Those who thought, rather not with any logic, that the apartment prices would come down in Bangladesh in the wake of global economic downturn have been living in the fool's paradise. What happened in the outside world, particularly in the property market, does not have any bearing on the situation in Bangladesh. The most glaring example is ever rising apartment and land prices.

The global economic downturn caused many sprawling businesses including these involved in real estate, banks and insurance companies to close down around the globe. But in Bangladesh, the scenario is different. No real estate developers shut down their operations so far.

Owning a small piece of land or tiny apartment has now become a dream for most of the Dhaka citizens because of their 'prohibitive' prices. Reports say the land price increased by 25 times and the apartment price 10 times in the last one and a half decade making Dhaka's real estate most costly in the region after Mumbai and Delhi. In the backdrop of high demand, price hike of the real estates has turned country's capital one of the costliest cities in South Asia.

The pressure on limited land in Dhaka has not only intensified urbanisation but also led to indiscriminate filling of lowland in and around the city to make way for unplanned urban development. The increasing rate of urbanisation is the effect of growing population and migration from rural areas. The mounting population pressure on Dhaka city has a severe impact on housing, infrastructure and employment sectors, which require adequate land to meet the demand. The existing selling price of per square feet apartment in Gulshan and Banani, two most city posh areas, is between Tk 14,000 and Tk 15,000. The price was, however, was only Tk 1,400 to Tk 1,500 for per square feet in those areas in early 1990s. The lowest price of per square feet apartment is around Tk 4,000 in less demanded areas like Mirpur and Mohammadpur. In this market, land becomes arguably the most valued commodity. It is no surprise that land receives more than its fair share of attention from land speculators and developers as well as grabbers in Bangladesh.

Three decades back, the city dwellers were reluctant to live in apartment while ten years back people would have thought twice before buying a flat. But things have changed in recent past. There is now a high demand for apartments in the city. Dhaka is one of the fastest growing metropolises in the world. Between 1981 and 2000, the greater Dhaka population grew 5.5 per cent on an average to reach 10.0 million from 3.44 million. During the same period, the area of the city also increased from 104 sq. km to 150 square kilometres (km). By the year, 2015, the projected population will be about 15.7 million.

Very recently, the government has decided to raise the 'official' price of land four times to match somehow with the ruling market prices, in a bid to increase non-tax revenue income. The increased rate would come into effect from September 01. The government is also likely to reduce the registration fee by 6.0 to 8.0 per cent from September 01. The authorities have so far failed to increase the revenue income from the land registration fee as it is much higher compared to that of India. Registration fee of a flat is around 18 per cent of its cost, while it is below 5.0 per cent in India, Pakistan and Sri Lanka. Land buyers usually show lower prices of land on paper to avoid paying the full registration fee and also to 'conceal' their monetary assets. This has also led to holding of a huge amount of undisclosed money in the hands of the sellers due to circumstantial reasons.

Dhaka city has seen the most unusual rise in land price for lack of serviced land compared to the demand. Age-old land record system, taxation structure and cumbersome land transfer procedure have made the whole system unmanageable in the city where the land-man ratio is among the lowest in the world.

The real estate companies have set up land development and housing projects all over the city, driving up the land price, as they compete with each other for a single piece of land. Transformation of land use from residential to commercial purposes, has scale up the price further.

In order to offset the possible impact of the global recession in the housing sector, the Real Estate and Housing Association of Bangladesh (REHAB) called upon the government to create a fund of Tk 10.0 billion in the next budget to help the middle-income people get loan on easy terms and conditions. The REHAB, an association of around 500 real estate companies, claimed that the industry had already been affected by the global recession and that their sales have plummeted by 30 per cent this year. It would also like to see investment of 'undisclosed money' in the sector even by giving fine.

The way land is sold in Dhaka city is just like an auction. There should be a system to regulate the land market in the city. The land ministry needs to take effective, immediate moves for settling the pending land-related cases and bring the land registration directorate under the jurisdiction of the land ministry. The merit for introduction of one-stop service in the land registration directorate deserves attention for appropriate policy actions sooner than later. The computerisation of land survey, recording and land management process also demands a priority consideration.

Furthermore, the concerned circles have also rightly highlighted the need for setting up of an information database to regulate the market, avoid artificially created land crisis, ensure equitable access to land by citizens and overcome the problem of speculation. There is no denying that information about land price helps the policymakers and the planners understand and analyse the dynamic urban structure of Dhaka as the capital city and plan its future growth.