policy from time to
time to cope with the emerging housing needs in the country.
4 Develop a property tax base to promote housing.
5 Provide fiscal incentives to promote individual and private sector
investment in housing.
6 Mobilize additional funds for house building activities from households and
enterprise.
It can be concluded from the foregoing sections that the governments chase role
for the future is to be a catalyst for private sector investment in housing.
3
4
5
6
7
8
9
Now in 2009 there are about 507 companies engaged in this business in
Dhaka and some other cities.
At one time it was necessary to from a trade association to strengthen the
role of real estate sector and ensure the ethical practice in construction.
In 1991 Real Estate and Housing Association of Bangladesh (REHAB)
was formed with only 11 members. At present there are 507 members of
REHAB.
3
4
5
Populatio Growth
n
Rate
(In million)
1.68
3.43
7.53%
6.90
6.55%
9.90
5.66%
10.28
6.67%
Customers:
Business people, senior doctors, pilots, personnel of multinational companies,
top and mid level managers of large companies or group of companies, people
living abroad, government service holders, senior professors of universities, may
be illegal money holders, industrialists, police officers, defense professionals etc.
Technology/innovation:
Construction technology is standard and changes have been slow; smallest
changes are occurring in products about 3-4 newly formulated specialty features
are being introduced annually.
Product characteristics:
Standardized; the apartments of different producers are essentially features are
identical (buyers perceive little real difference from seller to seller.)
Economies of scale:
The construction cost is almost same for both luxurious and high-rising building;
on the other hand the price of land is increasing at a very rate.
Capital utilization:
Construction efficiency is highest between 90-100 percent of rated capacity;
between 60-70 percent utilization, unit costs run significantly higher.
Profitability:
The gross profit margin is 30% on average and net profit is 18% on average of
the total investment for each project.
Capital Requirement:
Fairly high; big requirements make investment decision critical; creates a
moderate barrier to entry and exit into the business.
1980
1982
1983
1988
1989
1992
1995
1998
Legal
Status
Profit
margin
Complete
d project
Pub.Ltd.
Pvt. Ltd.
Pvt. Ltd.
Pvt. Ltd.
Pvt. Ltd.
Pvt. Ltd.
Pvt. Ltd.
Pvt. Ltd.
22%
32%
18%
26%
29%
24%
25%
30%
92
29
22
12
21
6
3
16
On
going
project
47
11
8
9
16
10
16
18
10
Findings:
5.6 SWOT Analysis of some real estate company
Strength criteria:
1
2
3
4
5
6
7
8
9
10
11
12
13
Weakness Criteria:
1
Poor construction
Obsolete facilities
Opportunity criteria:
1
11
Vertical integration
Threat Criteria:
1
SWOT/com
p
Strength
Weakness
Opportunity
Threat
BTI
UDD
AMF
PDTL
EHL
ADTL
CCL
EPL
76.92
66.67
57.14
66.67
30.77
66.67
57.14
83.33
53.85
55.56
71.43
66.67
38.46
55.56
71.23
83.33
38.23
55.56
71.43
66.67
69.23
55.56
100.00
50.00
61.54
44.44
71.43
50.00
70.15
56.52
89.00
50.00
According to the above criteria of SWOT Building Technology and Ideas Ltd.
(BTI) has the followed by ADTL, EPL, CCL. AMF, EDDL, PDL, EHL, and UDD
respect while Concord condominium Ltd. (CCL) has the lowest weakness
followed by BTI, AMF, EHL, ADTL, EPL, EDDL, and PDL respectively. At the
same time major opportunities of the market are in front of Advanced
Development Ltd. (ADTL) followed by CCL, AMF, BTI, EDDL, EHL, PDL and EPL
respectively.
12
Construction Activities:
7
8
9
10
11
The study reveled that most of the developers procure building materials by local
cash purchase and they use their own machinery and equipment.57.14%
13
Most new construction for the urban formal housing market is in the form of
apartment buildings. The predominant way of financing the construction of this
type of housing is through landowner and developer self-finance, e.g., by selling
part of the land parcel or other land and subscribing the housing development
15
After the failed attempt to stimulate BHBFC to lend for lower cost housing
developments (see below), the Prime Ministers Office recently established a
Housing Fund called the Grihayan Project, which provides low cost funds to
NGOs and public sector developers for the construction of low- to moderateincome housing schemes. The Housing Fund is administered by an interministerial committee of 17 members and includes one NGO member (Proshika).
A total of Tk.580 million is available at an interest rate of 1 percent for 10 years.
The project requires that the borrower on-lends to lower-income households at a
rate of 5 percent, which leaves a spread of 4 percent for which the developer has
to cover all costs, including loan administration. Indeed the project expects the
NGO or public sector developers to put in their own funds for project
development and management. Therefore, only well funded NGOs can consider
participating in the project. Also, selected agencies have to have the capacity to
act both as developers and long-term mortgage financiers for the projects.
B. Major Mortgage Lenders
ones were 8 percent for 7 to 8 years. Previous bond issues ranged from 2 to
6.5%.
BHBFC has to operate on a commercial basis and sets its interest rates in
accordance to its costs of funds and operating costs. Its net profit has steadily
increased since the late eighties and since 1993/94 its profits have exceeded its
total expenditures. However, its loan recovery performance is poor and well
below that of the commercial banks. Its recovery on current loans is 86 percent
(of number of loans), but the cumulative recovery is only 44 percent. No
classification system of loans is in place. Indeed, the financial statements do not
include adequate loan loss provisions or reflect the low collection of accrued
interest. BHBFC does not do its own servicing. It uses one of the National
commercial bank (NCB)s, the Sonali Bank, and its branch network for that
purpose. The main office of Jonata Bank in Dhaka, another state owned
commercial bank, sells the applications at a fee of Tk.400 to 500.
BHBFC operates presently only in carefully targeted, higher quality housing submarkets in Dhaka, and on a very limited scale in Chittagong and Rajshahi (which
received 9.4 percent and 3.1 percent of disbursed funds in 1995/96 respectively).
Poor repayment experience in other urban areas was the reason to concentrate
on Dhaka. It has financed 125.000 units since its inception, of which more than
30,000 since 1992, mostly for higher income households.
The commercial banks, both public and private, and the specialized banks are
the only other financial institutions with a considerable proportion of their
combined assets in housing. For the entire banking sector (excluding the
Grameen Bank) the total housing related advances were Tk.17.7 billion at the
end of 1997 of which two thirds (or Tk.11.2 billion) were held by the NCBs. The
majority of the accounts held by the banking sector are individual accounts
(approximately 54,000), and only approximately 1400 loans were made to
housing societies.
Table: Outstanding Housing Sector Advances with Interest in Million Taka
(All banks):
Construction Loan
Housing
Societies/Companies
Housing Individual
Other than Housing
Total
13,183
7,018
21,167
13,552
6,837
24,528
17
10,732
14,848
12,514
10,084
2,338
13,540
Source:
Lending Institution
Outstanding Housing
Loans
Lending Terms
BHBFC
Tk.22,201 million
15 years
13% for loans <1.4
million
15% for loans >1.4
million
12
months
period
grace
loan
Tk.2.5
10 years
16% p.a. compounded
LTV ratio 50%
Av.Loan Tk.1.5 to 2.5
million
20
Tk.208
year)
million
(first 15 years
16.5%,
compounded
p.a.,
21
financial institutions and NGOs could acquire funds for on-lending to low income
households, community groups etc. This idea was proposed in the ADB draft
report on institutional strengthening for the housing sector (1993); 3) increasing
the proportion of funds from insurance companies, unit trusts, commercial banks
and other financial institutions to be allocated to housing and providing other
incentives for these institutions to increase their role in the housing finance
sector; 4) reforming the BHBFC into a self-sustaining premier housing finance
institution; 5) introducing a secondary mortgage system in order to attract funds
from a wider range of investors.
E. Main Issues in Expanding the Formal Housing Finance System
The general weaknesses of the financial sector have of course a negative impact
on long-term lending for housing. These have been detailed above. Here some
issues have been discussed which specifically deal with housing finance
A main distortion in the savings and debt system is the high rates offered by
various government savings plans compared to market rates offered by private
deposit taking institutions.2 The plans have created an inverted yield curve where
lower risk savings instruments carry higher returns than higher risk instruments.
These distortions make it difficult for private sector institutions to raise household
funds and hinder financial market development. Indeed, it is unlikely that the
bond market will develop within this financial market structure. Long-term lending
operations such as housing finance are particularly affected by the difficulty of
raising long-term funds in the domestic financial market.
The BHBFC has access to lower-cost funds and is not yet required to incorporate
adequate bad debt provisions in the overall cost of credit. This allows them to set
their lending rates below the market rates, making it difficult for the private sector
to compete and, therefore, suppressing the development of the private mortgage
industry.
Interest rate subsidies have some major drawbacks apart from stifling private
mortgage market development. First, they subsidize debt rather than housing
directly. A below market interest subsidy encourages people to borrow as much
as possible and repay their loans as slowly as possible. Second, the subsidies
increase with inflation when interest rates go up, a poor index for subsidization.
2
23
Third, the subsidies are not transparent. Subsidy amounts are hidden and vary
with the market rate of capital. It is only through the constant additional
government funding to BHBFC that the cost of the subsidies is apparent.
Alternative ways of subsidizing those households that could, with some
assistance, participate in the formal mortgage market, need to be considered.
For example, upfront subsidies that could be applied in any public or private
financial institution are used in many countries. These can take the form of a
direct transfer or allowance or a buy-down mortgage instrument, whereby an
upfront subsidy is put in an escrow account and used to pay part of the monthly
installment for the mortgage over a fixed period of time. In addition, the
government could reduce the stamp-duty and administrative cost of mortgage
lending to make it more affordable.
Subsidy targeting
The second issue is the poor targeting of the existing interest rate subsidy
system. Subsidized loans are presently provided to those that could participate in
the private market without assistance. Indeed, there is no difference in the
income level of recipients, loan amounts and geographical target areas between
the private lenders and BHBFCs clients. The objectives of the subsidy scheme
should be to assist those that do not qualify for a formal sector mortgage loan
without some special assistance and thereby increasing the number of middle
income households that can avail themselves of housing finance. The BHBFC
ought to re-orient their assistance program to that group of beneficiaries. This
would not only mean focusing on a different income group and other locations
within and outside of Dhaka, but also providing other types of assistance to
households not used to dealing with the plethora of requirements of underwriting
and mortgage repayments.
aware of this provision, however, and it has not been regularly applied. This
adjustment feature considerably decreases the interest-rate risk to the lender,
however, which should be reflected in the rate structure. An explicit adjustment
protocol or index may be useful to consider.
These are also fixed rate mortgages, but the repayment schedule has been set
up in such a way that early payments are lower and increase periodically by a
specified percentage. Some banks have used this type of mortgage in the past to
25
Both banks and non-banks are plagued by bad debt. Yet, very little systematic
analysis is taking place on the specific causes for mortgage default. Presently,
entire geographical and income segments are excluded from mortgage lending
because of their high perceived credit risk. However, underwriting methods are
very rudimentary and do not include a careful market analysis of the property.
Affordability calculations for all types of residential properties are done mostly on
the basis of future rental income even when owners are occupying the building.
Also, servicing methods are not inductive to stimulate timely payments and there
are long lapses before overdue notices are send out 3Foreclosure procedures
take on average five years and clients know that financial institutions will only
take them to court in extreme cases. It is, therefore, not known whether a poor
payment record is based on clients inability to pay, the low value of the building
relative to the outstanding loan, or on the perception of clients that no action will
follow in case of non-payment.
Within the primary mortgage market (and micro-finance market) different types of
interest payment calculations are used, which is often confusing to borrowers
and increases the difference between government and non-government rate
structures. While compounding is the most common way to calculate interest and
is used by most of the financial sector, simple interest rates, which lower the
effective rate, are used for special loans or customers. For example, BHBFC
charges simple interest rates for smaller loans and as an incentive system for
special customers, which translate into much lower effective rates. Also, NCBs
charge simple rates for special customers, using the same nominal interest rate.
MFIs typically charge a flat rate for the entire loan period. No adjustments are
made for principal repayments during the course of the loan. A flat rate therefore
has a higher effective rate than the quoted rate. It is used for reasons of
simplicity on small loan repayment calculations and because the quoted rate
appears low, which has a positive effect on borrowers. It is not always clear
which type of interest rate calculations are used and it is often confusing to
inexperienced borrowers who have to compare different costs of credit Also, the
NCBs and BHBFC use a simple interest rate as an incentive for good borrowers
without clearly calculating how much of a subsidy is provided by moving from
compounded to simple interest rates. There is hardly any adjustment made in the
rates for different risks or loan terms. Moreover, this lack of standardization will
make it more difficult to develop secondary lending facilities at a future time
7.2.2. Alternative Housing Finance Systems
3
26
Several micro-finance institutions provide long and short-term credit for housing
without a mortgage contract based on collateral. In other words, the financial
institution does not require documents of ownership of the land and the house as
collateral for issuing a loan. Loans are made on the bases of established
membership in lending programs and a sound track record of repayments on
previous loans. Group pressure and mutual support are used as guarantees for
loan repayment. There is no recourse by the financial institution in the case of
non-payment other than the persuasive and legal ways to recover the loan and
future exclusion of the borrower from the credit program. The MFIs have no right
to sell the property. Housing loans are typically based on the same underwriting
and repayment structure used for the micro-credit income generating programs
for rural and urban poverty groups. The Grameen Bank has the largest housing
loan portfolio of this nature, but other MFIs carry housing loan portfolios as well,
with different levels of success. Several micro-finance lenders are interested in
expanding into housing. Here discussed the largest micro-finance institutions and
their housing loan programs below. These four MFIs dominate the micro-finance
sector in Bangladesh and have an outreach of 6.3 million clients (1997)
A. Main Micro-Finance Housing Lenders
Grameen Bank.
The Grameen Bank was established in 1983 under the Grameen Bank
Ordinance, to provide non-collateral- based credit to the rural landless poor, in
particular women, for income-generating activities. Its charter prevents it from
working in urban areas. It established the system of small group-based lending
for groups of approximately 5 members, whereby the individuals continued
access to credit is related to the repayments made by the entire group. An
integral part of the credit program is that members have to save in group-funds,
savings accounts and emergency funds. These savings can, however, not simply
be retrieved when the individual requires money; group and institutional
requirements have to be adhered to. Another characteristic of the credit program
is that extensive social development and technical assistance support is provided
to the borrowers. These lending and savings systems have been effective in
keeping down default rates and dropouts, and increased the savings rate among
the rural poor.
The Grameen Bank has more than 1100 branches and approximately 2.3 million
members (mostly women) in close to 40,000 villages. The total loan amount
disbursed since its inception and until July 1998 was close to Tk.100 billion, with
a recovery rate of 97 percent. The average loan size is $180. Total savings are
Tk.25.14 billion (12/97), with Tk.808 million outstanding. Its financial margins
(excluding grants) were 8 to 8.5 percent in the early 1990s.The Moderate
Housing Loan program was established in 1984 with a current loan maximum of
Tk.25,000. After the floods of 1987 a Basic Housing Loan was introduced which
27
account for 43 percent of its funds, while members bring in close to 30 percent.
Proshika started its urban program in 1990. It includes a component that focuses
on the improvement of water, sanitation and electricity for the urban poor, in
targeted squatter areas.
Proshika started a housing program for rural areas in 1988 and has provided
assistance for the construction of more than 30,000 houses to date. The total
amount disbursed for housing is Tk.193 million. Housing loans are based within
the group and the group selects the member most deserving of a housing loan
under strict allocation rules; i.e., only three housing loans per year per group,
housing loans can only be provided to groups that are at least three years in
existence. Loans have a maximum of Tk.10,000 with an equity contribution of
Tk.1000. Loans carry a 5 percent flat interest rate (reduced from 10 percent
because of affordability reasons).
BRAC
BRAC was established in 1972 as a relief organization to resettle households
after the liberation war. In 1976, it started focusing on the improvement of the
living conditions of the landless rural people through a system of village
organizations, savings programs and micro-credit. It has approximately the same
number of members as the Grameen Bank and a total cumulative disbursement
of Tk.21,585 million. It is a professionally run organization with major investments
in real estate.
BRACs urban program began in 1991 and focused on education for city children.
It is now proposing to extend its urban work to economic development, health, in
particular water and sanitation, and other services.
The housing loans program started after the flood of 1988 and focused on the
same rural poverty group. Only members who successfully repaid an income
generation loan and saved for 6 months an equivalent amount to the monthly
repayments for a housing loan, are eligible. The loans are smaller than those
provided by the Grameen Bank and Proshika and have a maximum of Tk.8,000.
Interest rates on housing loans are 5 percent and the repayment period is 3
years. Housing loans were only 2.25 percent of the total loan disbursements at
the end of 1997 (BRAC 1997).
BRAC is considering to establish a moderate-income rural housing loan program
with loans up to Tk.20,000. It is at the same time concerned to move into this
market in view of the massive defaults that plagued the housing portfolio of the
Grameen Bank after the recent floods.
ASA
29
30
Loan terms
Equity requirements, interest rates and loan periods vary widely. Flat interest
rates range from 5 to 10 percent. The term varies from 6 years for Proshika to 15
years with GB. Where repayment amounts are fixed but loan amounts vary, the
term is dependent on the loan amount. The 15-year loan issued by the Grameen
Bank is the longest and is considered too long by the other MFIs for the rural
poor to carry. GB may reconsider the period after their recent high default
experience on their housing loan portfolio. The housing loans have simple
application and approval procedures and assistance is provided with the design
and purchase of cheap and appropriate building materials.
Targeted Households
Housing loans are considered social sector loans and are provided to the most
deserving members of rural groups, those without land and shelter. All MFIs
require a track record of successful loan repayment of an income-generating loan
or a simultaneous loan for income generating activities that would guarantee the
repayment of the housing loan. However, the size of the housing loans and the
related repayment obligations and period is least suitable for this rural lowincome group (although these clients are not the hard-core poor either).
There is a growing awareness among some of the micro-finance institutions that
there is a need to differentiate among subgroups of rural and urban poor that
have different needs for credit, including housing credit. Several MFIs are
interested in expanding micro-finance to small individual entrepreneurs to set up
businesses and move to another level of economic development than possible
with micro-credit for individual income-generating activities. Similarly, housing
loans could be targeted to those who have established more secure incomes and
can more easily afford market rate payments, rather than to the poorest
households alone. This would allow the expansion of the housing programs
considerably and reduce their risk.
Internal cross subsidies
All housing loans carry a lower rate than income-generating loans and are
internally cross-subsidized within the MFI. There are several related reasons for
this cross-subsidization: first, housing is considered a social good and a basic
need worthy of subsidization; second, without subsidization the rural poor would
not be able to afford a housing loan. However, if housing lending programs are
targeted to those who have established a solid income base established through
previous micro-credit and micro-finance programs, such deep cross-subsidization
would not be necessary and more rural households could be assisted with
housing loans.
Credit risk
31
The micro-finance sector does not use a mortgage instrument for its housing
loans. Land titles are cumbersome and costly to get and many households live
on land that is not legally theirs. Loans are collateral free and lenders do not
have recourse in case of delinquency. Foreclosing on a housing loan and
repossessing the house would, in any case, be a theoretical option only. In rural
areas the market for houses of delinquent households would be non-existent.
Security is provided by group support and social pressure on the borrower to pay
and the threat of future sanctions when additional credit is sought. Some past
programs have used a chattel mortgage, which secures the loan through a claim
on the house only (instead of on the land and the house).
Housing loan portfolios have a slightly higher level of default than the incomegenerating loans, although defaults are generally much lower than in the private
mortgage sector. Defaults are due mostly to inability to pay, rather than to low
equity in the house or lax recovery systems (which are the main causes of
default in the formal housing finance sector). Also, the recent floods have
emphasized again that rural housing loans are exposed to systemic risks of
default when floods or cyclones strike the country. Under the present crosssubsidy system, the higher risk on the housing loans is perversely reflected in the
interest rate structure of MFIs which applies lower rates to these loans than to
the regular micro-credit loans. In addition, savings schemes attached to the
micro-credit loans are too small to act as a buffer in case of payment problems
for housing loans, and, for most of the programs, savings cannot be accessed
when needed to bridge a difficult period in a households life cycle or deal with
natural catastrophes.
Housing solutions
Loans are only provided for new home construction, mostly for specific house
designs. Only GB has a small loan program for rehabilitation or extension of
houses. Yet many households use part of their income-generating loans for
housing improvement, even though that is explicitly forbidden. An extension of
housing loan programs to cover housing rehabilitation may be a worthwhile
option.
None of the MFIs have an urban housing loan program, not even for small towns.
This rural focus is related to the overall orientation of MFIs towards rural poverty
alleviation (e.g. the GB is not allowed to lend in urban areas). But even for MFIs
working in urban areas, the housing sector is too big a challenge, because of the
high cost of new housing in relation to incomes, particularly if land costs are
included. Also, there is a perception that the greater mobility of the urban
population poses a higher credit risk for longer-term credit such as housing
credit. However, ASA, for example has successfully run credit programs for urban
households, even without the rigid group structure utilized by other MFIs as a
guarantee for repayment.
7.3.0 Investment status in real estate sector:
32
The real estate sector is at present creating employment for about one million
people who are directly or indirectly involved in the sector. According to the Labor
Force Survey (LFS), in 1999-2000, 2.1 per cent of the labor force was engaged
in construction, whereas for 1995-1996 the figure was 1.8 per cent respectively
(CPD, 2003).
Recent information concerning investment in the housing sector shows steady
growth both in absolute terms and as a percentage of total private investment
and GDP. Private investment in housing and construction has more than doubled
during the Fourth Five Year Plan period, from US$ 11.66 million in 1989-1990 to
US$ 264.83 million in 1994-1995. During the first three years of the Fifth Five
Year Plan period, the average investment in housing and construction was US$
1273.65 million. As a share of total private investment, private investment in
housing and construction in the 1997-1998 to 1998-1999 period accounted for
47.3 per cent which far exceeded the target of 16.35 per cent for this period. The
proportion of investment in housing and construction in the national GDP
increased from 3.4 percent in FY 1997 to 4.1 per cent in 1999 (CPD, 2003) 4.
Various revenues like VAT (Value Added Tax), registration fees, utility connection
fees etc. generated in the real estate sector amount to about US$ 6 million per
year. During the peak years of the early 1990s, over 3,000 apartment units were
built by developers every year. Today around 2000 units are built, which indicates
a 30 per cent drop in output (CPD, 2003).
About 19 per cent of the dwelling units are located in urban areas. Per capita
floor space in urban areas is only 62.3 sq ft. About 46.4 per cent of urban
dwellings are made of brick/cement. From the early 1980s the business started
to flourish and showed robust growth. At present, more than 250 companies are
active in the real estate business in the country (CPD, 2003).
There has been a new trend of housing development mainly in the private sector
in the mid eighties. This new type of residential development can be broadly
termed as apartment development. In most of the cases, an individual or a
company constructs buildings comprising of several apartments, which are later
sold to individual purchaser. This has prompted many individual entrepreneurs to
develop apartment buildings resulting in an increased number of real estate
companies in the city.
33
Project
Apartment
18,140
12,100
10,085
2,980
5,336
4,888
3,068
1440
2,092
Avg. size of
Apt. (Sft)
2164
2342
1383
1969
1096
1722
1344
1254
1508
907
550
630
235
184
88
57
80
46
73
28
16
20
14
2,240
2,064
759
828
798
595
49703
28
26
52
40
42
22
1440
1560
1480
1517
1555
1752
34
Project
Apartment
42
4
3
2
51
1,974
512
105
72
2663
Chittagong
Shylet
Bogra
Comilla
Total
Avg. size of
Apt. (Sft)
1620
1284
1180
1230
1528
Location of the Residential Project is considered as the most crucial factor for the
success of Residential project, followed by social and natural environment of
project area, Price of apartment, Marketing efforts, Planning of the project,
Architectural design, Quality of works and Management of the project. The
following table identifies the crucial factors:
Table-4.4: Factors considered crucial for success of Residential Project
Factors
Location of the Residential Project
Environment
Price of apartment
Good Road Communication
Marketing efforts
Goodwill Integrity of Developers
Quality of works
Planning of the project
Architectural design
Management of the project
Timely Completion of Project
Security/ Safety Provision
Facilities in Residential project
Position of Land in locality
Cost of the Project
Timely Collection of Installments
Size of Apartment
Financial Strength of Developers
Technical competency
Timely Sale of Apartments
% of respondents
61.4
54.2
51.4
42.9
34.3
30.0
28.6
27.1
27.1
20.0
17.1
15.7
14.3
14.3
14.3
12.9
11.4
8.6
5.7
4.3
Percent
1.4
10.0
1.4
64.3
11.4
8.6
1.4
1.4
of
% of respondents
87.1
74.3
62.9
55.7
52.9
48.6
37.1
32.9
4.3
Location
Dhanmondi
Siddeswari
Shyamoli
Mohammadpur
Green Road
Elephant Road
Lalmatia
Santinagar
Selling price
(Tk/Sft)
3500-5000
1900-2400
1700-2200
2400-2900
2200-2500
2200-2500
2400-2600
1900-2400
Location
Uttara
Gulshan
Neketon
Baridhara
Banani
Mirpur
Segunbagicha
Palton
Selling price
(Tk/Sft)
2500-3500
3500-5000
2500-3000
3500-4500
2000-2500
1400-1600
2000-2200
2000-2200
Source: REHAB
50,000 (App.)
5000-6000 Units.
:
4000-5000 Units.
1,250 Crore Taka. (Tk.12.50
100 Crore Taka. (Tk.1.00 billion)
:
12% - 14%
12,282,000crore taka
1,000 crore taka (10billion)
Number of Units
325
420
662
840
1,275
1,540
1,140
1,530
1,850
2,298
2,320
2,430
2,684
2,840
3,298
3,620
3,930
4,172
4,465
5,074
Growth Rate
29%
58%
27%
52%
21%
39%
-29%
21%
24%
01%
05%
10%
06%
16%
10%
09%
06%
07%
14%
2006
2007
2008
Total
Source: REHAB, 2008
1
2
3
4
5
6
7
8
Defination of Marketing:
Marketing is the process by which companies create value for customers and
build strong customer relationship in order to capture value from customer in
return.(kotler, 2006)
Marketing Mix:
The set of controllable tactical marketing tools- product, price, place and
promotion that the organization blends to produce it wants in the target market.
The many possibilities can be controlled into four groups of variables known as
the four Ps: Product, Price, Promotion and Place.
39
Product
Quality
Features
Sizes
Services
Returns
Price
Discounts
Payments
Services fees
Target
customers
Promotion
Advertising
Sales
promotion
Public relation
Intended
Positioning
Place(Distribution)
Locations
Assortments
Logistics
Price: It is the amount of money customers have to pay to obtain the products.
Place (Distribution): It includes companies activities that make the product
available to target consumers.
Promotion:
Architectural
Structural
General Engineering Department
Each department is headed by a director of the firm and has highly efficient staff
with expertise in various branches of engineering, architecture & planning. A
close liaison is maintained at all levels between the departments to ensure coordination of the work of the participating department. Sufficient flexibility is
maintained so that one department can draw on the personnel & services of
another department according to necessity. The company maintains rather large
field staff for various types of engineering surveys, socioeconomic survey &
construction supervision. The drafting & reproduction section is also very well
equipped and is staffed by highly skilled personnel.
41
b.
c.
Business Areas
ENA Properties Limited is a provider of apartment, shop, office space, rental
service and security service for specific client segments. ENA Properties Limited
43
also provides architectural solution for building design and logistic solution for
construction.
ENA Properties Limited selected client, sectors include top-level management
personnel of national and multinational companies, small business enterprise,
government employees, NGOs, distribution and others. ENA Properties Limited
segmented the client groups on the basis of social structure. ENA Properties
Limited provides its client exclusive apartments, rental service, and security
service.
ENA Properties Limited corporate structure, based on its business areas, has
been developed and the focus of the companys strategy has been directed to
the management of logistic chains and technical information as well as the
supply of construction related raw materials.
Personnel
At the end of the financial period year 2008, the group employed 285 persons of
whom 164 were working in the companys headquarters. The average number of
personnel was 230 during the period.
Board of Directors, CEO & the Corporate Management
ENA Properties Limited Board of Directors has two members. Engr. Md. Enamul
Haque acts as President and another member is Director Mrs. Tohura Haque.
ENA Properties Limited corporate management group companies president/
CEO Engr. Md. Enamul Haque, Deputy Managing Director Dr. Mosleah Uddin,
Director (P&D & Land) Mominul Islam Shangram, Assistant General Manager
(Accounts & Finance) Abu Sadek Bepari, Director (Construction &
Development) Mr. S. S. Alam, Head of Design Mr. Asif Ridwan & Head of
Purchase Md. Harun-Ur-Rashid.
Auditors
The companys auditor is authorized Chartered Accountants, Kazi Zahir Khan &
Co, 67/4, Pioneer Road, Kakrail, Dhaka-1000.
The Boards Proposal for Profit Distribution
44
S.N
01.
02.
Fathers/Husbands
Name
Late Emaratulla Mondal
Engr.
Haque
Md.
Enamul
Status
Managing Director
Director
45
S.N
01.
02.
Fathers/Husbands
Name
Status
Share %
Managing
Director
80 %
Director
20 %
Position
in the
Firm
Managi
ng
Director
Age
41
B. Sc in
Civil
Engineeri
ng), MBA
HSC
Experie
nce
(Years)
15
10
Involvement in
other
Business
Saleha
Emarat Cold
Storage Ltd.
Saleha
Emarat
Agricultural
Industries Ltd.
ENA Building
Product Ltd.
Successio
n
Information
Ms. Tanzia
Farhana
Haque
Ms. Tanzia
Farhana Haque
Mr.
Ehtesham
ul Haque
Mrs.
Tohura
Haque
Director
Dr. Mosleh
Uddin
Executi
ve
Director
43
M.D
(A.M)
10
N. H Khan
Auditor
&
Consult
ant
Financi
65
FCA
35
Not applicable
58
MBA,
28
SELTA Associates
Not applicable
M. A. Ullah
42
Educatio
n
Mr. Ehteshamul
Haque
Not applicable
46
Mr. M.
Mominul
Islam
Mr. Abu
Sadek
Bepari
Sultan
Ahmed
Palash
Mr. SS
Alam
Mr. Asif
Ridwan
Director
Khan
(Construction)
Md. HarunUr-Rashid
al
Advisor
GM
(P & D)
FCMA
37
M.Com
10
Not applicable
Not applicable
AGM
(A&F)
33
M.Com
Not applicable
Not applicable
Manag
er
(Financ
e)
Director
(C&D)
29
M.Com
MBA
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Head of
Design
Head of
Purcha
se
Managing Director
42
B Sc in
15
&
Civil
CEO
Engineeri
ng
35
B. Sc
8
(Architect
ure)
37
MBA
10
Director (Planning
Not applicable
&Not applicable
Development)
LAND
CONSTRUCTIONOffice
Corporate
Location of the Company
Telephone
ARCHITECT & DESIGN
PURCHASE
ENA Properties Limited
House # 30, Road # 9/A,
Dhanmondi
Zip: 1209.
Information R/A,
& Technology
Dhaka, Bangladesh.
HUMAN RESOURCE MANANAGEMENT
88-02-811-1442,
88-02-911-2148,
&
ADMINISTRATION
88-02-911-7636, 88-02-815-1280,
Fax
88-02-812-8637
MARKETING
E-mail
Web site
STRUCTURAL DESIGN
ena@dhaka.net
www.enagroup-bd.net
SALES
ACCOUNTS
FINANCE
ELECTRICAL DESIGN
47
AUDITNG
CUSTOMER SERVICE
48
49
SL
NO
NO
POSTION
OF
POSITION
1
2
3
4
AT EPL
ARCHITECT
2
DIP. ARCHITECT
2
STRUCTURAL ENGINEER
1
SENIOR
ELECTRICAL 1
5
6
ENGINEER
DIP. ELECTRICAL ENGINEER 2
SITE
ENGINEER 1
7
8
9
(ELECTRICAL)
SITE ENGINEER (CIVIL)
8
CAD OPERATOR
1
COST
ESTIMATE
AND 1
10
11
12
13
14
15
16
17
18
QUANTITY SUPERVISOR
SYSTEM ANALYST
MARKETING MANAGER
SALES OFFICER
PROGRAMMER
GRAPHIC DESIGNER
DATA ENTRY OPERATOR
CUSTOMER SERVICE
LAND DEPARTMENT
ACCOUNTS DEPARTMENT
1
1
3
1
2
1
2
2
4
19
20
21
22
23
FINANCE DEPARTMENT
AUDIT DEPARTMENT
IT DEPARTMENT
LOGISTIC DEPARTMENT
PURCHASE DEPARTMENT
2
2
4
2
4
50
ENA Properties Ltd has its current account at The Hong Kong and Shanghai
Bank Limited(HSBC Bank) at Dhanmondi Branch, Dhaka.
51
This segment identify the existing situation of real estate industry and the present
market position of ENA Properties Limited and on the basis of the study some policy
recommendation have been mode for its better performance by utilization its marketing
potential as a market challenger.
There is a growing tendency in the middle class customer market to buy and live in the
apartments. It is more profitable to sell apartments to the upper class.
52
% of total T.M.
15
15
35
15
20
The above shows the occupational status of the target market of ENA Properties
Limited. Among the customers of ENA Properties Limited as many as thirty five
percent customers are businessmen. Expertise rank second in terms of
occupational status of the target market of ENA Properties Limited.
53
Reliability:
Reliability is a measure of the probability that a product will not malfunction or fail within
a specified time limit. This is an important factor for ENA Properties Limited singe
customers want to avoid the high cost of product breakdown and repair time. ENA
Properties Limited should build apartments in the way that customer can have high
reliability.
Style:
Style describes the product look and feel to the buyer. Buyers are willing to pay a
premium price for products that are attractively style. ENA Properties Limited can
develop its product in a way that creates a sophisticated image to the customers.
Design:
Design is the totality of features that affect how a product looks and functions in terms in
terms of customer requirements. Design is particularly important in making and
marketing durable equipment and services. ENA Properties Limited should develop a
distinctive design patterns for its apartment projects.
Service Differentiation:
In addition to differentiating its physical product, a firm can differentiate its product in
terms of services. ENA Properties Limited can consider the following service
differentiation.
Ordering Ease:
Ordering ease refers to how easy it is for the customers to place an order with the
company. If necessary, ENA Properties Limited should send its marketing executives to
the offices of residences of the customers for getting sales orders.
Delivery:
Delivery refers to how well and quickly the product or service is delivered to the
customers. It includes the speed, accuracy and care attending the delivery process.
ENA Properties Limited must have some better position in these matters.
Customer counseling:
Customer counseling refers to data, information systems and advising services that the
seller offers free or for a price. ENA Properties Limited must offer these things to the
customers and in the way customers can differentiate its product.
Maintenance and Repair:
It refers to the companys service program for helping customers keep their purchased
products in good condition. After sales service, thus, play an important factor in
54
ENA Properties Limited has better-trained personnel to differentiate itself in the real
estate industry.
55
on Internet based marketing so that it can attract prospective buyers both from home
and abroad.
Pricing Strategy:
Pricing is the most critical element of the marketing mix. Among the 4 Ps. It is the only
one that produces revenue.
57
Personal Channel
Non- personal channel
Personal channels such as word of mouth, advocate, expert and social channels should
be used to promote ENA Properties Limited products. In case of non- personal channel,
media and atmosphere must be used. In case of media, the following should be
considered:
1
2
3
4
Affordable method.
Percentage of sales method.
Competitive parity method.
Objective and task method.
ENA Properties Limited decides on its promotional budget depending on its sales
objective. The sales objective of ENA Properties Limited for the year 2005 is 100
apartments and revenue of Tk.30crore. Keeping this objective in mind, it has set a
yearly promotion budget of Tk.70,00,000lac that is, it spends Tk.600,000 Lac per month
on promotion.
Decide on the Promotion Mix:
The company must develop a promotional mix from the five following promotional tools:
1 Advertising
2 Sales Promotion
3 Public Relation and Publicity.
4 Personal selling
5 Direct Marketing
There are some factors those should be considered in developing the promotional
58
Insufficient fund:
Most of the developers cannot manage any fund from the government Agencies. So the
amount of investment seemed to be very negligible for completion of the total project.
This problem discourages them to undertake a new project.
Lack of promotion executives:
Most of the real estate developers have no promotional executives or staffs. So they
face problem in enhancing their marketing activities.
High promotional cost:
Some developers engage promotional agencies to promote their offerings. But due to
high promotional cost, they often slow- down their promotional activities.
Price fluctuation:
Prices of various building materials such as brick, rod, cement, wires, electrical fittings
are not stable. It creates lot of problems in the cost estimation o f developers.
Lack of quality material:
The building materials available locally are of very poor quality. In other sense,
adulteration in building materials hampers in the quality building construction.
Non-cooperation from clients:
Most of the developers depend on advance sales and installments. But sometimes
clients do not cooperate in payment. It hampers in completing projects accordingly.
Material Shortage problem:
City area is growing day to day. There is acute shortage of open space for material
storage. Sometimes exiting building creates problem in this regards. So material
storage problem is a great problem faced by the developers. I
Cumbersome procedures:
During pre-construction period, developers have to face various types of formalities,
which are very complicated and time-consuming. The corrupt officials create most of
these of formalities intentionally for illegal monetary gains.
Demand of undue money:
Most of the officials of housing related agency demand money illegally for any kind of
activities.
60
Degradation of environment:
Most of the real estate developers do not keep places for tree plantation inside the
project boundary in order to optimal uses of project land. It causes degradation of
environment.
Employment of unskilled personnel:
Most of the developers employ unskilled professional personnel in various departments
of construction activities to save money. This hampers in proper construction.
Shortage of utility service:
Most of the developers have an intention of earning more profit. This tendency often
allures them to provide improper fire controlling system, improper electricity security
system etc. It causes safety problems to the apartment dwellers.
Inappropriate plan:
Sometimes developers start their projects with inappropriate structural plan, which
create various types of problems.
Breach of commitment:
Some developers offer a variety of facilities at the time of starting the projects. But all
the facilities are rarely implemented.
Violation of rules:
The violation of the established rules and regulation by few developers spoils the image
of real estate business.
62
Vertical rise:
The real estate developers can be encouraged vertical rise other than horizontal rise.
This practice will solve scarcity of land in the important areas of city.
Conclusion
The study conducted on the real estate business of Dhaka City discloses a true picture
of this business. This study explained the status of the real estate developers, profile of
projects, construction activities, marketing aspects, and financial conditions of the real
estate developers. Brief discussions are also made in this study on several relevant
issues of housing sector of the Dhaka city as well as the country. This will provide an
overall idea of housing business in Dhaka 11th mega city of the world.
The real estate business is a booming sector of economy at present because of several
reasons. Scarcity of open space in the city first reason, Security of living coupled with
amenities and features are the second reason for buying an apartment. Moreover,
decreasing bank interest let the people to look for a secured investment with
satisfactory return and an apartment is a good investment in this sense.
The real estate developers are growing fast to meet the challenges of housing needs.
But in a number of cases, this business dose not follows the standard rules and
regulations, which will be fatal in near future both for developers and apartment buyers.
This tendency is damaging the image of the professional developers.
Organized efforts are very essential to identify and solve various problems that are
obstructing real estate developers. Government can play a vital role with private sector
and non-government organizations in this regard.
Finally we can hope that if the existing problems of real estate business can be thrown
out and appropriate measures can be implemented, the prospect of real estate business
in Dhaka City in particular, Bangladesh in general, is glossy.
63
BIBLIOGRAPHY
Annual Report of Eastern Housing Limited.
Annual Report of ENA Properties Limited.
http://www.enagroup-bd.com
Kotler Philip, Armstrong Gary (2006), Principles of Marketing, 12th
Edition, Pearson Education, Inc.
64