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Dhaka Tribune

ABC Real Estate Director reveals insights on shifting trends, challenges in Bangladesh's real estate market

A public-private-financer-social partnership is essential for ensuring affordable housing, she says

Update : 31 Aug 2023, 11:19 PM

In an interview with Dhaka Tribune, Srabanti Datta, director of ABC Real Estate Limited, discusses changing market trends and the many hurdles that real estate companies face in order to thrive in an increasingly competitive market.

What are the current trends in the Bangladeshi real estate market? How have they evolved over the past few years?

The next big thing that is already sprouting in Bangladesh’s real estate sector is large-scale gated housing complexes with multiple towers and common facilities for convenience, fitness and entertainment.

Increasingly during recent years, people have become busier, traffic is getting difficult and open space for walking or playing is getting scarce and unsafe. These problems and community issues are triggering the opportunity and aspiration for these gated communities - a modern and upscale take on our traditional ‘residential colonies’. For an affordable service charge, a lot of facilitated features and services can be offered in these projects that may add tremendous value to the lifestyle of the residents which are not present even in the high-end single-building projects in Dhaka.

Also, these projects are the most suitable schemes for investors as such facilitated housing complex is always a popular choice among the tenant community in any big city. So, more developers are now leaning towards launching large-scale projects to meet the aspirations and needs of a big group of potential clients.

 

ABC has received a remarkable response from customers in our gated community project ‘The Oasis’ at Ispahani Colony in the last four years and our research data before and after the project’s sales evidently shows the strength of this trend.

Given that the developer can keep up the pace of construction progress, maintain the quality, price the project suitably for the target market, and be committed to promises, a gated community project in Dhaka is sure to see success today and onwards.  

Affordable housing is a significant concern. What initiatives is your company taking to provide affordable housing options for different income segments?

We have studied the feasibility and framework for affordable housing in Dhaka city and our finding is that it is only possible for quality-conscious developers to build affordable housing if the land is either made available by the state-governed agencies or if a smooth communication infrastructure can be ensured between the suburban zones and the main metropolis of Dhaka.

The price of land here is market-driven, which makes any easily-accessible area pricey. Whereas, the areas which still have a feasible land price suitable for affordable housing are not feasible for people who need to commute to the main capital city for their livelihood.

Now that we have completed our prestigious gated community project The Oasis at Ispahani Colony at Moghbazar, we have hands-on experience that may help us do the practical study of required costing, infrastructural features, technology and architectural issues for making an optimum solution for a functional and affordable housing project.

We are planning to work on some affordable housing models that are viable and practical. In the next step, we need to discuss these models and the prerequisite conditions of their viability with partners like the relevant authorities in government, easy-interest financers, local communities etc.

I believe that a public-private-financer-social partnership is essential for ensuring affordable housing against the reality of the real estate and infrastructure scenario of Dhaka.

Without a united partnership effort and a collective visionary agenda, the dream of structurally safe affordable housing can’t be achieved.  

How do you see the intersection of sustainability and affordability in your real estate developments?

This is a very critical and vital issue for setting the right direction to a healthy future for the real estate sector as well as Bangladesh itself. We’re a hugely populated nation cramming in a limited landed area.

The protection of our environment and natural balance is as critical as our need to ensure housing for every citizen.

There comes the challenge of attaining the right balance. Again, I believe it is quite difficult for private commercial enterprises like property developers to do something truly impactful and meaningful in ensuring a true equilibrium of sustainability and affordability in the real estate sector.

Every nation’s geography, climate factors, material availability, resource capacity, economic structure, lifestyle needs and social fabric are very distinct. Bangladesh needs to have a collective agenda and the combined effort of a panel of visionary experts from the fields of architecture, engineering, environment, material science, energy, technology etc to prepare models of housing solutions that are both sustainable and affordable, but compliant to the unique factors of Bangladeshi reality.
Once that step is done, the authorities should formulate a separate building code for various schemes of green building for various price markets based on the models.

Then only, conscious and responsible companies from the real estate sector can develop viable projects in a sustainable-affordable scheme.

It might sound complex, but we believe that with the right intentions and effort, this groundwork can be done within two years of time but, without a comprehensive and integrated approach to the method, the so-called sustainable projects shall only have superficial impacts – they can neither be truly sustainable nor be cost-effective.

I am very hopeful that, with an integrated effort from all conscious and leading minds from various sectors and responsible governance, we shall soon get a green building code suitable for Bangladeshi climatic and economic realities. 

Given the capital-intensive nature of real estate projects, what financing strategies do you employ to ensure the timely completion of your developments?

There has been a chicken and egg situation regarding the timely completion of real estate projects in Bangladesh in the last 15 years.

Due to overtly ambitious deals, the high cost of borrowed funds, delayed sales or delayed payments from clients, many developers completed their projects quite later than the initially promised schedule.

That resulted in a general mistrust among the customers and now there is an increasing trend in the customers to invest in an apartment after at least 75% of the work is done in the project, only to avoid uncertainty and opportunity cost of the investment.

Now, this trend is adding so much financial cost of capital to the projects, making the real estate slower and pricier for the clients at the end.

ABC has a high reputation in the market for its steadfast commitment to timeliness and construction quality. Since we are very proud of our goodwill, our strategies also aim to protect these factors.

The most important strategy we follow is to never overtrade in the acquisition process of projects. We never make highly ambitious deals, gambling on the inflated potential of the future market. We always factor in the future price potential based on pragmatic terms and a conservative risk assessment.

In fact, this goodwill and selective operations are what kept ABC on every financer’s good book as best borrowers. So, it helps us plan the finances of our projects in both ways, we can count both on our customers and financers for the smooth progress of any project. We borrow easily and we pay back easily because the financial planning is sound, sensible and responsible. 

However, we think that our commercial banks and NBFIs should seriously think about scheming home loan and mortgage products based on long-term payback plans and variable interest rates.

If the customer-lender together can finance a project in a 30/70 ratio on a 30-year payment plan where the interest rate for the construction period will be lower and then higher for the rest of the tenure, it would enable the customer to afford a home as well as enable a developer to finish the project on schedule.

There is a challenge of an unstable economy and high inflation volatility in Bangladesh, due to which it probably becomes difficult for the financers to dish out the schemes that are standard in numerous developed markets. Yet, we think there is a big opportunity for designing loan products incorporating cushions for the possible financial risks and considering the advantage of the appreciating collateral in the real estate sector.    

How is your company leveraging technological advancements, such as PropTech and construction automation, to enhance the efficiency and quality of your projects?

ABC is a multi-generational organization doing healthy business for more than 50 years now and we have an organizational culture of preserving and nurturing our human resources in a steady manner.

As a result, ABC has a distinctively high rate of retention in the organization but the pace of change towards advanced practices has been a little slower than the new entrants in the market.

We’ve been slowly introducing modern technologies and PropTech practices into our operations while making sure the first generation of our diligent personnel do not feel redundant or insecure. It has been a healthy process of transformation and we aim to pick up the best of technology in our construction methods, planning tools, sales management and other management practices within the next 2-3 years.

However, we feel that, on top of individual capacity building of developer companies in technology, it is time to utilize PropTech tools in developing independent interfaces and e-services that can flourish on the huge untapped potential of not only offering search portal, mortgage assistance or legal vetting services to customers but also effective BPO/B2B services like sales management, collection management or legal services.   

With growing concerns about environmental impact, how does your company incorporate sustainability practices into your real estate projects?

ABC has recently completed building a 457-unit residential complex in the heart of Dhaka Metropolitan City. In that project, we have chosen to invest and incorporate a number of sustainable features, despite no condition from the authority.

Climate-oriented architectural layout, rainwater harvesting, sewerage treatment plant, high-capacity solar energy system, recycling of treated water for gardening and road-cleaning, facilitating recycling bins for household plastics, carbon emission control in generator system through the water-filter process, shuttle service for peak-time commuters, intensive rooftop agro project, paperless communication system for facility management etc have been meticulously incorporated in this project.  

ABC is mindful of making environment-conscious and responsible decisions in the process of building and equipping our projects. However, as mentioned before, we believe that a Bangladesh-specific protocol, guideline and green building scheme must be formulated by experts to work as a code for conscious developers.

We regularly feel that our customers are not aware of the pros and cons of a building in terms of environmental sensitivity and rather focus on aesthetics and convenience.

It is important to transform their outlook and cognizance so that it influences and drives the direction of the upcoming projects. An expert-approved Green Building protocol shall also work as a campaign of awareness for the end-users so that they are encouraged to make the right choices of architectural aesthetics, finishing materials, SDG-compliant features and lifestyle practices that will naturally force the market and builders towards incorporating sustainable practices on both ends.

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