The past year was topsy-turvy for real estate in Bangladesh. It started off with a lot of optimism, with the market on the up. The year looked to be a bright one for the real estate industry. And then everything came to a halt. The pandemic hit. Bangladesh’s real estate sector was badly hit by the pandemic at first. But slowly, thanks to certain initiatives from the government, along with an improvement in the situation, resulted in the market rebounding slowly from the effects of the pandemic. The real estate sector in Bangladesh saw a lot of activity in the latter half of the year, and showed signs of improvement. With the turn of the new year, the industry is looking to capitalize on these post-pandemic gains. Today, we will look at the things that will happen to the real estate market of Bangladesh in 2021.
Increase In Investment
One of the most important initiatives taken by the government to boost real estate investment last year was the allowance of investment of untaxed income into real estate. This has seen investments of over Tk3,200 crores of untaxed investment into the real estate market. With regulations changing in June, the months before that will see an increase in such real estate investments. Other important regulations, such as the reduction of interest rates of home loans to 9%, along with a reduction in land transfer taxes from 2% to 1% and stamp duty fees from 3% to 1.5% will also result in increased investment into the sector.
Changes In Regulation
In the latter half of 2020, the real estate sector saw a resurgence in activity. It is working its way towards complete recovery. But for this upward trend to continue, certain changes in regulations need to be made, so that the industry can grow further. Although the regulations that are already in place are adequate, there are still many barriers that prevent the participation of a large portion of our population in real estate investment. Removal of such barriers can greatly increase the amount of investment in real estate, further fuelling the growth of the real estate market in 2021. Current regulations that have been put in place can also be improved upon for the same effect.
Higher Demand For Land
As 2020 progressed, the demand for land increased greatly. Compared to the start of the year, the end of the year saw a ten-fold increase in the demand for land, according to our data. There is a good reason for that, though. Investing in land provides much greater returns when compared to investment in property. And although land inside Dhaka can be very pricey, land located on the outskirts of Dhaka, in places such as Purbachal, are reasonably priced. And the value of land there is also increasing at a very fast rate. This has resulted in greater enquiries for land in Purbachal, and other areas like it. This trend is expected to continue in the real estate market of Bangladesh in 2021. With the economy rebounding from the effects of the pandemic, more people will start to invest in land, especially in areas such as Purbachal.
More Affordable Homes From Developers
With the onset of the pandemic, the number of buyers in the real estate market declined greatly. But the number of flats for sale on the market remained the same. This resulted in far greater supply compared to demand in the real estate market. Many developers faced a consequent cash crunch, as they were relying on selling apartments to fund future projects. But with lower demand, they had to lower their apartment prices significantly. This makes it a great opportunity for those looking to invest in real estate, as prices will go up once the economy recovers.
Real estate has seen rapid recovery, thanks to certain policies such as allowing the investment of untaxed money, lowering of interest rates, and reduction of fees. All these policies, paired with a quick recovery of the economy, has helped the real estate sector bounce back strongly from the effects of a global pandemic and its economic fallout. With Bangladesh braced for an annual GDP growth rate of 6.8% per year between 2021 and 2025, the real estate sector won’t take long to go back to its previous state. Other industries related to real estate will also see a swift recovery this year. The real estate market of Bangladesh in 2021 is going to see a period of growth and recovery.
2020 was a turbulent year for real estate, with the pandemic affecting the industry greatly. But the end of 2020 saw the market recover. The real estate market of Bangladesh in 2021 will see continued growth, and will be a prosperous year for those involved in the real estate industry.