How safe is it to invest in real estate? What is the future of real estate in Bangladesh? Your mind may have all these queries, and here we will answer all these alongside analyzing Why Real Estate is a Safe Investment in Bangladesh. Let's take a detailed look insight and compare it with some other investments.
Why Real Estate is a Safe Investment in Bangladesh
We will assess the contemporary factors, but prior to that, let's have a look at some historical data and trends.
Historical Growth of Real Estate
Even during the late 1970s, there were single-digit (around 5) developing companies working in this sector in the country's capital. They used to offer small-scale housing solutions. In 1991, we saw the establishment of REHAB. Its full form is the Real Estate and Housing Association of Bangladesh. Since then, the industry has kept growing. You will be amazed to know that the number of developer companies that are formally working is in the 4-digit range! It has crossed the 1000 mark. Indeed, there are many companies that are working without formal membership. Hence, the number is much more.
Enormous Land Price Rise
From the 1900s to the 2000s, the land price rose by 267% in the Gulshan area. The rise was an unbelievable 733% in the Baridhara area. On the other hand, from the 2000s to the 2010s, within a decade, the land price rose by 700% in Baridhara. In Gulshan, the percentage was a whopping 1000%+ increment. These numbers can tell how stable, safe, and profitable this sector can be. Early investors obtained a remarkable return that changed luck for multiple upcoming generations.
Huge Price Rise in Apartments
The trend also shows a huge price rise in terms of flats or apartments. From the 2000s to the 2010s, within a decade, the per square foot price increment was the following:
| Area |
Apartment Price Rise |
| Gulshan |
471% |
| Banani |
830% |
| Baridhara |
468% |
| Dhanmondi |
483% |
In fact, a standard 1800–2500 sq ft apartment used to cost 25-30 lakh BD Taka in the early 1990s. Within less than 30 years, the price rose over 12 times. By 2020, the very same sort of flats cost around 2-4 crore BD Taka.
Comparison with Other Investments
Let's compare the real estate investment with some other possible alternatives.
Bank Deposits
Banks used to offer a 10% interest rate previously. But the numbers came down to just 6-7% or even less nowadays. And with high inflation rates, even the depositor is losing their money.
Sanchayapatra (Savings Certificates)
Once, people used to enjoy a high return of around 12.5-13% in this investment. But now it's no more than 10% returns with additional taxes.
Stock Market
Yet another tempting investment sector, but it is too risky. It's associated with Market crashes, political unrest, economic instability, etc. You can be zero overnight, which is unlikely in the real estate market.
Gold & Precious Metals
Being a tangible asset, this investment might be the best possible alternative. By the way, there are market fluctuations and dependency on the worldwide market. Moreover, the investment in Gold & Precious Metals won't secure you any rental income.
What are the Reasons for Real Estate to be a Safe Investment
Tangible Asset
This is a physical asset that you can see. It can't disappear like many other financial assets or virtual assets. Moreover, the political instability and economic crashes may have an impact on this sector as well. But the impact would be minimal for sure.
Infrastructure Developments
Various infrastructure developments are actually increasing the value of properties, and with better accessibility and communication, the market is spreading. This list includes the likes of: Metro Rail (MRT), Elevated Expressway, Dhaka Elevated Bus Rapid Transit, Padma Bridge, Gated communities (Bashundhara, Purbachal, Rupayan City), Smart city projects, Flyovers & highways.
Demand Increase for Commercial Purposes
The commercial real estate demand is increasing rapidly. You can find many shopping malls, office buildings, warehouses, retail outlets, etc are thriving. There is no lack in demand, and it's eventually increasing the property values.
Demand for Housing or Shelter
Real Estate will fulfill your demand for shelter. Even if your family has one or more, indeed, there is much demand in the entire Dhaka City for housing, and it won't drop in the near future.
Rental Earnings
Real Estate investment can be a serious source of rental cash flow. You can give it on rent, and that can help you earn a healthy amount of money on a regular basis.
No Inflation Issue
Most other investments are impacted by inflation. On the other hand, real estate and gold investments are the sources where the inflation will actually benefit you. So, it's not only a protection against inflation but also gaining source.
Loan and Tax Facilities
Enjoy the privilege of tax incentives and deductions. One can also own a larger asset even with a small cash capital.
Generational Wealth
Real Estate is one of those generational wealth that will benefit not only you but also your upcoming generations. Apart from a safe home, they can enjoy some rents, or even the prices rise multiple times as time goes by.
Future of Real Estate in BD
The future of real estate looks bright in BD and the entire world. There will always be an uprising demand for land and apartments for various uses. So, you don't need to think about the clients; they will come to you. With less impact from all unrests, unharmed from inflation, and being a generation wealth, there is no better way to invest your crucial money.
