In the property market, there are mainly two types of assets, developed and undeveloped. While developed assets have multiple categories like residential, commercial and industrial, undeveloped assets generally include land. Among all these properties, a popular investment debate is between apartment vs land and which one is the better alternative. Both sides have strong reasoning behind their claim. However, as apartments in Bangladesh are more available and less expensive, most people would rather choose an apartment over a piece of land. But what are the reasons to invest in land? Let’s take a look.
Land Never Depreciates
Unlike any other asset in the world, land is the only property that does not depreciate over time. Moreover, the value of the property will increase and generate you a high Return on Investment (ROI). The core reason behind this characteristic is land is a scarce resource. With time, the number of people in this world would increase but the amount of available land will not. Plus, undeveloped land is the simplest form of property you can buy. Unless it is affected by natural calamities, your asset is likely to survive and will not deviate from its initial condition. That’s why instead of depreciating, land value always increases over time.
Minimal Costs
All other properties come with a hefty after purchase cost, except for land. No matter what you buy, there will be taxes on it and you have to pay for maintenance as well. On top of that, you have to ensure utility costs such as electricity, gas, and water are in order to enjoy the core benefit of your property. But for a piece of land, these costs are minimal. Apart from the initial investment, you only have to pay the yearly taxes to validate your ownership. Plus, you may also want to construct boundaries and avail utility connections for your land as protection mechanisms against illegal land grabbing. But that’s about it, and there are no further costs to maintain the true state of the property. Hence minimal cost is one of the reasons to invest in land.
Great For Long-Term Investment
The core idea behind long-term investment is capital gain. You will purchase the asset for a low price and hold it until it is profitable. It may or may not give you a monthly return but the original capital gain is the main motive behind the investment. However, a major drawback of long-term investments is the regular maintenance and opportunity cost. The latter is a non-cash expense and can be compensated if profit gains meet the required rate but maintenance cost is a big burden. In case of lands, as the costs are minimal and yet generates a high-profit gain over a certain period of time, people find it more suitable for long-term investments.
Versatility
Since land is the basic form of an estate, it can be used for many purposes. It gives the owner the liberty to pick and choose the most profitable option. The idea is basically that as an owner, you can lease/rent, sell or develop the land depending on your financial expectations. Leasing the land would give you steady cash inflows while selling it for higher value is another option. You can also choose to develop the land yourself if it’s not in a habitable condition and make a sharp profit almost instantly. Based on location, demand, and quality of the land, you have the ability to customize your expectations from a land. For most other properties, you can not enjoy this extra benefit.
Low Market Competition
Land is comparatively more expensive than a single unit apartment in Dhaka of the same size and location. It is obvious that urban land has a higher price tag than land in the suburbs or rural areas due to urbanization and demand. Because of this higher price, not many people can afford to purchase land in urban areas. That’s why the competition in this market is relatively low in comparison to other property transactions. Hence, if you want to purchase land, you have a slightly higher advantage as a buyer can utilize this opportunity to negotiate price. Many find this advantage as one of the key reasons to invest in land.
Then again, Dhaka is expanding on the eastern side and several land developers are preparing unutilized lands for selling purposes. These newly developed lands are comparatively less expensive as East Dhaka is expected to be an extension of the capital. If you are looking for an investment opportunity, then certainly this is your chance to buy land at an affordable price. If you have any queries regarding this matter or have any property related concerns, we are here to help.
