In the real estate sector, prices in Dhaka have been soaring since the population boom of the ‘90s. In the current context, it has become extremely difficult for the middle-class to be able to afford first-hand land or apartments, especially with the rising inflation rates in the country. As it is said, necessity is the mother of all invention. When the demand for houses started rising, but there was a shortage in production, a secondary market for real estate was created. In this market, people started to buy land and flats to resell to others, thus helping fill the gap created in the real estate sector. In addition, the government formulated the “Detailed Area Plan” including new areas.
Following this plan, real estate developers and realtors filled up the low-lying, underwater and marshy areas. Since many of these decisions were taken without undertaking environmental surveys, there is no proof that any of these will be environmentally sustainable in the long run. For anybody who is hoping to grow their investment, real estate is usually a relatively low-risk option as there is less of a chance for depreciation of property, and the investment often has higher return of investment over time. If you have enough savings to be able to invest in a parcel of land or a flat, it is often advisable to do so instead of saving the money in bonds or in a bank, which can be far riskier.
Since there aren’t too many viable investment opportunities in Bangladesh, real estate has long been the topmost in people’s choice for long-term investment. Many Dhaka residents are already struggling to pay about 60% of their income in renting a house or a flat. Studies show that this is already putting a strain on people coming from single-income families. Housing demand has also increased fueled by the rapid expansion of the economy and the surging middle class.
The alarming thing to consider is that in the past 15 years, housing demand has substantially spiked due to the city becoming rapidly urbanized, combined with exponential population growth. In a city where over half of the people come from other areas and about 1.8 million residents live in rented homes, housing still seems to be a daunting task. As the economic and cultural hub of Dhaka, Dhaka has always been very fast-paced–which is why getting a reliable realtor is an absolute necessity, to ensure you get the best available deal. While apartment prices have tripled in the last 15 years, flat prices have jumped by 390% from 2000 to 2018. Where the demand has gotten this high, barely 10,000 to 12,000 units manufactured per year will never even begin to make up for what has been lost.
As the elections are slated to be held in January, 2023; experts are estimating that the economy will be going through a recessive phase, as is usual pre-election in any country. This recession usually rolls over into the first six months after the election, which is the time that it takes a country to stabilise economically. However, since this year’s budget has seen an increase in the price of construction raw materials, it will become even more challenging for the middle-class to be able to afford proper housing, unless they go through the secondary property channel.
For landowners, conversely, the land registration taxes in certain areas have been cut–which means depending on your budget, it might be easier to buy land rather than to get ready flats, as land will be substantially cheaper now than it was before. More people will be leaning into the idea of fully-furnished rental homes, some even embracing the idea of co-living. Office and commercial spaces in the secondary property market will experience a boom, especially since more and more people find convenience in starting up their own stores or business firms, especially if they are willing to have upgraded operations from the get-go, and do not have any particular limitations in terms of area preferences or budget.
While there will not be any specific trends in the secondary property market in 2024, the secondary property market will possibly be the only way in which the middle class can afford to own or rent housing in Dhaka. If you are careful enough, good opportunities may open up for you where you least expect them.
