Surviving constant ebb and flow, real estate sector in Bangladesh made a notable comeback in the past couple of years. Simultaneously, major contributing factors like bank loan availability, political condition were also skewed positively towards the market growth. Investing in the country’s property market during this boom might turn out to be relatively profitable. However, a common dilemma can arise while coming to a decision; ‘Where to invest, apartment or land?’. Both of the assets have merits and demerits. If you are going through the same phase and trying to make up your mind, let’s look at a few pointers that will help you in taking a definitive stand.
Purpose of The Investment
Are you looking for a long-term settlement (residence) or a sharp profit gain? Both the apartment and land see price appreciation although profit growth slows down for flats after a certain period due to the quality deprecation. On the other hand, a land never depreciates. Instead, holding on to the investment for a much longer time will generate a higher ROI. Evaluating resale status and span of investment, apartments are a better choice for immediate returns. While land is more suitable for building a residence.
Cost and Capital Leverage
Apartments and plots are priced differently due to their distinct characteristics. For instance, a piece of land is mainly valued based on the locality, size, and demand of the space while flats have additional price variables like the design, building materials, amenities provided and developer brand. Comparing a similar sized apartment and land in the same area, usually, the land will cost more due to its customizability and price appreciation factor.
Nonetheless, you can avail loan facility and choose the desired investment option by taking more risk. Usually, banks or financial institutions are reluctant to disburse loans for land purchase whereas getting a home loan (apartment) is relatively smoother.
Source of Income
As an investor, you can convert ready flats as a source of income almost immediately after purchase. Even if you buy the apartment using bank loans; monthly rents will be a supporting addition to the installments. Contrarily, converting the land into a source of income needs additional investments in most cases. Yes, you can lease lands to developers and rental income will be comparatively higher than of a single unit apartment. Involvement of developers surely increase cash inflow, however, also amplifies the chance of missing asset handover deadline. Thus, make up your mind and expectation out of the investment.
Risks Associated With Ownership
Purchasing any property makes you (and others) the sole owner of the asset. Any legal complications against the ownership will hamper you directly. Investment risks for apartments are much lower as developers handle the transaction, cutting down the risk of a scam. On the contrary, because of the low involvement of the mediators, land transactions are comparatively risky. To avoid any uncertainties, it is imperative to scrutinize legal documents via trusted experts before the purchase, regardless of the property type.
Liquidation of Apartment and land
Not necessarily a ready flat will appeal to the next potential buyer. They (buyers) might have to invest more and redecorate/modify/ reconstruct a new building; which is why finding new buyers can take a much longer time. Conversely, developers build apartments with standard designs and facilities, keeping the necessity of the target customer in mind. Thereupon, you can liquidize a flat much faster.
Then again, as a plot owner, you can make a higher cut in profit by injecting more capital and constructing multiple floors on the land. Selling out all the apartments in the building might take time. While the apartments get sold one by one, you get to enjoy rental income in the meantime from the unsold flats, generating a much higher ROI.
Referring back to the 1st point again, it is much crucial to define the purpose prior to figuring out the right investment option. Choose the best alternative based on your capital sourcing, liability management expertise, and ROI expectations. Being the number one real estate portal in Bangladesh, Bproperty is ready to provide any assistance you need to ensure a safe investment.