Country Situation paper

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• NHB-APUHF conference on
• Growth with Stability in the Affordable Housing
  Markets

• Country Situation paper
• BANGLADESH
• Presented by

Chowdhury Mohidul Haque Executive
Director Bangladesh Bank
Delhi, India 29, January-01 February, 2012
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Bangladesh Asia Pacific Region
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Basic information on Bangladesh

• Location South Asia (member of the SAARC)
• Area 144000 Square Km
• Population 162.22 million(2009 estimate)
• Population Density 1127/square Km
• Urban population as of total population 27.6
• Urban population growth rate 3
• GDP current price and million USD 89159
• GDP growth rate 6.3 2010
• GDP per capita current price in USD 692 (2009)
• Housing demand 5 million , 0.5 million in urban
  and 3.5 million in rural being added annually
• Main exports Garments, fish, jute goods, leather
  products
• Main Crops Rice, Jute, Wheat, Vegetable, Maize
  and potato

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Houses in Bangladesh
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Slums, streets planned residential area
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Background

• Housing refers to the arrangement or provision of
  places to live. The sum total of policy
  framework, institutional infrastructure and
  regulatory environment provides the frame work of
  a country.
• Housing Finance is the institutional arrangement
  (public and private) for financing housing.
• Affordable housing is broadly defined as housing
  that is adequate in quality and location and does
  not cost in such a way that it restricts meeting
  other basic living cost.
• Bangladesh is a developing country in this region
  and has planned to become middle income country
  by 2015.
• The urban population constitute almost 28 of the
  total population and is increasing by 3.5
  annually. Dhakas population growth rate is the
  highest among the major cities in the world.

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Background

• Rapid and sustained urbanization and population
  growth in the country are fuelling the demand
  for well- located, adequate and affordable
  housing.
• Bangladesh is home to over 160 million people of
  whom around 31.5 is poor, who require more
  personalized housing solutions as existing market
  terms are not always affordable to them.
• Challenge of affordability is not new to
  Bangladesh but the need for instituting a
  supportive institutional framework and increase
  the supply of affordable land and housing is
  still a daunting task.
• Housing and housing finance services have the
  huge potential to be expanded to middle- and even
  lower- income families both in the urban and
  rural areas.

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Demand for Housing

• Enhanced private sector role in the housing
  market would free government resources for other
  priority social and economic needs.
• Bangladeshs housing market is characterized by a
  surplus of upper-income group housing stock and
  shortage of affordable housing for the great
  majority of middle and lower-income population
  groups
• Estimates suggest a shortage of about 5 million
  houses in Bangladesh, with as many as 500,000
  houses added annually in urban areas and 3.5
  million added in rural regions
• There is great demand for houses of moderately
  priced
• Comprehensive market-based demand studies are not
  available, and there is a need for further
  research on the housing demand of lower- and
  medium-income groups.

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Housing and Housing Finance in Bangladesh- Policy
Framework

• Housing is treated as a basic right in our
  constitution
• Government provides housing facility to all
  groups of people
• National Housing policy has been drafted recently
  and is now open for public comments
• Draft housing policy has the objectives of
• Sustainable and affordable housing for all
• Incorporation of public, private, cooperative,
  NGOs and community organizations in housing
  initiatives
• Special emphasis to disadvantaged and poor
  members of the society in housing
• Special emphasis to housing for women at work

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Housing and Housing Finance- Institutional
Infrastructure

• Bangladesh has excellent institutional
  infrastructure for housing and housing Finance
• Public sector institutions
• Ministry of housing and works
• National Housing Authority (NHA)
• City development Authority (RAJUK, CDA, KDA etc.)
• Bangladesh House Building Finance Corporation
  (BHBFC)
• National Housing and Building Research institute
• Directorate of architecture
• Ashrayan Project
• Grihayan Tahbil (Housing Fund)

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Cont.

• Private Sector Organization
• Developers
• Land developers
• Builders
• MFIs
• Centre for urban Studies(CUS)

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Housing and Housing Finance-Regulatory Environment

• General regulatory environment regarding housing
• legal and regulatory framework concerning the
  housing and real estate development includes laws
  such as
• Building Construction Act (1952),
• Town Improvement Act (1953),
• Dhaka Master Plan (1959) and
• Building Construction Rules (1984).
• National Building code (1993) regulates
  construction specification

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Cont.

• Regulatory Environment in the housing finance
• Prudential regulations for housing finances by
  banks and NBFIs
• These regulations allows and promotes lending to
  housing (not for land purchase).
• Housing finances are done by state owned, private
  commercial banks and as well as specialized
  housing finances company both in the public
  sector(BHBFC) and private sector (DBH)

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Initiatives for affordable housing by Government

• A very large segment of urban house is provided
  by the private house development companies.
• Government initiated housing supply basically
  cater for the government officials, middle income
  and lower middle income group in Dhaka as well as
  other major city of the country (RAJUK, National
  Housing Authority).
• For low income rural housing need government has
  taken many initiatives like Ashrayan Project,
  Ekti Bari Ekti Khamar (one house one farm) and
  Gore Fhera Kormosuchi (Back to home program)
• Grihayan Tahbil also work for low income
  affordable housing by providing long term low
  interest bearing finances
• Apart from government efforts some NGOs and MFIs
  fund self-construction for lower-income
  groupsbut on a far smaller scale, relative to
  the existing need.

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Housing Finance market -Bangladesh scenario

• The housing finance market is characterized by
• High interest rate
• Limited term lending
• Insufficient fund from the public financial and
  specialized financial institutions
• Lack of transparency
• The legal, regulatory, and taxation frameworks
  are not sufficiently enabling for the
  development of primary and secondary housing
  finance markets.
• Bangladeshs ratio of housing finance to GDP is
  less than 5 percent.
• Mortgage finance from private banks and
  specialized lenders is available only to urban
  households with high incomes (more than Tk
  40-50,000 a month).
• Plenty of multistoried buildings for residents in
  urban areas specially in big cities like Dhaka,
  Chittagong, Khulna, Coxs Bazar.

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Cont

• Government-subsidized housing finance through the
  Bangladesh House Building Finance Corporation
  (BHBFC) targeting lower- and lower-middle income
  groups.
• Outreach of Grihayan Tahbil, Ashrayan, Ghore
  Phera, and Ekti Bari Ekti Khamar is very limited
• That leaves a large lower-income housing market
  completely unaddressed, despite currently high
  growth rates of housing finance.

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Increasing affordability

• Hindrance
• Lack of balanced funding models,
• Absence of diversified instruments,
• Absence of separate prudential regulations/guideli
  nes for the sector, and
• Lack of affordable mortgages based lending
• Positive aspects
• Islamic finance could help to enhance access to
  underserved market segments.
• Public-private partnerships and creative
  cooperative solutions are promising.

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Way forward

• Bangladesh need reforms in the field of Housing
  Finance to cope up with the growing demand.
  Reforms should
• improve regulatory enforcement and property
  registration.
• prudential norms customized to housing finance,
• a more effective collateral regime,
• improved availability of housing and mortgage
  information,
• Policy interventions needed in the following area
• Finalizing the National Housing Policy
• The revamping of the Bangladesh House Building
  Finance Corporation(BHBFC)
• Increasing supply of housing stock for homeless,
  lower and lower middle income people of both
  rural and urban areas
• the promotion of long-term financing via a
  refinancing facility and
• A national savings-for-housing scheme, and
• The encouragement of a secondary housing market.

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(No Transcript)