land prices put dhaka on par with ny or london _ dhaka tribune
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An article on real estate in Bangladesh; Land Prices Put Dhaka on Par With NY or London _ Dhaka TribuneTRANSCRIPT
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bangladesh>>published:09:35may3,2013>>updated:13:34july7,2013
LandpricesputDhakaonparwithNYorLondonFaisalMahmud
But the median household income here is 50 to 100 times lower than inthose cities
IfyouareaDhakaresidentanddonotalreadypossessapropertyinthecapital,thereiseverychancethatyoumightendupnotowningoneinyourforeseeablefutureevenifyourmonthlyincomeisinthesixdigitrange.
Thiswastheconclusionofarecentstudywhichcompiledayearofresearchworkbyurbanplannersandeconomistsinthecountry.Thepublication,titledUrbanBangladesh:Challengesoftransition,wasconductedbythePowerandParticipationResearchCentre(PPRC)aprivateresearchorganisation.
Accordingtothispublication,formostDhakadwellerstheprospectofbeingabletobuyahouseappearstobethepoorestinSouthAsiancitiesasthepriceincomeratiohereis5:1ormore.(EventheneighbouringIndiancityofKolkatahasaratioof3:1).
PhotoAmirulRajiv/DhakaTribune
LandinthisconcretejungleisnolesspreciousthaninLondonorNewYork
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Normallyaratioofbetween2:1and3:1wouldgenerallyimplythatasignificantportionofthemiddleincomepopulationcouldaffordtopurchasehouse,althoughhighlyunequalincomedistributionwouldpushdowntheproportion,saidthestudy.
TheeverincreasingcostofhouserenthasforcedtheDhakadwellerstospend35%oftheirincomeonaverage.Sometimestheshareofincomepaidinrentisashighas45%.
CalculationsdoneinoneofthestudiesofthispublicationshowsthatevenifthecurrentincomeofapersonisTk100,000permonthandheisabletosavehalfofthisamountafterbearinglivingexpenses,itwouldtakehimatleastadecadetosaveenoughmoneytopurchasingapropertyintheoutskirtsofthecapital,providedthatthehousingmarketremainssteady,whichisveryunlikely.
Dataprovidedbytheurbanandregionalplanning(URP)departmentofBUETsaysthatinareasofDhakaanditsoutskirts,landpriceshaveincreasedbymorethan300%between2000and2007.Realestatedevelopersestimatessuggesttheincreasewouldbecloseto350%sincethen.
AccordingtoRealEstateandHousingAssociationofBangladesh(Rehab)data,thepriceofakathaoflandroseby344%inMohakhaliDhanmondiwasclosebehindat331%and300%inBananiandGulshan.
LandpricesinMotijheel,thecommercialhubofBangladesh,increasedbyaslightlyaboveaverageof214%duringthisperiod.
ThemostmodestpricerisewasinhighlycongestedAzimpur,atjust118%.
TalkingwiththeDhakaTribune,ProfDrSarwarJahan,headoftheURPdepartmentofBUET,andtheauthorofoneofthestudiesofthepublication,saidthescarcityandhighcostoflandhasbecomethestumblingblocktofacilitatingaccessibilityofthemiddleandlowerincomepeopletohousing.
Landdevelopmentmultiplier(LDM)isanindicatorthatreflectsthepremiumthathadtobepaidforaplotoflanddevelopedforhousingincomparisontoraw,undevelopedland.TheLDMofDhakawasestimatedaround2in1991,butitincreasedtoabout7.5and18in2001and2011respectively,hesaid.
Theweaknessofthefinancialsectorintermsofprovidingfundsforhousingisalsoamajorobstacletohousingdevelopment.Theformalmortgagefinancesystemissmallrelativetonewhousingconstruction,servingonlythehighestincomegroups,saidDrJahan.
ReferencingaWorldBankstudyconductedin2007,ProfJahansaidthatDhakaslandpricesarecomparabletothoseinsuburbanNewYorkorLondon,althoughthemedianincomeinDhakais50to100timeslower.
ProfJahansaidinDhakamorethan65%ofhouseholdsrenthousestolivein.Likeothercommodities,houserentincreasedtremendouslyduringthelastfewdecades.Asperavailablestatistics,itwasfoundthatthehouserentinDhakain20072008wasmorethan24timestherentin197374,hesaid.
Healsosaidthatabout60%ofurbandwellingsinBangladeshareowneroccupied,butthepercentageisonly30inDhakacity.Overtime,therehasbeenadecliningtrendinsingleowneroccupiedhousing,asrealestatecompaniesemergeandrenovateasingleownerhousesintoanapartmentcomplex,hesaid.
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TanveerulHaqueProbal,formerpresidentofRehab,saidtheincreasedpricesoflandandconstructionmaterialhaveforcedrealestatedeveloperstosellreadymadeapartmentsathighprices.
Landownersnowpreferhandingovertheownershipoflandtotherealestatedevelopers,asinthishousingmarketscenario[that]ismuchmorelucrativeforthem,hesaid.
Probalsaidthecurrentpriceofapartmentinadecentlocationofthecapitalisnotaffordabletomiddleincomepeople.Thatswhydevelopershavestartedtoconstructlowpricecondominiumsintheoutskirtsofthecapital,hesaid.
However,hesaidtheoverallsituationofthesectorwasnotgood,andthatthereasonfortheslowdowninsaleswaslackoffinancingfrombanks.Inthepast,banksusedtofinancethehousingsector.Butnowtheyseemlessenthusiastic.Ithasimpactedthesector,hesaid.
EconomistProfWahiduddinMahmudsaidapointofDhakaisthattheaverageincomeofitsdwellershasnotreachedathresholdatwhichonecanaffordtobuyahouseinsuchalargecity.
Costsofnecessarycivicamenities,intermsofinvestmentandmaintenance,arebeyondtheincomecapacityofmostofthecitysdwellers.Thisisactuallythecostofunplannedcityexpansion,hesaid.
ProfMahmudsaidoptimumuseoflandunderextremelandscarcitycannotbeensuredonlythroughmarketorprivateincentives,butthroughincentivesbypublicinterventions.
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