FACTORS AFFECTING APARTMENT BUYING DECISION OF …

Sinthia Sharmin Sonia

FACTORS AFFECTING APARTMENT BUYING DECISION OF

MIDDLE-INCOME PEOPLE IN DHAKA, BANGLADESH

From the perspective of COVID-19-led economic situation

Thesis

CENTRIA UNIVERSITY OF APPLIED SCIENCES

Business Management, Enterprise Resource Planning (ERP)

August 2020

ABSTRACT

Centria University

of Applied Sciences

Date

August 2020

Author

Sinthia Sharmin Sonia

Degree programme

Business Management, Enterprise Resource Planning (ERP)

Name of thesis

FACTORS AFFECTING APARTMENT BUYING DECISION OF MIDDLE-INCOME PEOPLE IN

DHAKA, BANGLADESH. From the perspective of COVID-19-led economic situation

Language Instructor

Eija Torkinlampi

Pages

50 + 4

Supervisor

Paula Tornikoski

This research aimed at exploring the factors which affect apartment buying decisions of middle-income people in Dhaka, Bangladesh. The research also aimed at investigating the impact of COVID-19-led economic situation

on the purchasing decision of apartment buyers. The research used deductive approach and mixed method strat-

egy as research methods. The data were collected from prospective apartment buyers in Dhaka City through survey. The sample size was 56. The analysis was done in three segments: demographic analysis, analysis of

factors which affect decision making process of apartment buyers and the impact of COVID-19-led economic

situation on apartment buying decision of prospective buyers. The research found that apartment facilities have

the most significant impact on decision making process. Moreover, apartment price, financing arrangement and reputation of the developer regarding timely delivery and quality of work have significant impact on apartment

buying decisions. The study revealed that COVID-19 has negative impact on apartment buying decision. Most

of the middle-income apartment buyers want to delay their apartment buying job until the situation improves.

Key words

COVID-19 Pandemic, Customer Purchase Decision, Middle-Income People, Real-Estate Sector, Real

Estate Finance.

ABSTRACT

CONTENTS

1 INTRODUCTION ........................................................................................................................... 1

1.1 Background of the Research ..................................................................................................... 1

1.2 Research Aim ............................................................................................................................ 2

1.3 Research Limitations ................................................................................................................ 2

1.4 Problem Statement .................................................................................................................... 3

1.5 Research Objectives .................................................................................................................. 4

1.6 Structure of the Thesis .............................................................................................................. 4

2 LITERATURE REVIEW ............................................................................................................... 5

2.1 Consumer Behaviour & Purchase Decision ............................................................................. 5

2.2 Consumer Purchase Decision in Real Estate ............................................................................ 7

2.2.1 Information Search ........................................................................................................... 7

2.2.2 Evaluation of Alternatives ................................................................................................ 7

2.2.3 Purchase Decision ............................................................................................................. 8

2.3 Real Estate and Housing Market in Bangladesh...................................................................... 8

2.4 Real Estate Price Trends in Dhaka......................................................................................... 10

2.5 Definition of Middle-income customers in Dhaka ................................................................. 12

2.6 Real Estate Financing for Home Buyers ................................................................................ 13

2.7 Real Estate and Apartment Pricing Factors .......................................................................... 14

2.7.1 Rise in the price of land .................................................................................................. 14

2.7.2 Increasing Cost of Quality Construction Material ........................................................ 15

2.7.3 High Apartment Price .................................................................................................... 15

2.7.4 High Home Loan Interest Rate ...................................................................................... 15

2.7.5 High cost of property transfer and registration ............................................................ 16

2.8 Factors Considered by Apartment Buyers before Purchase ................................................. 16

2.9 Impact of COVID-19 Pandemic on Housing Market ............................................................ 17

2.10 Conceptual Framework ........................................................................................................ 18

3 RESEARCH METHODOLOGY ................................................................................................. 20

3.1 Research Approach ................................................................................................................. 20

3.2 Research Method..................................................................................................................... 20

3.3 Data Collection ........................................................................................................................ 21

3.4 Sampling Method .................................................................................................................... 22

3.5 Data presentation and Analysis .............................................................................................. 22

3.6 Ethical Issues ........................................................................................................................... 22

4 ANALYSIS AND DISCUSSION .................................................................................................. 24

4.1 Demographic Analysis ............................................................................................................ 24

4.1.1 Apartment Buying Motive .............................................................................................. 24

4.1.2 Ownership of other Apartments/Lands in Dhaka ......................................................... 25

4.1.3 Occupation ...................................................................................................................... 26

4.1.4 Family Size ...................................................................................................................... 26

4.1.5 Monthly Income .............................................................................................................. 27

4.1.6 Duration of living in Dhaka ............................................................................................ 28

4.2 Apartment Choice by Customers ........................................................................................... 29

4.2.1 Preferred location for Apartment Purchase .................................................................. 29

4.2.2 Apartment Amenities ..................................................................................................... 31

4.3 Factors Affecting Apartment Purchase Decision ................................................................... 32

4.3.1 Price................................................................................................................................. 32

4.3.2 Finance ............................................................................................................................ 32

4.3.3 Location and Communication ........................................................................................ 33

4.3.4 Security ........................................................................................................................... 34

4.3.5 Project Facilities ............................................................................................................. 35

4.3.6 Physical Quality of the Building ..................................................................................... 36

4.3.7 Environmental Quality ................................................................................................... 36

4.3.8 Reputation of the Developer ........................................................................................... 37

4.3.9 Promotional Activities of Developers ............................................................................. 37

4.3.10 Overall Ranking of Factors .......................................................................................... 38

4.4 Impact of COVID-19 ............................................................................................................... 40

4.5 Discussion ................................................................................................................................ 42

5 CONCLUSION & RECOMMENDATIONS ............................................................................... 46

5.1 Conclusion ............................................................................................................................... 46

5.2 Recommendations ................................................................................................................... 47

5.3 Future Studies ......................................................................................................................... 48

6 REFERENCES .............................................................................................................................. 49

APPENDICES

FIGURES

FIGURE 1.“Five-Stage Model” of Buying Process (adapted from Kotler 2012) ................................... 5

FIGURE 2. Average land price in Dhaka from 1975 to 2013 (adapted from LightCastleBD 2015)10

FIGURE 3. Land price in different areas of Dhaka (adapted from Dhaka Tribune 2020a)11

FIGURE 4. Average apartment price in Dhaka from 2003 to 2013 (adapted from LightCastleBD

2015)11

FIGURE 5. Conceptual Framework (developed by the author based on Kamal & Pramanik 2015)19

FIGURE 6. Whether customers want to buy an apartment in near future25

FIGURE 7. Respondents having another land or apartment in Dhaka25

FIGURE 8. Occupation of Respondents26

FIGURE 9. Family size of respondents27

FIGURE 10. Monthly average income of respondents in BDT28

FIGURE 11. Most preferred location by different class of customers29

FIGURE 12. Overall preferred location for buying apartment30

FIGURE 13. Whether customers need car parking space31

FIGURE 14. Ranking of factors according to their importance39

FIGURE 15. Ranking of factors by customer category40

TABLES

TABLE 1. Projected annual growth of urbanization in South-Asian Countries (MTBiz 2017)9

TABLE 2. Trend in apartment prices in different areas of Dhaka from 1990 to 2010 (adapted from

Khare 2016)12

TABLE 3. Income Range of the Different Income Groups (adapted from Labib, Bhuiya & Rahaman

2013)13

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TABLE 4. Home loan outstanding on FY 2019 (adapted from Bangladesh Bank Annual Report

2019)14

TABLE 5. Monthly income level for each class of people27

TABLE 6. Number of years you are living in Dhaka City28

TABLE 7. Number of Bedrooms you expect in your apartment30

TABLE 8. The apartment must be affordable32

TABLE 9. Responses regarding the availability of credit/installment facilities for buying apartment32

TABLE 10. Preference of area where customers live for long time and have relatives’ houses nearby33

TABLE 11. Responses on whether customers prefer apartment location where communication with

their workplace & other prime places is easier34

TABLE 12. Customers ‘emphasis on security of the area & the building34

TABLE 13. Customers’ responses on having nearby school, playground, parks, mosque/church/tem-

ple35

TABLE 14: Customers’ responses on having lifts, CC Camera, garbage disposal and other modern fa-

cilities35

TABLE 15. Responses regarding the quality of the construction materials and fittings36

TABLE 16. Responses on the necessity of the good internal living environment of the project36

TABLE 17. Importance of the previous good reputation of the developer37

TABLE 18. Influence of promotional activities of developer companies38

TABLE 19. Whether customers would delay the purchase of apartment due to COVID-1940

TABLE 20. Deterioration of economic capacity due to COVID-1941

TABLE 21. The expectation of respondents regarding the fall of apartment price due to COVID-1941

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1 INTRODUCTION

Bangladesh is a small sized South Asian country with population of about 165.00 million (Worldometers

2020). It is the 7th largest populous country in the world (UNFPA Bangladesh 2020). Providing housing

to each citizen is a major challenge for Bangladesh. Besides growing population, the economy of Bang-

ladesh is also growing rapidly which enhances purchasing power of middle-income people. This led to

the development of commercial real estate sector in Bangladesh. In this backdrop, this research has been

undertaken to explore the factors affecting apartment purchase decision of middle-income people in

Bangladesh. This chapter contains the background of the research, research aim, objectives, problem

statement and the limitations of the research.

1.1 Background of the Research

Housing problem is prevalent in Bangladesh and at critical level because the country is one of the most

densely populated countries of the globe. According to Statista (2020), about 64.81 million people in

Bangladesh live in urban area which is forecasted to be about 110 million by 2035 (Dhaka Tribune

2020a). The urban population is growing by about 6% annually. Among the total urban population about

60% live in four major metropolitan cities- Dhaka, Chattogram, Rajshahi and Khulna city. Dhaka, the

capital of Bangladesh is the abode of about 21 million population (Worldpopulationreview.com 2020).

This number is increasing day by day. Each year about 600,000 people migrate to Dhaka from different

corners of the country (Islam 2017). The major reasons for such migration are to find employment,

treatment, education, legal matters etc. The government of Bangladesh is centralized and heavily de-

pendent on the capital city. The head quarter of all government offices, Supreme Court, major and high-

quality hospitals, universities, colleges, schools are in Dhaka. Moreover, the headquarters of different

businesses, corporate houses, banks, insurances, airlines all are in Dhaka. Even for airport facilities ma-

jority of the outgoing people depend on Dhaka City (LightCastlebd 2015). Due to lack of decentraliza-

tion the whole country is dependent on Dhaka City. This increases extreme pressure on housing facilities

of this City. Therefore, housing sector faces major impediments. The rents of houses increase every year

at accelerated rate. The price of scarce land is being skyrocketed due to high demand. As a result, the

price of houses also increased exponentially in last two decades. To mitigate the increasing pressure on

the capital city, there is inadequate government initiatives. The number of government housing projects

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are extremely limited and plagued with bureaucratic problems. Therefore, prospective buyers don’t de-

pend on government sources for their housing. To mitigate housing problems more than 1000 real estate

companies have been established in last 2 decades (REHAB 2020).

Traditionally, people in Bangladesh were used to building their own houses by purchasing land. There

was little planning in the urbanization process of Dhaka City. There are some planned areas such as

Dhanmondi, Uttara, Baridhara, Gulshan, Bashundhara, Banasree and Mohammadpur. But most of the

areas of Dhaka City have grown unplanned way. It became extremely difficult to get new vacant land at

affordable price. The land price has increased more than 1000 times in some areas of Dhaka in last 45

years (Dhaka Tribune 2019). Due to incapacity of middle income and upper-middle income people for

purchasing land and developing own houses in the heart of Dhaka, they are tending to buy apartments

in different areas of Dhaka (Mohiuddin 2014). As a result, the real estate sector witnessed high growth

in last few years. As the growth in this sector is increasing, the competition is also increasing. The 90%

of the real estate market is dominated by top 30 companies (Islam 2017). To survive in such competitive

market, real estate companies need to analyze their future market and customers regularly. The projects

need to be designed to meet the changing needs of different classes of people. Therefore, a study needs

to be undertaken to explore the buying attitude of different customers of real estate sector in Bangladesh.

1.2 Research Aim

This research aims at exploring the factors which affect apartment buying decisions of middle-income

people in Dhaka, Bangladesh. The research also aims at investigating the impact of COVID-19-led eco-

nomic situation on the purchasing decision of apartment buyers.

1.3 Research Limitations

There are some limitations to this research. The research was made on a small sample size. If the sample

size were bigger, the research would be more representative. Moreover, the data were collected through

semi structured questionnaire only. If the research had been done using fully structured questionnaire

and OLS models had been used in the research, the extent of the impact could be found. Despite these

limitations, the research found a representative result that could explain the purchasing decision of mid-

dle-income people all over Bangladesh.

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1.4 Problem Statement

Annually about 600,000 units of houses are required to build all around Bangladesh (LightCastlebd

2015). This requirement and increasing purchasing power of Bangladeshi people has boosted the con-

struction and related industries in last two decades. Per capita income of people of Bangladesh reached

to $2173 in 2020 while it was only $703 in 2008 (The Financial Express 2020). Bangladesh has become

a lower-middle income country in last one decade. This high growth of income has led to higher eco-

nomic capacity of people. This led to a boost in the real estate sector. After growing for about two

decades, the real estate sector of Bangladesh has fallen in recession. The land and apartment prices have

fallen by about 30% in last few years (Haider 2020). Therefore, for booming real estate sector there

needs strategic planning for attracting people to buy more apartments.

Apartment or real estate is a lifetime investment for any person. It cannot be traded like consumer goods.

There needs a significant fund to buy a property in an urban area like Dhaka. People often use whole

life’s savings to purchase a property. As a result, they take their purchasing decision through rigorous

assessments (Labib, Bhuiya & Rahaman 2013). They consider different factors before purchasing an

apartment. To influence the decision-making process of apartment buyers, companies need to study the

factors which influence the buying decision of customers. This research focuses on exploring the factors

which influence the apartment purchasing decisions of middle-income people in Dhaka City. Since, the

middle-class population of Bangladesh is rising rapidly, this study will help real estate developers re-

shape their strategies to catch the most promising customer segments in the upcoming days. According

to Mahmood (2018), there are about 12 to 33 million middle income people in Bangladesh (based on the

range of income). This large segment is very promising for real estate sector.

The COVID-19 pandemic, evolved from China in 2019, has brought disaster to all sectors of every

economy. Being a small and lower-middle income country Bangladesh has hurt very hard by the pan-

demic led economic crisis. More than 20 million people around the country became unemployed due to

pandemic situation (Paul 2020). About 3.5 million people in the construction and related industries are

in the risk of becoming unemployed (Dhaka Tribune 2020b). Even white-collar private job holders are

also losing their jobs. This has worsened the already wooing real-estate industry. Therefore, this research

also focusses on exploring the impact on COVID-19 pandemic on the apartment purchasing decision of

middle-income people. Although, some studies have been done previously on financing crisis of real

estate sector and some studies have been done on the apartment buying attitudes of all classes of people,

no studies focused on middle-income people’s apartment buying decision making process. Moreover,

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no study has been found on the impact of COVID-19 on the apartment buying decision of middle-income

customers. So, this study will add some new knowledge in this literature.

1.5 Research Objectives

To fulfill the aim of the research some specific objectives of this research have been identified. The first

objective of this research is to explore the demographic and economic characteristics of prospective

apartment buyers in Dhaka City. The second objective is to investigate the factors affecting apartment

buying decisions of middle-income people in Dhaka City. The third objective is to critically analyze the

impact of COVID-19 pandemic on apartment buying decision of middle-income people in Dhaka, Bang-

ladesh and the fourth objective is to recommend policy implications and strategies for real estate com-

panies to attract middle-income people for purchasing apartments.

To fulfill research objectives some research questions will be sought to answer in this research. The first

research question is- what are the demographic and economic characteristics of prospective apartment

buyers in Dhaka City? The second question is- which factors affect apartment buying decisions of mid-

dle-income people in Dhaka City? The third research question is- what is the impact of COVID-19

pandemic on apartment buying decision of middle-income people in Dhaka, Bangladesh? The fourth

research question is- what are the policy implications and strategies for real estate companies to attract

middle-income people to purchase apartments?

1.6 Structure of the Thesis

This thesis is divided into five chapters. The first chapter is introduction. This discusses background of

the research, rationale for choosing the research topic, research aim, objectives and research questions.

The second chapter contains review of literature. Customers’ decision-making process, the brief over-

view of real estate sector in Bangladesh and previous literature on real estate buying factors and concep-

tual framework of the research have been critically discussed in this chapter. The third chapter contains

the research methodology. The research method, sampling technique, data collection method, and data

analysis method have been discussed in this chapter. The fourth chapter contains analysis and discussion.

The collected data have been analyzed and critical discussion has been done in this chapter. The final

chapter contains the conclusion, recommendations, and further research opportunity.

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2 LITERATURE REVIEW

This chapter contains review of literature. Different theoretical concepts regarding consumer behaviour

and purchase decision and consumer decision making process for real estate purchase have been dis-

cussed here. Moreover, this chapter highlighted brief overview of Bangladeshi real estate sector. At the

end of the chapter a conceptual framework has been developed by the researcher.

2.1 Consumer Behaviour & Purchase Decision

Consumer behaviour, a widely used term in marketing arena, is known as the process through which

customers or consumers finalize their decisions of purchasing a product or service that they hope will

meet their needs (Solomon 2006). For marketers and businesses, it means understanding and researching

the consumers (i.e. individuals, organizations etc.) and their buying process, like selecting, securing,

paying, and experiencing, to meet their expected needs. As consumer behaviour is a broad term it is not

only limited to consumer’s action but also to analysing actual reasons behind buying the product or

services.

According to Hoyer, MacInnis and Pieters (2008), the process of buyer decision is the process which is

undertaken by the customer or prospective buyer while making the purchase. Decision making is the

process where a buyer selects one or more products from multiple other options. Most of the experts

consider it as a psychological matter where people perceive certain product or services will benefit them

over the others. Though it may seem very complex procedure, indeed it is, Roberts (1998) argued that

sometimes consumers depend on simple strategies. Kotler’s (2012) writing can also be presented in its

support. He identified five steps process through which almost all buyers go while buying a product.

They are as follows.

Problem

Recognition

Information

Search

Evaluation of Alternatives

Purchase Decision

Post

PurchaseBehaviour

FIGURE 1.“Five-Stage Model” of Buying Process (adapted from Kotler 2012)

6

With recognizing problem, the process of decision-making starts. It is the process where a prospective

buyer decides whether he/she wants the product, why he/she might want this and why the product is

better than the others. It is the method of distinction between the preferred state and real scenario (Etzel,

Walker & Stanton 2007). A potential consumer may assume that a product might be ideal, but it may

differ in the real case scenario.

In the information search stage, the consumer looks for the solution of the problem he/she recognized in

the earlier stage. An efficacious search can offer some valuable insights on the problems and might offer

several effective solutions to the problem. The process of information search can be divided into two

parts: Internal and external search. Internal search is the process where consumers think for solving a

problem in consumers’ mind and create a map according to this. Previous experience impacts our inter-

nal search most. After conducting internal searches, the consumer conduct external search. Most of the

time it is influenced by consumer’s internal search. In external search consumers seek to validate the

justification. Some of the sources used in external searches are family, friends, advertising, and sales-

people etc. (Pride & Ferrell 2008.)

Once the consumers have mapped the solving process of a specific problem and have several options in

hand, they proceed to the next step which is evaluation of alternatives step. While conducting internal

search consumer’s decision is influenced by some brands with whom he/she had previous experience.

In this process he/she eliminates many other alternatives. Consumers set several criterions based on their

buying capacity, preference, and availability. Based on these criterions evaluate the alternatives available

to them. External purchase also influence evolution process a lot (Pride & Ferrell 2008).

Once the evaluation step is completed the consumer proceeds to the next step which is the purchase

decision. He/she visits the outlets or shops or websites he/she selected in the evaluation process and

decides when he/she would buy and how much in quantity would be bought. After deciding and com-

pleting all the steps they proceed to purchase and make payment for the purchase.

The final step of ‘5 step model’ is the post purchase behavior. The post purchase behavior is considered

as the real experience that consumers have after purchasing the product or service. Consumer can be

satisfied or dissatisfied from the product or service. And this satisfaction or dissatisfaction will influence

the next purchase significantly (Hoyer, MacInnis & Pieters 2008.)

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2.2 Consumer Purchase Decision in Real Estate

Purchasing or leasing real estate is considered as a very complex process which requires high involve-

ment with the goods along with related knowledge (Kumar & Khandelwal 2018). For that reason, most

of the industry experts suggest applying the three most important comprehensive steps of consumer

decision making in cases of real estate purchase or lease. These models analyse the psychological con-

dition and behaviour of the prospective consumer from his/her point of view for better understanding of

their needs and expectations. In the following sections some of the major elements of the model are

discussed in brief.

2.2.1 Information Search

At first a prospective consumer searches all the information he/she possesses internally (Blythe 2013).

Level of experience, knowledge and expertise, duration of time elapsed since last purchase and satisfac-

tion or dissatisfaction with previous purchases will impact the most in internal searches (Dey 2016). As,

real estate is not bought and sold in a frequent basis for most of the consumers, they do not tend to solely

depend on internal search while making the purchase decision. Consumers also obtain related infor-

mation from various external sources (Evans, Jamal & Foxall 2013). Real estates are pricy goods and

for this reason consumers always try to make the best decision by going to the experts on this fields.

They also collect information through personal inspection and attaining information from newspapers,

brokers and most importantly from family & friends. (Kumar & Khandelwal 2018.)

2.2.2 Evaluation of Alternatives

After the collection of information consumers begin evaluation. In general, it includes three stages: the

choice to move, selecting a destination to move and choosing a particular home. Kamal, Sarker &

Pramanik (2016) have proposed two stages of evaluation. First one is the moving decision where a con-

sumer decides to collect information about the geographical condition of the area and evaluates them

with some predetermined criterions. If a specific location passes the test, then the consumer proceeds to

the next stage which is collecting information form the person living near to it about the housing infor-

mation. This evaluation helps the consumers to identify whether a property is best fir for them. This

process is also conducted based on their expectations, knowledge, and motivation. (Martin 2006.)

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2.2.3 Purchase Decision

Everybody tries to win the deal and it is no exception for real estate consumers too. They always evaluate

several alternatives that are offered to them and choose the best fit for them. The salient qualities and

features of a real estate property play important role while being chosen (Chia, Harun, Kassim, Martin &

Kepal 2016). But according to Capon & Kuhn (1982), consumers sometimes cannot buy based on best

feature due to several limitations.

Popular decision-making methods that consumers use comprise of non-compensatory rules and com-

pensatory decision rules. In conjunctive decision rule under non-compensatory rule, consumers set min-

imum requirements and removes any other additional requirements. Consumer buys the property if it

meets the minimum requirements. Another variant of non-compensatory rule is lexicographic rule which

indicates consumer gives importance on certain deterministic characteristics and based on this they

choose property. If two or more property meets the same criteria, then a 2nd major characteristic is con-

sidered for choosing the best one (Kumar & Khandelwal 2018). And, finally in compensatory rule a

consumer configures all the desired characteristics of a property and put specific weight on them. After

that, he/she evaluates all the characteristics of the properties available and find out the total score. The

one with maximum score is chosen for investment (Kumar & Khandelwal 2018).

2.3 Real Estate and Housing Market in Bangladesh

In recent years, Bangladesh is experiencing improvement in all indicator’s economic growth. Construc-

tion sector is newly emerged sector in Bangladesh. According to BBS, construction sector has contrib-

uted around 7.53% of the GDP of the country in 2017-18 alone and grown by about 10.11% (The Fi-

nancial Express 2018). In a report of World Bank in 2015, Bangladesh has experienced hasty growth in

urbanization in period between 2000 and 2010. The rate was around whooping 1.69% and will reach to

1.80% by 2020-2025 (MTBiz 2017). This growth in urbanization has accelerated the growth of con-

struction sector. In 1991, around 22% of the country’s population lived in the city whereas in 2020 it is

expected that it will increase to 40%. In comparison to its south Asian counterparts Bangladesh has the

most potential of ensuring highest urban growth (Jamil, Hossain & Siddique 2018).

9

TABLE 1. Projected annual growth of urbanization in South-Asian Countries (MTBiz 2017)

Dhaka is the capital of Bangladesh and home to around 16.6 million which is growing by 4.7% per year.

Housing demand in Dhaka is around 600000 and 120000 more is being added every year (MTBiz 2017).

But, according to data, only 25000 units are coming to private sector construction and the government

is facing consistent challenge to accommodate this huge amount of population. The shortage is estimated

to rise at 8.5 million by 2021 (Lightcastlebd 2015).

In Bangladesh, the housing sector was introduced by private sector in the 1970s and in beginning it was

developed at the center of Dhaka. But, after 1980 this sector has seen an exponential growth and by 1988

there had been around 42 developers (Barua, Mridha & Khan 2010). By this time, the country has de-

veloped a lot. The number of housing business companies has also increased. According to REHAB

(2020), at this moment there are 1026 companies are conducting their business in the real estate market

of the country. This list only included the registered ones, whereas if we count the non-registered ones

the number will be much larger. Market capital of this sector in BDT 540 bn according to the data in

2015 and it experienced a growth of around 42.40% in the previous 10 years (Lightcastlebd 2015). The

average growth of housing sector of Bangladesh since independence is 4%. As per capita income of the

country has been increased and number of middle-income earners are also increasing it can be expected

that the housing sector will widen its size faster than before.

RAJUK, the acronym of Rajdhani Unnayan Kartripakkha, is the regulating body of all real estate activ-

ities and housing issues that are happening or going to happen in Dhaka. It is required by the laws of

Bangladesh that, anyone who seeks to develop or conduct any construction activity in Dhaka he/she

must have to acquire permission from RAJUK. Though RAJUK is the controlling authority in Dhaka,

other agencies are also working here with RAJUK to solve the housing and infrastructural demand of

the city. Among them, PWD (Public works department) and NHA (National Housing Authority) are the

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most notable ones. NHA has its operation all over the country and looks after the housing crisis among

all level of people of the country, including poor and ultra-poor. On the other hand, REHAB is respon-

sible of regulating and helping the private construction sector of the country.

2.4 Real Estate Price Trends in Dhaka

Dhaka, the capital city of Bangladesh, can be considered perfect for studying pricing trend of real estate

in Bangladesh. The cost of owning land in Dhaka is increasing since 1975 and at this market situation it

costs one more than $3600 to own a square meter. This is roughly 1000 times increment from the prices

of 45 years ago.

FIGURE 2. Average land price in Dhaka from 1975 to 2013 (adapted from LightCastleBD 2015)

Though price of land in Dhaka is higher than the other parts of the country, it is not equal in every areas

of the city. In some areas land costs much more than the average $3600. For example, in Baridhara, per

Katha (720 square feet) land cost anywhere around BDT 40 to 60 million (LightCastleBD 2015). As the

acquisition cost is higher in these areas, house rent, and cost of other services also become higher than

average. The city is expanding to accommodate the increment of population and number of elite areas

are also increasing to accommodate new rich and high-income earners.

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FIGURE 3. Land price in different areas of Dhaka (adapted from Dhaka Tribune 2020a)

The cost of owning apartments is also increasing rapidly. The rate of increment has speeded up since

2003 and as of 2013 average cost of owning apartment in Dhaka is $1,705.47 per square meter.

FIGURE 4. Average apartment price in Dhaka from 2003 to 2013 (adapted from LightCastleBD 2015)

According to the industry experts, one of the main reasons of expensive apartments is the high cost of

acquiring land and increasing cost of raw materials. Dhaka has seen exponential growth in high rise

apartments especially since 2000. We can state the situation of Baridhara for example. Here owning an

apartment will cost about BDT 20 million (LightCastleBD 2015). Shymoli is considered the area for

middle class people, though it is not as cheap as one might think. A 1000 sq. ft. apartment here costs

around BDT 5.5 million. To afford this amount of money many middle-class people of the city have to

take loans from different sources.

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TABLE 2. Trend in apartment prices in different areas of Dhaka from 1990 to 2010 (adapted from Khare

2016)

But this is not always the case. During the period of 2007 and 2012, real estate market had shown some

bullish behaviour. Experts explained the situation because of rise in sudden demand of landowners and

so-called real estate boom. As a result of boom, the price of properties rises significantly than their actual

deserved value. Ultimately, when the boom was over, in the period between 2012 and 2018 the cost of

real estate fell by almost 30% (Haider 2020).

2.5 Definition of Middle-income customers in Dhaka

Basically, in Bangladesh there are three major classifications of the population. They are upper class,

middle class, and lower-class people. As the income inequality among the higher class and lower class

in city areas is astounding, Islam (2001) has divided the middle class into three more groups which are

upper middle class, middle class, and lower middle class. Labib, Bhuiya & Rahaman (2013) divided

middle-class into three classes- upper-middle-income, mid-middle income and low-middle income. The

definition and income range of different classes are shown in the following table. But for the purpose of

this thesis the definition of Labib, Bhuiya & Rahaman (2013) has been revised which is shown in the

analysis part.

13

TABLE 3. Income Range of the Different Income Groups (adapted from Labib, Bhuiya & Rahaman

2013)

According to Islam (2017), 51% of the people who can afford their own apartment are businessmen

while 40% are service holders. Research also found that, most of the apartment owners also has the

ability of maintain cars.

2.6 Real Estate Financing for Home Buyers

According to the data from Bangladesh Bank (2019), the demand of housing finance in Bangladesh was

BDT 1496 billion as of 2019 and it is growing rapidly. They also forecasted that it will be BDT 1544

billion in near future. As of 2017-18 the total amount distributed in the market as home loan was BDT

815.2 billion and private banks of Bangladesh had distributed most of them, which was around 58.4%.

(Bangladesh Bank 2019.) There are some specialized housing finance companies in the country also.

Some of the most notable ones are BHBFC (Bangladesh House Building Finance Corporation),

DBHFCL (Delta Brac Housing Finance Corporation Ltd) and NHFIL (National Housing Finance &

Investment Ltd). Among them BHBFC is owned by the state.

Overall outstanding house building loans in Bangladesh are BDT 902 billion as of June 2019 (Bangla-

desh Bank 2019). The amount comprises of around 8.9% of the total financing in the private sector of

the country. Some of the major changes have been taking place since last year. Private Banks of the

country are expanding their portfolios and giving more loans on house building purposes. Private Banks

have provided around BDT 491.6 billion in the housing market in forms of various loans as a leading

provider. State-Owned Commercial Banks retained the 2nd position by investing BDT 211.9 billion in

the housing market as of June 2019. Other banks, like the govt. ones, have provided around Tk 35.4

billion in housing sector in total. (Bangladesh Bank 2019.) There are also two private organizations in

the country that are helping the people with land. They invest heavily in the lands and help the landown-

ers to build high rise buildings with enough funding. This approach is also proved to be very efficient

14

and effective. Experts expressed their opinion that these organizations are playing vital role in country’s

development.

TABLE 4. Home loan outstanding on FY 2019 (adapted from Bangladesh Bank Annual Report 2019)

2.7 Real Estate and Apartment Pricing Factors

Investors in real estate have to overcome numerous challenges while fixing the price of a property. High

property value, high cost of development instrument, impromptu and irregular improvement of the city,

high flat value, high family loan apprehension and increasing rate of asset movement and recording

expense, and so forth give numerous difficulties to the real estate investors.

2.7.1 Rise in the price of land

The significant interference of giving sensible housing to all the city dwellers is the significant expense

of property in Dhaka. Property price in Dhaka has profoundly amplified in last 10 years which showed

multiple times increments for the estimation of land averagely throughout the previous 10 years (Khare

2016). For instance, the cost of land in Baridhara is very high, which is BDT 50 million for each katha

(720 square feet). Accordingly, it is not feasible for all middle-class families to live there. The ordinary

expense in that spot is additionally very high for the individuals who are as of now living there. There-

fore, different spots in Dhaka are encircled by huge population density. For instance, the Malibagh zone

of Dhaka is the most densely populated zone where there are numerous flats and apartments are built for

15

sale. In spite of the fact that cost isn't highly identified with that of wealthy areas, the population density

is exceptionally high. This is the root cause of the high increment in the price of the land in Dhaka.

2.7.2 Increasing Cost of Quality Construction Material

The issue in housing of the town is furthermore strengthened in light of the increment of cost of devel-

opment and supply instruments. The cost of construction supplies is routinely rising, in this manner

increasing the structure cost and room cost (Arifujjaman 2015). Spontaneous development of the city

and Unplanned and irregular development of the city makes difficulties for real estate planners to make

a reasonable spot for housing improvement. Arbitrary development of business esteemed land use in

housing regions, intensifying of transport facility and road framework creates a relentless testing position

for real estate designers while giving housing amenities in the regions of Dhaka.

2.7.3 High Apartment Price

Due to increase in land price and price of quality construction equipment price of apartment also in-

creased rapidly. The rate of price increase is soaring since 2000. In recent years studies found that hous-

ing cost in Dhaka city has increased 3 folds. Now, a flat in Baridhara costs BDT 30 million for 1400

square feet whereas, the same size flat costs around BDT 20 million in Gulshan (Dhaka Tribune 2020a).

Shymoly is known as the area for middle income earners. But here a flat of 1000 square meter costs

around BDT 5.5 million (LightCastleBD 2015). Most of the middle-class families cannot afford the full

price by themselves. So, to own the flats they have to manage their finance from various other sources,

like bank loans and loans from relatives etc.

2.7.4 High Home Loan Interest Rate

As the number of middle-income earners increase in the country the number of house demand is also

increasing day by day. As stated earlier, most of the middle-income earners cannot afford the whole

price of the property all by themselves. And, as a result they try to manage the fund from various sources.

Personal savings and loan from relatives are generally interest free source while almost every other

source charge heavy interest rate for providing loans. Government of Bangladesh is trying its best to

make the housing sector as much affordable as possible to the middle-income earner class. It has also

16

introduced many schemes and facility with very low interest rates. But the amount they provide is bare

minimum. So, people have no choice rather than taking loans on high interest. Interest rate in Bangladesh

is also higher than its south Asian counterparts like India and Pakistan. House loan rate in India and

Pakistan is around 75% of the interest rate prevailing in Bangladesh. However, Bangladesh Bank set all

home loan interest to 9% in February 2020 to boost the sector. (The Financial Express 2020.)

2.7.5 High cost of property transfer and registration

In Bangladesh not only the property development and purchasing costs are high. If one wants to transfer

the property or register it, it also will cost a lot of money. These expenses have become another layer of

added pressure for the middle-income earners who dreams of owning a house but barely can finance it

fully. Gain tax rate is 4% in the country whereas stamp duty is 3% and registration fee is another 2% for

city areas and fee for sub register is another 0.5% (Asaduzzaman 2020). All these rates add to the price

of the property and makes it even more unbearable for the middle-income earner families. Moreover,

owners have to pay some other property taxes each year and avoiding those can lead to fine. Moreover,

the buyers need to pay BDT 2,000 for each square meter as advance tax as well as 1.5% to 4.5% value

added tax which again worsens the ability of a particular buyer to have an apartment. (Asaduzzaman

2020.) Total registration cost becomes about 10 to 14% of the property price based on the nature of the

property which is very high (Yasir 2020).

2.8 Factors Considered by Apartment Buyers before Purchase

There have been studies conducted around the world on how buyers are influenced while buying a prop-

erty. Though their behavior varies from country to country. According to Li, Wang & Lin (2018) the

apartments’ design is the most important determining factor in purchasing apartments. Another im-

portant factor in home purchase is the neighborhood of a particular apartment. Municipal service factors

were also evaluated by some researchers eg. Misra, Katiyar & Dey (2013). He has no low significance

of quality public services in buyers’ purchasing decisions. Keifer (2007) also found similar result in his

research. Mohd Thas Thaker and Chandra Sakaran in their research in 2016 evaluated buyer’s buying

decision based on three criterions. One of them is the schooling facility of the children and anther one is

public services quality. The last one was impact of neighbors. He concluded that quality of public ser-

vices has small impact whereas the other two has significant impact on purchasing decision. Some other

17

significant factors that might influence buying decision are public expense, tax, rate of corruption and

crime (Pleyers & Poncin 2020). Business opportunity of a particular area is also found to be an important

factor.

In Bangladesh, researchers have also conducted similar types of studies. Analyzing their results is im-

portant because this can help us to understand the situation in accordance with the socio-economic en-

vironment of the country. Labib et al conducted their research in 2013 on buyers’ preference while buy-

ing a property in a particular location. They came to the conclusion that budget is the most important

factor in this country. People tend to fix their budget and then start looking for properties according to

this. Socio economic environment and transportation facility of a certain area also act as determinants

while buying properties. Studies conducted in other countries have also found some other determining

factors that influence the buying decision are closeness to the relatives (Leiser & Ghor 2011), suitable

transportation to the workplace (Leiser & Ghor 2011; Al-Nahdi, Habib & Albdour 2015), availability

of better schools and colleges, better city service (Barua, Mridha & Khan 2010; Singh, Gupta & Dash

2018), availability of superior flat (Khaled, Sultana, Biswas & Karan 2012) etc. Though the researchers

also concluded that these priorities are not same in all areas of the city. In some elite areas of the city

people look for several facilities like car parking facility, superb interior design, and quality builds etc.

Safety is also another important issue for higher class people specially, whereas for middle class buyers

they tend to overlook many of the issues due to budget constraints.

Preko, Agbanu & Feglo (2014) found relationship between the dimensions of service distribution and

satisfaction of the buyers. In their research they tried to understand what influences a buyer to buy a

particular apartment in the first place. They found that initial communication of the seller plays an im-

portant role in the purchasing decision of the buyer. If the seller communicates in a friendly and affable

way, it creates a sense of security and satisfaction among the potential buyers. Ultimately in many cases

this leads to final buying decision. (Preko et al 2014.)

2.9 Impact of COVID-19 Pandemic on Housing Market

The recent pandemic of novel corona virus has impacted the world. Though the virus was first discovered

in December 2019 in China it did not take much time to reach Bangladesh. Business all over the world

has taken a huge blow due to the virus and Bangladesh is no exception. Housing industry in the country

is the one which is affected seriously (Dhaka Tribune 2020b). The value of property has decreased by

18

25% within just 3 months and no one knows when the situation will improve (Haider 2020). Many

middle-income earners have lost their jobs and can’t retain another one. As a result, they are finding it

difficult to meet their both ends. In this pandemic situation businesses are also failing to repay their loans

that they have taken from banks. As a result, investments capacity of the banks also decreased signifi-

cantly.

Government of the country is trying its best to help the economy. Already the government has declared

several packages to the business owners that can help them to run their business and survive during the

pandemic. But, as a densely populated country the amount of help provided by the government is very

low.

2.10 Conceptual Framework

Based on the above literature, a conceptual framework has been developed below. The framework is

developed based on the conceptual model of Kamal & Pramanik (2015). They used six broader factors

for investigating the buying behaviour of real estate customers. For this research, this model is further

extended. This research has used 9 factors and one additional factor COVID-19 for assessing the impact

of different factors on buying decision of apartment customers.

19

FIGURE 5. Conceptual Framework (developed by the author based on Kamal & Pramanik 2015)

Customer Purchase Decision

Price

Finance

Location and Communication

Security

Project Facilities

Physical Quality of the Building

Environmental Quality

Reputation of the Developer

Promotional Activities

COVID-19

20

3 RESEARCH METHODOLOGY

The methodology of conducting this research has been discussed in this chapter. Data collection and

sampling methods, data analysis techniques, research approach and methods have been discussed in this

chapter.

3.1 Research Approach

Research approach is the hypothesis usage process in which the researcher either uses existing theories

or develop new theories according to the findings of the research. Bryman & Bell (2015) classified

research approaches as deductive and inductive research approach.

The deductive approach uses existing theories developed by previous researchers (Saunders, Lewis &

Thornhill 2012). The hypotheses for the research are developed from existing literature. Then those

hypotheses are tested using collected data and the findings are tended to be generalized. On the other

hand, inductive approach develops new theories using collected data. Different patterns are sought out

in the collected data for exploring new theories (Saunders et al 2012).

For this research deductive approach is more suitable than inductive approach. The aim of the research

is to explore the factors affecting apartment buying decision of middle-income customers in Dhaka,

Bangladesh. There are numerous theories on customers’ buying decision making process. Moreover,

there are available literature and frameworks for analyzing the decision-making process. Therefore, de-

ductive approach is more suitable than inductive approach.

3.2 Research Method

Three research methods are commonly used by researchers. These are qualitative method, quantitative

method, and mixed method. According to Bryman & Bell (2015), quantitative method is more suitable

for deductive approach of research. In this method quantitative data are collected from primary and

secondary sources through survey or secondary data repository. The collected data are then analyzed

using statistical methods (Saunders et al 2012). On the other hand, qualitative method uses non-numer-

ical data. Data are collected through experiments, interviews, or observations. The data are analyzed

21

descriptively. This method is more suitable for behavioral analysis. Another research method named

mixed method uses combination of both quantitative and qualitative method.

This research has adopted the mixed method technique. The data were collected through survey method

through a semi structured questionnaire. The collected data were numerically converted and then ana-

lyzed using quantitative techniques. Moreover, some non-numerical data were also collected which were

analyzed using graphical presentation.

3.3 Data Collection

There are two sources of data- primary and secondary sources (Saunders et al 2012). Primary data are

collected directly from sources of data or from field. On the other hand, secondary data are collected

from different published sources i.e. journals, articles, websites, statistical bureaus, world bank, IMF,

OECD and other publishers and data repositories.

For conducting this research data were collected from both primary and secondary sources. Primary data

have been collected through conducting survey among target respondents. A semi structured question-

naire has been used to collect data. The questionnaire contained some multiple-choice questions, some

yes/no questions. Some questions were used to assess the factors affecting apartment buying decisions.

The responses of this part have been assessed using 5-point Likert scale. Respondents were also asked

to rank different factors according to their importance. Some open-ended questions were asked about

the area of preference by the participants. Some questions were also asked regarding the impact of

COVID-19 pandemic on the apartment purchase decision of respondents. For assessing the replies of

respondents on these questions 5-point Likert scale has been used.

The secondary data have been collected from different published research papers, articles, newspaper,

statistical websites like Statista.com, websites of Bangladesh Bureau of Statistics, website, and publica-

tions of REHAB etc. These secondary data have been mainly used in preparing literature review and

other theoretical parts. The respondents were surveyed through email. The email addresses of respond-

ents were collected from five real estate companies in Dhaka.

22

3.4 Sampling Method

There are more than 21 million people in Dhaka City. As a result, it is not practical to collect data from

entire population. The researcher collected data from a sample of prospective apartment buyers in Dhaka

City. For collecting data, the sample was chosen in snowball technique. Firstly, the researcher ap-

proached to five real estate companies in Dhaka who are also REHAB members. The researcher re-

quested them to provide a list and contact details of prospective buyers who visited their company in

last one year. After getting the list of prospective customers, the researcher selected 20 persons randomly

from each company. Those customers were sent requests to participate in the survey. The prospective

respondents were sent the questionnaire through their email, WhatsApp, and Imo. Total 100 respondents

were approached. Out of 100 respondents only 58 respondents replied. After checking their replies, fi-

nally 56 questionnaires have been used in this research. Without such sampling technique, it would be

difficult for the researcher to collect data within this pandemic situation.

3.5 Data presentation and Analysis

Data analysis is the next step after collection and sorting data. The researcher used simple quantitative

techniques for analyzing data. Before analyzing data, all collected data were input in MS Excel. The

collected data were codified for the ease of analysis. For example, in Yes/No MCQs, “Yes” is codified

as 1 and “No” is codified as 2; for income categorization “Upper Income” is codified as 1, “Upper-

Middle-Income is codified as 2, “Mid-Middle-Income” is codified as 3, Lower Middle Income is codi-

fied as 4 and Lower income is codified as 5. For other questions, such technique was applied. After

codifying collected non-numeric data, the data were analyzed using SPSS and MS Excel software.

For easier presentation of data, some results have been presented using different types of charts and

some have been presented in tabular form. Most of the data were presented using frequency analysis.

Other complex statistical models have not been used due to the nature of data.

3.6 Ethical Issues

Every research involves some ethical issues. The first ethical issue is taking informed consent from

participants. For this research, at first the researcher contacted to the prospective participants informing

23

the purpose of the survey and the research. The researcher requested their consent for sending question-

naire. After getting consent from the respondents, the researcher sent them a set of questionnaires

through different media. No inducements have been made by the researcher to make the participants

participate in the research. The results of this research will be used solely for academic purpose. More-

over, the personal information of the participants will not be shared with any other party.

24

4 ANALYSIS AND DISCUSSION

In this chapter, the collected data have been analyzed for exploring the factors affecting apartment buy-

ing decision of middle-income people in Bangladesh. This chapter will also discuss the impact of

COVID-19 pandemic on apartment buying decision.

4.1 Demographic Analysis

Demographic analysis refers to the analysis of different characteristics of population which include age,

sex, race etc. (The United States Census Bureau 2020). But the demographic analysis of this research

contains some additional characteristics e.g. apartment buying motive of participants, their ownership

of lands and apartments, occupation, family size, monthly income, and duration of living in Dhaka.

4.1.1 Apartment Buying Motive

As discussed earlier, the survey was conducted on people who visited real estate companies in last 12

month to purchase apartments. The very first question was asked to the respondents on whether they still

want to buy an apartment in near future. About 55% of respondents agreed strongly and 36% agreed.

Only 9% of respondents remained neutral which implies that may not purchase an apartment in near

future but may purchase at later time.

25

FIGURE 6. Whether customers want to buy an apartment in near future

4.1.2 Ownership of other Apartments/Lands in Dhaka

Respondents were also asked whether they have any other land or apartment in Dhaka. It is found that

18% of respondents already have another apartment or land and 82% do not have any other apartment

or land. That means they are first time buyer of apartment.

FIGURE 7. Respondents having another land or apartment in Dhaka

9%

55%

36%

Customers who want to buy an apartment in near future.

Neutral

Agree

Strongly Agree

18%

82%

Respondents Having another Land or Apartment in Dhaka

Yes

No

26

4.1.3 Occupation

The respondents were also asked about their occupation. The following chart shows the percentage of

respondents according to their occupation. It is found that 31% of respondents have private job, 25% are

government employees, 23% are businessmen, 14% are self-employed (doctor, engineer, lawyer, char-

tered accountant, freelancer etc.) and 7% are expatriate.

FIGURE 8. Occupation of Respondents

4.1.4 Family Size

The respondents were also asked about their family size. This question was crucial because the bigger

the family size the bigger the apartment needed for the customer. From the following chart it is observed

that majority of the respondents (41%) have 3 to 4 members in their family. About 38% of respondents

have 5 to 6 members in their family, 16% have more than 6 members and only 5% have two members

in their family.

23%

31%

25%

14%

7%

Occupation of Respondents

Business

Private Job

Government Service

Self-Employed

Expatriate

27

FIGURE 9. Family size of respondents

4.1.5 Monthly Income

This question was very vital for the whole study. Respondents were asked about their average monthly

income in BDT. This was important to determine their income class. For the purpose of this study cus-

tomers were classified into five income categories: Upper Income, Upper-Middle Income, Mid-Middle

Income, Lower-Middle Income and Lower Income.

TABLE 5. Monthly income level for each class of people

Income Level (in BDT) Income Level (in EUR)* Class

A. Above 150000 Above 1500.00 Upper Income

B. 80000-150000 800.00-1500.00 Upper-Middle Income

C. 40000-80000 400.00-800.00 Mid-Middle Income

D. 20000-40000 200.00-400.00 Lower-Middle Income

E. Less than 20000 Less than 200.00 Lower Income

*Assuming exchange rate of BDT100 /EURO

From the following chart it is found that majority of the respondents (57%) have average monthly in-

come of BDT 40,000-80,000 with is equivalent to EUR 400.00-800.00. This class of customers are de-

fined as Mid-Middle income. About 29% of respondents have monthly income of EUR 800.00-1500.00.

5%

41%

38%

16%

Family Size of Respondents

2 3 to 4 5 to 6 More than 6

28

They are classified as Upper-Middle income. About 11% of respondents have income above EUR

1500.00 i.e. upper income and only 3% of prospective apartment buyers are lower-middle income.

FIGURE 10. Monthly average income of respondents in BDT

4.1.6 Duration of living in Dhaka

Respondents were asked about the duration of their living Dhaka City. From the following table it is

found that about 16% respondents live in Dhaka for more than 25 years, about 14% live for 21-25 years,

25% live for 16-20 years, about 21% live for 11-15 years and only 23% of prospective buyers live below

10 years.

TABLE 6. Number of years you are living in Dhaka City

Years

Frequency Percent Valid Percent

Cumulative

Percent

Less than 5 years 2 3.6 3.6 3.6

5-10 Years 11 19.6 19.6 23.2

11-15 Years 12 21.4 21.4 44.6

16-20 Years 14 25.0 25.0 69.6

21-25 Years 8 14.3 14.3 83.9

Above 25 Years 9 16.1 16.1 100.0

Total 56 100.0 100.0

11%

29%

57%

3%

Monthly Income of Respondents

Above 150000 80000 to 150000 40000 to 80000 20000 to 40000

29

4.2 Apartment Choice by Customers

This section consists analysis of apartment choice of customers based on location which will help us

explore middle income customers’ preferred area for purchasing apartment. It also shows the analysis

of the amenities they seek in an apartment.

4.2.1 Preferred location for Apartment Purchase

The respondents were also asked about their most preferred location for apartment purchase. In the fol-

lowing chart the responses of customers regarding first choice of location were summarized. It is found

that the most preferred location for apartment purchase is Mirpur. It is the most preferred location for

Mid-middle and lower-middle people. Due to lower cost of apartment in this area Middle-income people

prefer this location. The second most preferred location is Uttara. Uttara is most preferred choice for

upper income and upper-middle income class. Uttara is relatively costly area with higher cost of living.

Therefore, only Upper income and upper-middle income afford an apartment in this area. The third

preferred location is Banasree. It is a preferred location for all three middle-class people. Bashundara

Residential Area is also another preferred location for upper-middle and mid-middle-income class. Mo-

hammadpur and Basabo are solely preferred by Mid-Middle-income class. Gulshan and Dhanmondi are

preferred by Upper and Upper-Middle class. Wari and Siddeswari are preferred by upper-middle class.

FIGURE 11. Most preferred location by different class of customers

0 2 4 6 8 10 12

Banasree

Basabo

Bashundhara

Dhanmondi

Gulshan

Jatrabari

Mirpur

Mohammadpur

Siddeswari

Uttara

Wari

Most Preferred Location for Apartment Purchase

Upper Income Upper Middle Mid-Middle Lower Middle

30

The following chart demonstrates the overall preferred location chosen by respondents. It is found that

overall Mirpur is the most preferred location and Banasree is the second most preferred location by all

classes of people. Bashundara and Mohammadpur are third most preferred locations. Uttara is the overall

fourth most preferred location. Badda, Niketon, Syamoli Rampura, Dhanmondi, Basabo, Khilgaon,

Malibag are also chosen by respondents as their preferred location for buying apartment.

FIGURE 12. Overall preferred location for buying apartment

4.2.2 Apartment Amenities

Participants were asked about the number of bedrooms they want in their apartment. It is found that

majority of the respondents (about 55%) want 3-bedroom apartment. About 27% want 2-bedroom

apartment and about 18% want 4-bedroom apartment.

TABLE 7. Number of Bedrooms you expect in your apartment

Number of

bedrooms required Frequency Percent Valid Percent Cumulative Percent

2 15 26.8 26.8 26.8

3 31 55.4 55.4 82.1

4 10 17.9 17.9 100.0

Total 56 100.0 100.0

0

5

10

15

20

25

30

35

Overall Preferred Location for Apartment

Rank 1 Rank 2 Rank 3 Rank 4 Rank 5

31

Survey participants were asked about whether they need any car parking space. About half of the re-

spondents require car parking space, about 32% don’t need any car parking space and about 18% re-

spondents may need a car parking space. This means it would be better to get a parking space, but they

don’t mind if there is no car parking space.

FIGURE 13. Whether customers need car parking space

4.3 Factors Affecting Apartment Purchase Decision

From the literature review 9 factors have been identified as important factors which impact apartment

purchase decision of customers.

4.3.1 Price

Since purchasing an apartment requires a lot of money, price is a crucial factor while purchasing an

apartment. Respondents were asked whether their apartment must be affordable. The results are summa-

rized in the following table. From the table it is found that about 61% of respondent strongly agreed that

they need an affordable apartment, about 27% agreed and only 12% remained neutral. This implies this

portion of respondents have adequate money for buying apartment that affordability is not most im-

portant for them.

50%

32%

18%

Necessity of Car Parking Space

Yes No May be

32

TABLE 8. The apartment must be affordable

Responses

Frequency Percent

Valid

Percent Cumulative Percent

Neutral 7 12.5 12.5 12.5

Agree 15 26.8 26.8 39.3

Strongly Agree 34 60.7 60.7 100.0

Total 56 100.0 100.0

4.3.2 Finance

Finance has been considered a crucial factor for growth of real estate industry. If customers get cheaper

finance for long time, they get interested in buying apartments/houses. The survey participants were

asked whether there must be installment or credit facilities for buying apartment. It is found that about

41% of respondents strongly agreed and about 36% agreed to this statement. They need finance from

bank or any other sources for buying apartment. Only 23% remained neutral which implies they may

not require credit facilities for buying an apartment.

TABLE 9. Responses regarding the availability of credit/installment facilities for buying apartment

Responses Frequency Percent Valid Percent Cumulative Percent

Neutral 13 23.2 23.2 23.2

Agree 20 35.7 35.7 58.9

Strongly Agree 23 41.1 41.1 100.0

Total 56 100.0 100.0

33

4.3.3 Location and Communication

Traditionally price of a real estate depends on its location. The real estate in prime location and having

better communication often priced higher than assets located in remote area and with inadequate com-

munication. Two questions were asked to respondents regarding location and communication.

Firstly, they were asked whether they prefer apartments in the where they have been living for a long

time there are houses of relatives. The responses are summarized below. It is found that about 41% of

respondents strongly agreed and about 38% agreed that they prefer apartments in the area they have been

living for long time and they have relatives’ houses nearby. Only 21% remained neutral in this regard

which implies they are free to choose apartments in any areas irrespective of their relatives’ house

nearby.

TABLE 10. Preference of area where customers live for long time and have relatives’ houses nearby

Frequency Percent

Valid

Percent

Cumulative

Percent

Neutral 12 21.4 21.4 21.4

Agree 21 37.5 37.5 58.9

Strongly Agree 23 41.1 41.1 100.0

Total 56 100.0 100.0

The second question regarding location and communication asked was whether they want an apartment

in the area from where communication with their workplaces and other prime locations i.e. markets,

school, college, universities etc. is easier. From the following table it is found that about 89% of re-

spondents agreed and strongly agreed to this statement. They need apartments with easier communica-

tion. Only about 11% remained neutral in this regard.

34

TABLE 11. Responses on whether customers prefer apartment location where communication with

their workplace & other prime places is easier

Frequency Percent

Valid

Percent

Cumulative

Percent

Neutral 6 10.7 10.7 10.7

Agreed 29 51.8 51.8 62.5

Strongly Agreed 21 37.5 37.5 100.0

Total 56 100.0 100.0

4.3.4 Security

Security is another crucial factor for choosing a location for buying an apartment. Therefore, a question

was asked to the respondents on whether their prospective apartment buying area must be secured and

the building must have adequate security. About 75% people agreed and strongly agreed to this state-

ment. They require a secured area for buying an apartment.

TABLE 12. Customers ‘emphasis on security of the area & the building


Cumulative

Percent

Neutral 14 25.0 25.0 25.0

Agreed 33 58.9 58.9 83.9


Total 56 100.0 100.0

4.3.5 Project Facilities

An apartment is not a commodity and it is purchased for lifetime. Therefore, customers choose an apart-

ment by considering different facilities available in or near the project. Two questions were asked to the

respondents in this regard. Firstly, customers were asked whether their project must have nearby school,

35

playground, parks, mosque/church/temple and other public facilities. It is found that almost all (about

96%) respondents either agreed or strongly agreed to this statement. Only 4% remained neutral in this

regard.

TABLE 13. Customers’ responses on having nearby school, playground, parks, mosque/church/temple

Frequency Percent

Valid

Percent

Cumulative

Percent

Neutral 2 3.6 3.6 3.6

Agreed 16 28.6 28.6 32.1


Total 56 100.0 100.0

In the second question respondents were asked whether they need lifts, CC Camera, garbage disposal

and other modern facilities in the building. It is found that about 64% of respondents agreed strongly,

about 30% agreed normally and only about 5% remained neutral in this regard. This implies customers

give most emphasis on project facilities.

TABLE 14: Customers’ responses on having lifts, CC Camera, garbage disposal and other modern fa-

cilities


Cumulative

Percent

Neutral 3 5.4 5.4 5.4

Agreed 17 30.4 30.4 35.7


Total 56 100.0 100.0

4.3.6 Physical Quality of the Building

Since, most of the customers buy apartment for their living and spend significant amount of money

behind an apartment, they may want best quality building materials and fitting for their safety and metal

36

satisfaction. The respondents were asked whether the construction materials and fittings used in the

apartment should be good quality. Half of the respondents agreed to this statement and other half strongly

agreed. This implies customers don’t want to compromise about construction material quality.

TABLE 15. Responses regarding the quality of the construction materials and fittings

Frequency Percent

Valid

Percent

Cumulative

Percent

Agreed 28 50.0 50.0 50.0


Total 56 100.0 100.0

4.3.7 Environmental Quality

The environment or the living condition impacts the physical and mental condition of people. Therefore,

the researcher wanted to know from respondents whether they want a good, clean, and green internal

living environment for their apartment. The responses are summarized below. From the table it is found

that about 23% of respondents strongly agreed, about 59% of respondents agreed and about 18% re-

mained neutral in this regard. The majority of the respondents want a good living environment.

TABLE 16. Responses on the necessity of the good internal living environment of the project

Frequency Percent Valid Percent Cumulative Percent

Neutral 10 17.9 17.9 17.9

Agreed 33 58.9 58.9 76.8


Total 56 100.0 100.0

37

4.3.8 Reputation of the Developer

In Bangladesh, there are hundreds of cases where developers could not deliver apartments on time. There

are also some cases where the relator fled with booking money of buyers. There are also cases where a

single apartment was sold to multiple customers. Moreover, sometimes developers build apartments on

illegal properties and use low quality construction materials. Therefore, reputation of the developer is

included as a factor in this study which is not used by previous studies as factor for buying apartments.

The respondents were asked whether the developer or relator must have previous good record regarding

timely hand over and quality works. About 52% of respondents strongly agreed, about 36% agreed and

about 12% remained neutral.

TABLE 17. Importance of the previous good reputation of the developer


Cumulative

Percent

Neutral 7 12.5 12.5 12.5

Agreed 20 35.7 35.7 48.2


Total 56 100.0 100.0

4.3.9 Promotional Activities of Developers

This study also checked whether promotional activities of developers have any impact on apartment

buying decision of a customer. Respondents were asked whether promotional activities of developers

have any impact on their purchase decision. From the responses in the following table it is found that

about 27% of respondents disagreed that promotional activities have any impact on their purchase deci-

sion, about 41% remained neutral and about 32% agreed that they are somewhat influenced by promo-

tional activities of companies.

38

TABLE 18. Influence of promotional activities of developer companies


Disagree 15 26.8 26.8 26.8

Neutral 23 41.1 41.1 67.9

Agreed 18 32.1 32.1 100.0

Total 56 100.0 100.0

4.3.10 Overall Ranking of Factors

The respondents were also asked to rank these 9 factors according to their importance to them. The

following chart summarizes the ranking of factors according to their importance. From figure 14 it is

found that project facility is the highest regarded factor in rank 1. The second most considered factor is

Price and Third most considered factor is Finance, the fourth most considered factor is Quality of con-

struction materials and fittings, the fifth most regarded factor is location and communication of the apart-

ment, the sixth most important factor is reputation of the developing company the seventh important

factor is environment and the least important factor is security in rank 1. To be noted none of the re-

spondents gave promotion rank 1.

In rank 2, the most important factor is Reputation of the developer. The second most important is price,

the third most important factor is availability of financing facilities, the fourth most important factor is

location, the fifth important factor is project facilities, the sixth important factor is quality of construc-

tion. Internal living environment and security are also ranked in the second step.

In rank 3, it is found that location is the most important factor. The second most important factor is

project facility, the third most important factor is reputation of developer, the fourth important factor is

finance, the fifth important factor is security the sixth important factor is price. Internal environment and

construction quality are ranked as seventh and eighth in the third rank. It is to be noted that promotion

is ranked 8th and 9th by most of the respondents.

39

FIGURE 14. Ranking of factors according to their importance

The research wanted to reveal the most important factor for buying an apartment by different income

classes of customers. From the figure 15, it is found that project facility is the most regarded factor by

mid-middle-class customers. The second most important factor to this class of customers is the reputa-

tion of the developer, price and finance are simultaneously ranked as third important factor by this class.

Location is ranked as fourth most important factor for buying an apartment and quality is the fifth most

important factor to them.

On the other hand, upper-middle class regarded location as most important factor. They emphasized on

apartment price, facility, and reputation equally. They emphasized quality as the third most important

factor, financing facilities as fifth most important factor, living environment as sixth important factor

and security as seventh important factor. The lower-middle class considered price and finance facility

as most important factor for purchase decision for an apartment. They also emphasized on location and

project facility as important factors.

The upper-class considered project facility and location as most important factors. They also marked

internal living environment and security as important factor for buying an apartment. They also

emphasized on quality of construction materials.

0

10

20

30

40

50

60

70

Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Rank 7 Rank 8 Rank 9

Ranking of Factors

Price Finance Location Security Facility

Quality Environment Reputation Promotion

40

FIGURE 15. Ranking of factors by customer category

4.4 Impact of COVID-19

Since, COVID-19 has devastated Bangladesh economy like the whole world, the research assessed the

impact of COVID-19 pandemic on apartment buying decision of respondents. The respondents were

asked whether they would delay the purchase of apartment due to COVID-19. The responses are sum-

marized below. It is found that 75% of respondents either strongly agreed or agreed that they will delay

their purchase of apartment due to COVID-19-led situation. About 16% of the respondents remained

neutral and about 9% disagreed to this statement. Only 9% of respondents will not delay their purchase

due to pandemic.

TABLE 19. Whether customers would delay the purchase of apartment due to COVID-19

Frequency Percent

Valid

Percent

Cumulative

Percent

Disagree 5 8.9 8.9 8.9

Neutral 9 16.1 16.1 25.0

Agree 24 42.9 42.9 67.9

Strongly Agree 18 32.1 32.1 100.0

Total 56 100.0 100.0

The second question regarding the impact of COVID-19 asked was whether the economic capacity has

deteriorated due to COVID-19. From the results it is found that about 23% strongly agreed and 39%

0

5

10

15

20

25

30

Lower-Middle Mid-Middle Upper Class Upper Middle

Sum of Price

Sum of Finance

Sum of Location

Sum of Security

Sum of Facility

Sum of Quality

Sum of Environment

Sum of Reputation

Sum of Promotion

41

agreed which implies the economic and financial capacity of most of the prospective apartment buyers

worsened due to COVID-19. Only 21% of respondents remained neutral and about 16% disagreed. This

indicates that the economic condition of about 38% respondents didn’t deteriorate due to COVID-19.

TABLE 20. Deterioration of economic capacity due to COVID-19


Disagree 9 16.1 16.1 16.1

Neutral 12 21.4 21.4 37.5

Agree 22 39.3 39.3 76.8

Strongly Agree 13 23.2 23.2 100.0

Total 56 100.0 100.0

The third question related to COVID-19 pandemic was whether respondents expect that the price of

apartments will fall due to COVID-19. It is found that about 45% of respondents either agreed or strongly

agreed that price of apartments will fall due to negative impact of the pandemic. About 34% of respond-

ents remained neutral and about 21% said that they don’t expect the decline of price due to the pandemic.

TABLE 21. The expectation of respondents regarding the fall of apartment price due to COVID-19


Disagree 12 21.4 21.4 21.4

Neutral 19 33.9 33.9 55.4

Agree 22 39.3 39.3 94.6

Strongly Agree 3 5.4 5.4 100.0

Total 56 100.0 100.0

42

4.5 Discussion

From the above analysis of results, it is found that most of the respondents want to buy an apartment in

near future. The results imply that only a smaller portion of the respondents already have another apart-

ment. This indicates most of the customers are first time buyers. The number of repeat customers is

lower in real estate industry. Moreover, from the cross-sectional analysis it is found that upper class and

upper-middle income people are the repeat purchasers of apartments. For most of the people in Bangla-

desh, apartment purchase is once in a lifetime event.

From the analysis of occupation, it is found that the biggest group of apartment buyers are private job

holders. The second biggest group is government employees, the third largest group is businessmen, the

fourth largest group is self-employed persons and the fifth largest groups are expatriates. Due to rapid

expansion of the economy in last two decades in Bangladesh, the private sector has grown rapidly.

Therefore, private, or corporate job holders including bankers and other large paying job holders are

major buyers of apartments. The government employees are also important group because of increased

salary and other amenities by the government. Government facilitates subsidized home loan to govern-

ment employees (5% simple interest) for a long tenure. Therefore, government employees are increasing

becoming interested in buying apartments. Businessmen and businesswomen are traditional buyers of

apartments. They have higher economic capacity. As a result, they are also a major group of apartment

buyers. It is noted that, self-employed persons including doctors, engineers, chartered accountants, free-

lancers are becoming more financially strong that they are also a major group for apartment purchasing.

Expatriates are also becoming important groups in buying apartments.

From the analysis it is found that most of the prospective apartment buyers have small family size.

Developers need to think about the apartment sizes for smaller families. From the analysis of monthly

income, it is found that majority of the prospective apartment buyers are from mid-middle-income cat-

egory. Upper-income and upper-middle income people were traditionally regarded as the apartment buy-

ers. But from this research it is found that mid-middle-income people are becoming major group for

apartment buying while upper-middle and upper-class people still hold a strong position as apartment

buyers. The lower-middle-income people are smallest group. Therefore, companies need to develop their

plan for attracting more middle-income people.

43

From the living duration analysis of the respondents it is found that more than half of the prospective

buyers have lived in Dhaka for more than 15 years. The longer the customers live in Dhaka, the more

they want an own residence.

From the analysis of preferred location for apartment purchase, it is found that the most popular location

for apartment purchase among mid-middle class is Mirpur. This class of people also prefer Banasree,

Mohammadpur, Basabo and Bashundhara Residential area as preferred locations. Due to lower apart-

ment prices in these areas, they prefer these areas for buying their desired property. On the other hand,

upper-middle-income class prefer Uttara as their most desired location for apartment. They also prefer,

Siddeswari, Wari, Dhanmondi, Bashundhara and Banasree as their preferred location. The upper class

prefer apartments in costly areas like, Gulshan, Dhanmondi and Uttara. From the location analysis, it is

found that Upper and Upper-middle income people prefer apartments in Planned Residential areas due

to wider roads, good environment, and security. But mid-middle-class prefer apartments in less planned

areas due to lower price and availability of public facilities i.e. school, colleges, universities, bazars,

mosques etc. in these areas.

From the analysis it is also found that most of the customers want 3-bedroom apartments. The 2-bedroom

apartment buyers are also significant. Due to limited financial capacity and smaller family sizes middle-

income customers want medium size apartments. They also want a car parking space with their apart-

ment whether or they have any cars at present.

From the analysis of factors affecting apartment buying decision of customers it is found that apartment

price is an important factor for buying an apartment. Most of the customers want affordable apartments

due to limited financial capacity. Financing facilities is also a crucial factor. Easier home loan facilities

for middle income people may boost the apartment industry.

Location and communication are traditionally regarded as important factors that affect apartment buying

decision. Most of the customer want an apartment in the area where they are living for long time. More-

over, since community is a crucial factor in a cosmopolitan city like Dhaka most of the customer want

apartment in the area where there are homes of other relatives of prospective buyers. They also want

apartment in the area from where they can easily move to their workplace and other key areas of the

city.

44

Security is also a significant factor for buying the apartment. This study found that most of the buyers

want an apartment in the area where there is much security. They also want the building to be secured

with modern security equipment.

Project facility is the factor which is emphasized by almost all respondents as important. Customers want

facilities like school, colleges, community centers, playgrounds, parks, shopping centers within or

nearby project area. The isolated areas are less preferred by respondents. Customers also want modern

amenities in the building such as Lift, CC camera, waste disposal systems, good sanitation etc.

The physical quality of construction materials is also regarded crucial by most of the respondents. Since,

an apartment is purchased for lifetime and there needs safety of the building, customers want high quality

materials. For aesthetics of the apartment, customers want high quality tiles, washroom and kitchen

fittings and other fittings in the apartment according to their budget.

The internal living environment of the apartment building must be good. There should be clean and a

good community for living peacefully in an apartment. Reputation of the developer is highly regarded

by buyers. Since, there requires significant down payment for an apartment and the apartment is usually

handed over after a certain period, customers want trusted and reputed developers. Moreover, for ensur-

ing the construction quality customers tend to believe reputed builders.

Promotional activities of the developer are regarded as the least important factor for taking apartment

buying decision. But it is found that some buyers are influenced by promotional activities. At least for

initial reaching to customers, there needs widespread promotional activities by the companies.

From the overall ranking analysis of the nine factors it is found that project facility is the most important

factor to customers. All customers want good facilities and modern amenities in the project. The second

most important factor is found price of the apartment. Customers want an apartment at reasonable price.

The third important factor that influence buyers’ decision is financing facilities. Most of the middle-

income people do not have adequate money for buying an apartment through full cash payment. But

they seek loans and other financing facilities for buying an apartment. Construction quality, location and

communication and reputation of developer also have great impact on buying decision of an apartment.

From the analysis of factors by income categories it is found that mid-middle-income people regard

project facilities as most important factor. They also highly emphasize on relators’ reputation, price of

the property and financing facilities.

45

From the analysis of COVID-19 pandemic it is found that most of the customers will delay their purchase

of property due to COVID-19. Significant portion of prospective buyers recognized that their economic

condition has worsened due to pandemic led economic disaster. Specially, middle-income people have

been hurt strongly by the pandemic. Most of the customers expect that the price of property will fall due

to lower demand of apartments in this situation. Therefore, it can be said that COVID-19 pandemic has

negative impact on the apartment buying decision of buyers. Especially, middle income people will

delay apartment purchase due to COVID-19.

46

5 CONCLUSION & RECOMMENDATIONS

This chapter contains the conclusion based on analysis and discussion. The findings of the studies are

linked to research aim and conclusion has been drawn to fulfill the research aim. This chapter also con-

tains some specific recommendations for the real estate developers of Bangladesh. Lastly, this chapter

shows the prospect of further studies based on this research.

5.1 Conclusion

The aim of this research was to explore the factors affecting apartment buying decision of middle-income

people in Dhaka. The research also explored the impact of COVID-19 pandemic on apartment buying

decision of middle-income customers. The conclusion can be made according to the research objectives.

From the findings of the demographic analysis it can be concluded that most of the middle-income buy-

ers are first time buyers. The five types of people are main buyers of apartment including private job

holders, government employees, businessmen, self-employed persons and expatriates. Among them pri-

vate job holders including bankers, corporate professionals and government employees are major groups

of apartment buyers. Most of the customers have small family size, therefore they require medium sized

apartments. The most potential buyers of apartments are middle-income people. Due to growing middle-

income class in Bangladesh, they are the most significant customer groups for real estate companies in

upcoming days. From the analysis it can also be concluded that the most preferred location for buying

apartments by upper and upper-middle income people are planned residential areas such as Uttara,

Bashundhara, Banasree, Dhanmondi etc. On the other hand, mid-middle and lower middle-income peo-

ple prefer relatively less planned areas such as, Mirpur, Mohammadpur, Basabo, Rampura due to lower

price and central location. Most of the customers want modern amenities including adequate toilets and

car parking spaces in their apartments.

From the factor analysis it can be concluded that among nine factors eight factors including Price, Fi-

nance, Location and Communication, Project facilities, Physical quality of the building, Security, repu-

tation of the developer and environmental quality are regarded very important by respondents. The pro-

motional activity of developers is the least influential factor for apartment buying decision. Among these

factors Project facility is regarded as the most important factor for taking buying decision. Price and

Financing facilities are considered second and third most important factor. Construction quality, location

and communication also have significant impact on buying decision of customers. The reputation of the

47

builder also has very deep impact on buying decision. From the analysis it can also be concluded that

middle-income customers’ buying decision is most affected by project facilities, the reputation of the

developing company, price of the apartment and financing facilities. Location has also important impact

on buying decision of middle-income people. By taking care of these factors middle-income customers

can be attracted to a real-estate company.

From the analysis it can also be concluded that COVID-19 pandemic has much impact on apartment

buying decisions. The economic condition of most of the middle-income customers has been adversely

affected by COVID-19 pandemic. Therefore, they want to delay their purchase of apartments. Moreover,

the customers expect that the price of real estate will decline in Dhaka due to pandemic. As a result, they

want to delay their purchase until the price falls.

5.2 Recommendations

Based on the findings of the research following recommendations can be made. These recommendations

will be applicable for real estate developers to revise their business strategies.

Firstly, it is found that most of the customers are first time buyers of apartments. They have less

knowledge on companies. Although, promotional activities have less impact on buying decision, exten-

sive digital marketing activities can be undertaken by real estate companies to create brand awareness

among customers and to generate lead.

Secondly, most of the prospective customers are found to be small families. Moreover, most of the mid-

dle-income customers want medium (2-3 bedrooms) apartments. Developers should focus on building

low cost medium size apartments to attract these customers.

Thirdly, middle-income customers mostly emphasized on project facilities. If satellites cities can be built

in the suburbs of Dhaka, having all modern facilities such as school, colleges, shopping centers, hospitals

within the project, middle-income customers would be attracted. But the apartments must be affordable.

Fourthly, it is observed that middle-income people emphasized on financing facilities. Since, these cus-

tomers have limited resources for buying an apartment, real-estate companies can arrange finance facil-

ities on easier terms and formalities from different banks and financial institutions. If access to housing

finance is easier to middle-income people, they will be more attracted to buy apartments.

48

Fifthly, middle income people emphasized on location and communication. Government should build

wider roads and ensure public transportation system from satellite cities in the suburbs of Dhaka to

attract middle-income customers to these projects.

Lastly, companies need to develop strategies for survival from COVID-19-led economic downturn.

More discounts can be offered to attract customers. Companies should use government incentive pack-

ages to continue the employment in the real estate industry and develop a real estate industry for surging

middle-class population of Bangladesh.

5.3 Future Studies

This study is not a conclusive one. Based on the findings of this study, future research can be undertaken

to design innovative financing facilities for middle-income real estate buyers. More studies can be un-

dertaken to reveal effective securitization processes. Moreover, studies can be undertaken how to attract

middle-income people to the satellite cities around the suburbs of Dhaka City to reduce the congestion

in Dhaka. Further studies can also be taken to explore the effective strategies to recover from pandemic

led crisis.

49

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APPENDIX 1/3

Survey Questionnaire for Customers

This survey is being done as a part of my undergraduate research project at Centria University of Applied

Sciences, Finland. My research topic is “Factors affecting apartment buying decision of middle-income people in

Bangladesh: From the perspective of COVID 19 led economic situation.” I offer assurance on the privacy of

information to be provided by you. The personal information of you will not be disclosed to others without your consent. Your kind cooperation would be appreciated. Thank you in advance.

Participant Name: ……………………………………………………. Address: ………………………………………………………………

Questions

Please put a tick (√) on your chosen options & write on blank space 1. I want to buy an apartment in near future.

Strongly

Disagree

Disagree Neutral Agree Strongly Agree

1 2 3 4 5

2. Do you already have any other apartment or land in Dhaka?

Yes

No

3. Your Occupation

A Business

B Private Job

C Government Service

D Self-Employed (Doctor, Engineer, Lawyer, CA,

Freelancers etc.)

E Expatriate

F Others

4. How many family members do you have?

A. 2 B. 3-4

C. 5-6 D. More than 6

5. What is the average monthly income of your family?

F. Above 150000

G. 80000-150000

H. 40000-80000

I. 20000-40000

J. Less than 20000

APPENDIX 2/3

6. Number of years you are living in Dhaka City.

A. Less than 5 years B. 5-10 Years

C. 11-15 Years D. 16-20 Years

E. 21-25 Years F. Above 25 Years

7. Your area of preference in Dhaka City for buying the apartment (please rank 5 areas according to your

choice)

Rank Area Name

Rank 1

Rank 2

Rank 3

Rank 4

Rank 5

8. Which size of apartment do you prefer?

Below 1000 Sft. 1000-1200 sft.

1201-1400 sft. 1401-1600 sft.

1600-2000 sft. Above 2000 sft.

9. Number of Bedrooms you expect in your apartment.

1 2

3 4

10. Do you want any car parking space with your apartment?

Yes

No

May be

11. Which factors do you consider most important for buying an apartment? (Please rank factors according to importance and give weight on each factor)

Rank Factor Factor Description Weight of Each

Factor Price The apartment must be affordable 1 2 3 4 5

Finance There must be credit/installment facilities

for buying apartment

1 2 3 4 5

Location and

Communicati

on

I prefer apartment in the area where I am

living for a long time & near the house of

my relatives

1 2 3 4 5

Communication with my workplace &

other prime places is easier

1 2 3 4 5

Security The area must be secured & the building

must have adequate security

1 2 3 4 5

Project

Facilities

The project must have nearby school,

playground, parks, mosque/church/temple

1 2 3 4 5

The project must have lifts, CC Camera,

garbage disposal and other modern

facilities

1 2 3 4 5

Physical

Quality of the

Building

The construction materials and fittings

should be good quality

1 2 3 4 5

Environment

al Quality

The internal living environment of the

project must be good, clean, and green.

1 2 3 4 5

Reputation of

the

Developer

The previous reputation of the developer

must be good regarding timely hand over

and quality works

1 2 3 4 5

Promotional

Activities

I am influenced by promotional activities

of developer companies.

1 2 3 4 5

12. I will delay the purchase of apartment due to COVID-19.

Strongly

Disagree


1 2 3 4 5

13. My economic capacity has deteriorated due to COVID-19.

Strongly

Disagree


1 2 3 4 5

14. I expect that price of apartments will fall due to COVID-19.

Strongly

Disagree


1 2 3 4 5

APPENDIX 3/3

APPENDIX 2

Table: Choice of area by different class of customers.

Area Name Upper

Income

Upper

Middle

Mid-

Middle

Lower

Middle

Total

Banasree 0 2 6 1 9

Basabo 0 0 5 0 5

Bashundhara 0 2 5 0 7

Dhanmondi 1 2 0 0 3

Gulshan 2 0 1 0 3

Jatrabari 0 0 1 0 1

Mirpur 0 0 10 1 11

Mohammad-

pur

0 0 4 0 4

Siddeswari 0 2 0 0 2

Uttara 3 6 0 0 9

Wari 0 2 0 0 2

Total 6 16 32 2 56

Documents

FACTORS AFFECTING APARTMENT BUYING DECISION OF …