The development of tourism and real estate in Bangladesh is intertwined and complementary. Businesses are investing heavily every year to attract more tourists. In return, tourism in Bangladesh is bringing millions of dollars worth of Foreign Direct Investment into the country. A significant portion of this FDI is invested back into the property market of Bangladesh.
The economic crisis of 2008 terribly shook global tourism down to its core making it a luxury only a handful could hope to continue experiencing. However, recovery has been significant over recent years. In 2017, the tourism industry alone contributed around 10.4% of global GDP. Bangladesh is an emerging economy with a growing tourism sector. The last year alone saw the tourism industry contribute around BDT 427.5 billion to Bangladesh’s GDP. As the economy continues its growth, tourism in Bangladesh is expected to flourish along with it.
Tourism is an essential part of the economy and has quite a few notable impacts on the development of the property market in Bangladesh.
Demand For Accomodation
Demand for accomodation in Chattogram and Dhaka is always high. However, according to the tourist police in Bangladesh, the number of visitors has recovered significantly since the Holey Artisan incident in 2016. In that year, the number of domestic tourists stood at around only 90,000. That number later grew to 3.5 crores within the span of just a single year. Similarly, the number of foreign visitors to Bangladesh had risen by 100,000 during the same period. Such an upsurge of visitors has created a massive demand for accommodations across the 80,000 tourist spots throughout the country. Growths like these indeed generate more opportunity for real estate in Bangladesh. Because of that, the demand for construction and renovation is expected to keep up and adjust with time.
Foreign Direct Investment (FDI)
Foreign investment is a major indicator of economic development. A country attracts more and more investment as it develops. And when FDIs are injected into an economy, the government and businesses get the necessary funding to sustain projects and undertake new ones. According to a report published by the World Travel & Tourism Council, Bangladesh attracted capital investments worth around BDT 83 billion in 2017 from the tourism sector alone. FDI is expected to increase by 8% in the next year and around 6.2% per annum over the next ten years. Similarly, demand in the real estate sector is increasing rapidly and Bangladesh needs to invest more in urbanisation. Thus, the positive growth of tourism will play a decisive part in real estate in Bangladesh as well.
Growth of the Hotel Industry
Bangladesh’s economy has grown steadily over the last few years and about 3.1 million people flew into the country for various purposes. The high hotel room rates in the country are a clear indication of the demand for international-standard hotels. Recently, several large local companies have agreed to invest in global hotel chains of prominent hospitality. Dhaka is expected to have six new hotels, with an approximate investments of USD 6.5 billion in the next couple of years. This is a great opportunity for the property market in Bangladesh. Such a massive investment in construction projects would not have been possible without the contribution of the tourism industry.
Infrastructural Development & Urbanisation
The growth of tourism in Bangladesh calls for infrastructural development and urban expansion mainly for two reasons, connectivity and accommodation. As the travel industry pushes for infrastructural development by constructing roads, highways, shopping malls, etc., the demand for real estate increases in the adjunct areas. Similarly, to cope up with need, cities expand as well. This expansion leads to further infrastructural development, and people start to move into newly urbanised localities like Uttara. In a symbiotic relationship, each ensures the progress and growth of the other.
Additional Business Prospects
With an influx of tourists not only do hotel and hospitality services see increased market prospects, businesses like restaurants, coffee shops, and apparel & footwear brands share the joy. Furthermore, locals start to adopt cultures and habits from visitors to the country. All this later leads to the expansion of these businesses. Manhattan Fish Market is a great example of successful foreign companies operating in Bangladesh and has even become a heavily trending place to eat in Banani. Their positive results encourage local entrepreneurs to open up their own ventures, creating the path for more industry.
Impact on Property Types
Hotels and other hospitality services are codependents with commercial properties. Foreign capital investment in businesses requires standard office space, preferably in more prominent commercial areas of Dhaka. This will lead to appearance of more construction projects over the coming years. Because of that, short-term rentals garner more demand among foreigners. So those who stay for shorter periods of time and mainly for commercial/official purposes. Luxury villas and penthouse apartments are also becoming popular among tourists. This is sure to boost development of the real estate market in Bangladesh.
Bangladesh is currently enjoying a growth spurt in the development phase. If the government and related businesses can capitalise on the growth, the property market in Bangladesh will reach new heights and provide a considerable contribution to the development of the country.
