Overview of the Real Estate Industry in Bangladesh | JCX Developments Ltd.
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Overview of the Real Estate Industry in Bangladesh

Every year, new high-rise apartment buildings catering to the wealthy appear, changing the city's skyline in Dhaka. It's uncommon to come across a "For Sale" sign for a luxury apartment in a desirable neighborhood, even with this increase in building. Rather, the more affluent parts of the city are overrun with "For Rent" signs. Data from the Directorate of Registration show a persistent demand for apartments nationwide. The current fiscal year's March saw the sale of apartments valued at Tk24,000 crore. To put this into perspective, sales during the first nine months of the fiscal year (July-March) exceeded Tk 3,000 crore and more than doubled those of FY21. By the end of the fiscal year, sales might exceed Tk 30,000 crore if the current rate keeps up. Who is purchasing these upscale homes in light of the ongoing economic difficulties?

The Dark Side of Dhaka’s Real Estate Surge: Uncovering Market Distortions

Some analysts claim that deeper issues are revealed by the surge in demand and the covert financial tricks driving Dhaka's real estate market's continued boom. The demand for housing is not the only factor fueling the real estate market's expansion; widespread corruption is also a sign of the industry's distortion. Opportunities to have a "second home" are abundant in other nations, which has caused substantial capital outflows from Bangladesh into overseas real estate markets. By bringing investors into the tax system and boosting government revenue, allowing undeclared money to be invested in the local real estate market could have significant benefits. Black money investments in real estate could support the housing market and increase tax revenues if the upcoming budget allows them. The Bangladesh Bureau of Statistics (BBS) has released new data that demonstrates this increasing demand. The current fiscal year is expected to see the fastest rate of growth in the real estate sector in four years, at 3.79%. On the other hand, several other important industries, including manufacturing, trade, transportation, and finance, have seen noticeable slowdowns. The real value of real estate transactions maybe three to four times higher than the official figures reported by the Directorate of Registration, experts suggest, despite this growth, suggesting even more unrecorded activity in the market.

Bangladesh’s Real Estate Market on the Rise: Projections and Growth Trends

By 2024, Bangladesh's real estate market – which is mostly driven by the residential sector – is expected to reach an astounding value of US$2.75 trillion. With US $2.04 trillion of the market value that year, residential real estate is predicted to lead. With an estimated 2.23% annual growth from 2024 to 2029, the market is expected to grow steadily going forward, reaching a volume of US$3.07 trillion by that time. It is anticipated that the US real estate market will lead the world and generate US $132 trillion by 2024. Meanwhile, Bangladesh's rapidly increasing urbanization and population growth are driving up demand for affordable housing.

Emerging Trends Shaping Bangladesh’s Real Estate Market

Apartments in Studios

Since the Covid-19 pandemic, there have been a lot of changes in the real estate market. One of the most obvious trends has been the increase in demand for studio apartments. Compact living spaces, usually between 250 and 1,000 square feet, with a combined bedroom, dining area, small kitchen, and bathroom, are preferred by this new customer segment. Many people, particularly those who live in cities, are choosing these more compact, practical spaces. Furthermore, luxury commercial properties are becoming more and more popular, and they are being used for a variety of business purposes.

The Digital Influences

The real estate industry has embraced digital transformation, with many businesses now providing clients with a completely online experience. Prospective purchasers can effortlessly peruse real estate portfolios, observe flats that are available in Dhaka and other areas, and even monitor ongoing developments with the aid of user-friendly websites. Buyers are now more empowered thanks to this virtual shift, which eliminates the need for them to physically visit properties to make informed investment decisions.

Steel-framed buildings

Steel-structured buildings, in contrast to conventional construction, are becoming more and more popular in urban areas. In addition to being safer, these structures can be constructed more quickly and are more resilient to wind and earthquake damage. They are becoming a more and more popular choice for both developers and homeowners due to their strength and resilience.

Technology's Effect on Real Estate

Technological developments have fundamentally changed Bangladesh's real estate market. Remote property viewings are made possible by virtual tours and 3D modeling, and online property platforms have made it easier for buyers and sellers to get in touch. Rent collection, tenant management, and property listing are just a few of the tasks that real estate management software has made easier. Furthermore, the combination of big data analytics and artificial intelligence has made it possible to create more accurate market forecasts and customized recommendations for consumers. These developments have improved the real estate industry's overall efficiency, increased transparency, and decreased transaction costs.

Sustainable Development in the Real Estate Sector of Bangladesh

The importance of sustainable development in Bangladesh's real estate market has grown. Developers are concentrating on using green architecture to create structures that are both energy- and environmentally-efficient. In addition to protecting the environment, these sustainable efforts also attract buyers who place a high value on sustainability.

Growing Adoption of Green Structures in Bangladesh

Green building techniques have become more popular in Bangladesh in recent years. Environmentally friendly technologies are being used by developers to create energy-efficient buildings. These environmentally friendly constructions not only help the environment but also draw purchasers who are dedicated to lowering their carbon footprint.

Sustainable Architecture's Effect on the Growth of Real Estate

An important factor in the real estate market's growth in Bangladesh is sustainable architecture. Developers are meeting consumer demand for more environmentally friendly living environments by creating buildings with minimal negative effects on the environment and with minimal resource usage. These actions improve property value, cut energy expenses, and cut carbon emissions, which attract investors and buyers. Because of this, sustainable architecture is raising the marketability of homes across the nation in addition to enhancing environmental results.

Comparison of Overall GDP Growth vs. Growth in Real Estate, Renting, and Business Services

Year Size of GDP (In Crore Tk) Overall GDP Growth (%) Real Estate, renting, and business services (% of GDP) Real Estate, renting, and business services (In Crore Tk) Real Estate, renting, and business services Growth (%)
2001-02 225,261 4.42 8.63 19,440
2002-03 237,101 5.26 8.48 20,106 3.43
2003-04 251,968 6.27 8.30 20,913 4.01
2004-05 266,974 5.96 8.12 21,678 3.66
2005-06 284,673 6.63 7.87 22,404 3.35
2006-07 302,971 6.43 7.64 23,147 3.32
2007-08 321,726 6.19 7.49 24,097 4.11
2008-09 340,197 5.74 7.34 24,970 3.62
2009-10 360,845 6.07 7.20 25,981 4.05
Source: REHAB (Table: Comparison between overall GDP growth and growth of Real estate, renting and business services) The positive numbers in the table's definitive column indicate that the Real Estate, Renting, and Business Services sector has consistently grown annually. Nonetheless, the growth of this sector has been slower than the growth of the GDP as a whole. Its contribution to the GDP as a whole has thus gradually decreased over time.

The Future of Real Estate in Bangladesh

Despite the global economic downturn and recessionary trends, Bangladesh’s real estate market is showing promising signs for the future. With growing investments and increased government support, the industry is positioned to attract significant local and international funding. The following section highlights some of the key trends that will shape the future of the sector:

Rising Investments

The government's decision to allow tax-free investments in real estate has been a significant move to boost the sector. So far, approximately Tk 3,200 crore has been invested into the property market without incurring any tax liabilities. Experts anticipate that this policy will continue to attract substantial investment in the coming years. Other key initiatives, such as reducing home loan interest rates to 9%, lowering land transfer taxes from 2% to 1%, and cutting stamp duty from 3% to 1.5%, will further fuel investment. As a result, the next five years are expected to be highly favorable for real estate growth in Bangladesh.

Increasing Demand

With its relatively small land area, Bangladesh sees a high concentration of people in urban regions, especially in the capital, Dhaka. This has led to a surge in demand for apartments in the city, driven by the availability of premium amenities. In 2020, despite the challenges posed by the pandemic, interest in real estate grew significantly. Data shows that by the end of the year, demand for land had reached its highest level. One key reason for this is that land offers better long-term returns compared to buildings, making it a more attractive investment option. Land in areas like Purbachal, on the outskirts of Dhaka, remains more affordable than within the city and is rapidly appreciating. As a result, there has been a growing interest in purchasing land in Purbachal and nearby regions. The real estate sector in Bangladesh is expected to continue its upward trajectory beyond 2023, as the post-pandemic economic recovery enables more people to afford property, especially in emerging areas like Purbachal.

Conclusion

Bangladesh's real estate market is full of prospects for development and expansion. The government's persistent emphasis on urbanization and infrastructure development has resulted in a robust demand for residential and commercial real estate. Furthermore, new opportunities for innovation and investment are created by the sector's growing use of technology and the adoption of sustainable development practices. An increasing amount of foreign direct investment indicates rising market confidence. Emerging investment hotspots and upcoming projects offer investors the opportunity to grow their portfolios and support Bangladesh's future economic prosperity as the nation enters a new phase of real estate growth.

Frequently Asked Questions (FAQs)

What’s the current size of the real estate industry of Bangladesh?

With an estimated 58,000 crore BDT in total market value, Bangladesh's real estate market is expected to grow at a rate of 15% to 17% per year.

What are the most important aspects of real estate?

The elements that are most important in real estate are location, construction, and architecture.

What are the three major components of the real estate system?

The space market, the asset market, and the development industry are the three main parts of the "real estate system".

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