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It is always wise and advisable to allocate some capital or fortune in the expectation of some sorts of return or benefits in the future. While there are numerous means of investments, from simply depositing some money in the bank to earn interests, to investing in assets that will gain value over time. In spite of so many prevailing sources Real estate is being considered to be the most attractive source for investment considering of its stability or steady return. Real Estate is one of the oldest and most popular asset classes, but still there are many people who are doubtful out of caution regarding Real Estate Investment. It is true that, background knowledge from plenty of research, perseverance, commitment and of course risk-taking mindset are required, but when done properly it is one of the most lucrative investment sectors.
How the Real Estate Market Has Grown in Bangladesh: Capital Appreciation
At the late 70s there were only 5 companies who had started the Real Estate Business in Bangladesh, and even they were based in Dhaka City only. After the formation of the Real Estate and Housing Association of Bangladesh (REHAB) on 12 December 1991 until now there are 1010 enlisted members who are in the Real Estate Business while countless others who are doing business informally without REHAB membership. This certainly shows the growing demand of Real Estate in Bangladesh.
Data from REHAB shows that, there has been a colossal increase in the price of land all over Dhaka City. For example, the price of land from the 1990s to 2000s in Baridhara has increased by 733% and a further 700% from the 2000s to 2010s. On the other hand, the price of land in Gulshan has gone up by 267% from the 1990s to 2000s, and in the next decade it has increased at a stunning rate of over 1000%!
Similarly, the per square feet price of apartments in Gulshan, Banani, Baridhara and Dhanmondi have all increased massively by 471%, 830%, 468% and 483% respectively, over the period of 2000 to 2010. Apartments of 1800 square feet to 2500 square feet, in Gulshan area around 1990 would have cost around 25 to 30 Lakh Bangladeshi Taka. Now in 2020 Apartment prices in Gulshan of the same size would range from 2 Crore to 4 Crore, thus prices have increased by more than 12 times over the past three decades!
The rise in price is justifiable as accommodation is a basic human need. Dhaka is one of the most densely populated cities in the world and with increase in demand, backed up by the development in our socioeconomic condition, it is natural that the Real Estate Market has seen such dramatic growth over the decades.
Other Types of Investment Compared to that of Real Estate
Now let us compare these striking data with other forms of investments. Previously the gain from Interest rates by depositing money in Banks were 10% which has been decreased to even 6% in many Banks. Purchasing Savings Instruments or Sanchayapatra used to yield 12.5% to 13% interests which has been also decreased 10% with added Tax to be paid to the government on the income from the profit.
Why Invest in Real Estate Sector
Apart from the very obvious Monetary Profitability through Capital Appreciation in Real Estate Investment, which has been discussed in detail in the earlier section, there are many other reasons as to why you should consider Investing in the Real Estate Sector especially in Bangladesh.
It is high time that we make investments in Real Estate now as with more Development Works, the GDP will rise. The Price of Real Estate will go up even more. It is wise to invest at this moment as it will yield considerable profit in the future.
Investing in Commercial Properties is also a very sensible thing to do since with the economic growth, there will be need of more commercial properties like office buildings, shopping complexes etc. This will increase the price and the rental costs of Commercial Properties greatly.
It doesn’t necessarily mean that investment in all or any Real Estate blindly and without any prior thoughts or research is a good idea. There are several factors to take into consideration when buying an apartment or commercial property and in our next articles we will explore those. But Nevertheless, Real Estate is indeed one of the most sustainable sectors for investment in this rapidly changing ecology.
by Siam Mim