By Asif Tarafdar
Asif Tarafdar explores the housing market and updates where we stand in the tug-of-war between fantasy and reality.
It can be debated that, among 17 million residents of Dhaka, how many people actually hold this city dear. Generally, you would expect a little more affection towards the place people call home. But one cannot hold it against the people of Dhaka. The city gives them enough reasons for not having a place in their heart. The reasons can be easily deduced from the cries of anguish that can be heard in public spaces. A common denominator among them is the affordable housing crisis. For long, Dhaka has been blamed for having bloated property values. The crisis has only deepened over the years. I would like to translate this in numbers, to put the misery of people in perspective. According to a recent report by BRAC Institute of Governance and Development (BIGD), Dhaka City meets only 5% of its housing demand. Currently, the city requires 0.12 million housing units in total. The city’s response to this falls short by a margin. Private sector supplies 25000 housing units annually. On the other hand, the public sector has virtually no contribution to providing housing in any form. A large part of the resident’s income is spent on housing. Numerically speaking, people spend over 30 percent of their income on house rent and utility services. This has an adverse effect on the general living standard. More than 57 percent of the lower- and middle-income people have no savings which keep them out of the housing market. 68 percent of tenants do not want to purchase flats in the city. Among the people who want to buy a place to live in Dhaka, only 6.0 percent of the lower- and middle-income city dwellers are able to pay a down payment of Tk 1.9 million within six years.
It doesn’t paint a pretty picture. I never intended to sugar coat. But it is very important to grasp the magnitude of the situation before we start digging up what is causing the problem. The primary suspect is the growing population density. Dhaka attracts migrants from all across the country. Recent expansion in industry and other private sectors have multiplied the number of people coming to the city looking for work. According to government estimates, at least 1,418 people are adding to the population of Dhaka every day. Currently, Population density of Dhaka stands at approximately 80,000 people per square kilometer which is highest in the World and more than double than its closest competitor Mumbai (31,000). The average area per person in Dhaka is 12.5 square meters, while the average area per person is 32.3 square meters in Mumbai, 230.2 square meters in Tokyo, 167.6 square meters in Shanghai and 87.4 square meters in Delhi. Clearly, the numbers are overwhelming and Dhaka is failing tremendously to provide homes for its growing population. Currently, almost the entire housing demand is being fulfilled by the private sector. Informal private housing constitutes 55 percent and formal private housing supply is at 45 percent, the majority of which is supplied by real estate developers. According to an official account, real estate developers provide around 20,000 housing units in Dhaka per year.
Government housing projects have been inadequate and inefficient. The primary government development agency in Dhaka is Rajdhani Unnayan Kartripakkha (RAJUK). Most of their projects target higher income and upper-middle-income groups. It is currently operating 13 projects. Honestly, these projects haven’t contributed anything to solve the housing crisis. The projects take a long time to complete and are riddled with problems. The much-anticipated project of providing serviced apartments to the middle and high-income group hasn’t made any significant impact, most of them are not even completed. There are irregularities in the allocation of plots. Often the allottee is reluctant to start construction in hopes of selling the land to a real estate developer at a profit.
What is more infuriating is, both government and private developers have completely overlooked the low-income group. Over 35% of people in Dhaka live in slums. A large section of low-income people lives in very poor conditions. Their residence almost always has poor infrastructure and lacks proper utility connection. They are congested and unhygienic due to lack of proper facilities. There is no initiative from the private sector to provide housing for the poor. Private companies do not believe low-income people will be able to afford their houses. Despite suggestions from urban planners, there are no initiatives from the public sector to provide affordable homes to low-income people. Vhaasantek Rehabilitation Project undertaken by the government aimed at providing housing for the poor failed to deliver and was later shut down by the government.
The rising density of the city is not the only reason that is making affordable housing impossible for Dhaka residents. Irregularity and corruption in plot allocation are as responsible for making things worse. Irregular allocation contributes to increasing property value. It facilitates middlemen to make profits by selling their allotted plots at a high value. This causes property value to go up from the start. This conceives another problem, financing. Hopeful flat owners are forced to take out loans at a very high rate which is too much of a burden to take for many. That is why so many young families are staying away from buying any property because they do not want to risk defaulting.
If you have already started packing your bags, I’ll ask you to wait till you hear this. Other cities in the world have faced this problem. In fact, it is a common problem faced by cities all across the world. There are cities which solved its affordable housing crisis and set an example for others. Singapore has been most successful in solving its housing crisis. Currently, 82% of Singaporeans live in flats organized by the HDB (Housing and Development Board) and the satisfaction rate reaches 95%. For all of the Singaporeans together, home ownership is 93%, which is the highest in the world. One of the main reasons why home ownership is so high is that it through law is made possible to take a loan in your personal pension-funds from the day you start earning money. In this way, even low-income groups can find funding to buy their own home. Another Asian giant and one of our closest allies, Japan also have an exemplary record in providing affordable housing to its residents. When Tokyo was grappling with a housing crisis, authorities came up with a simple but effective solution. They let people build more houses. By starting on 100,000 new dwellings a year, Tokyo’s housing stock has more than kept pace with its population. As a result, the cost of housing is low. Therefore, the city’s emphasis on vertical expansion worked and helped the housing prices well within reach over the decades. Currently, 68% of the residents in Dhaka live in rented properties. Of them, 82% percent say the rent exceeds their affordability. New York came up with rent control that provided relief to millions of its habitats. Rent control does exactly what it says. Authorities set maximum rent for all properties. To qualify for rent control a resident must be living at that space for a certain amount of time. Maximum rent is set by the authority and only increases a certain amount every year. With an overwhelming number of residents who are struggling with affordability, rent control will allow breathing space for many in Dhaka. In the past, experts had suggested some form of rent control in Dhaka, but no words amounted to any action. If you are not mad yet, hear this, West Bengal government right across our border has fixed per sq. feet price at Tk 3,500 in Salt Lake area (a posh residential area), a similar initiative appears to be. It appears as if everybody has given up any hopes of prevailing sanity. Unusually high housing cost is just something that comes with life in Dhaka.
For too long, residents of Dhaka have been burdened with unfair housing cost. Far too many people are unable to find a safe affordable place to live. We deserve better than this, and the first step towards a solution is believing in that. Bigger and more expensive cities have been able to put a leash on its rising housing costs. Success stories are all around us. What we require is the willingness and patience to see things through. The actions which are required have been already advised countless times by urban planning experts. A coordinated effort of all the development authorities which includes 12 city corporations and the 328 municipalities is required to ensure maximum effectiveness. This time the priority should be the middle- and low-income segment. More emphasis should be given in building affordable and rental housing instead of allotting plots which have proved ineffective time and time again. In the Annual Development Programme (ADP), pro-poor housing projects must get maximum priority. Financial institutions like insurance companies, commercial banks, cooperative banks, special investment organizations should be encouraged to invest in the housing and real estate sector by providing incentives and Bangladesh Bank should step in and make terms and interest rate for housing loan much easier. A lot can be achieved if we reject the demeanour of “anything goes”.
