Looking back at the price growth of lands in the past, it is safe to say that investing in lands has always been profitable in Bangladesh. Over the years, land values in Bangladesh especially in megacities like Dhaka have experienced higher appreciation than most developed countries in the world. However, thanks to rapid urbanization, the land value in the outskirts of Dhaka has also increased a lot recently. Now if you are a real estate investor, you may wonder where it would be more profitable when it comes to investing in lands inside Dhaka vs outskirts. Short answer: It depends on the investment goal you have. However, you also have to consider some factors that actively impact the success of the investment. In this article, we have discussed all those key factors in detail and tried to portray a clear picture to help you pick the right location for your investment.
The differences in price play a massive role in deciding the investment location. Whether you are investing to develop the land or hold-and-sell, the natural tendency for most people is to get that piece of land as low of a price as possible. But there is another thing that is more important than the price; asset appreciation rate.
Not every area of Dhaka appreciates at a similar rate. According to REHAB, over the last few decades between 2000-2010, the land price in Mirpur and Uttara has grown by 471% and 650% respectively. But in that same time frame, Baridhara and Gulshan experienced a growth rate of 700% and 1,036% respectively.
For areas in the outskirts of Dhaka including Purbachal, Savar, and Keraniganj, the land prices have risen in these areas too but not as significantly. However, the scenario started changing recently. And demand for buying land on the outskirts of Dhaka has never been higher. For instance, Purbachal American City has experienced a price growth of 194.5% over the last 3 years.
According to the Bproperty database, the average price for every Sft of land in Purbachal stands at BDT 8,097 in 2021 which is on par with the average Sft price for land in Mirpur and Bashundhara R/A. On the other hand, in Savar, the average Sft price for land is BDT 2,245 which is actually 11% more than the average Sft price for land in Mohammadpur. If history is to be believed, the land value in these areas is bound to grow in the future; at a similar rate or higher.
The availability of land is another issue that directly impacts the investment decision. The supply of undeveloped assets like land is finite. This is also the reason why they possess intrinsic value and get benefited from inflation. But undeveloped lands are scarce in Dhaka. Either most lands are already occupied or undergoing development. And the ones that are still available are priced really high or have construction restrictions.
Although the scenario is not completely opposite in the outskirts of Dhaka, it is becoming more similar. People are becoming more and more interested in investing their hard-earned money into lands located in Savar, Keraniganj, Purbachal, and the areas on either side of Mawa Highway. The reason is simple, the demand for lands in Dhaka far outstrips the lands available in Dhaka. So when you are thinking of investing in lands inside Dhaka vs outskirts, take availability into account.
Depending on what your investment goal is, you may want to consider all the available investment opportunities before investing in lands inside Dhaka vs outskirts. If you want to buy and hold the land for the long haul and sell it when the time is right, investing in the outskirts is a better option. Because the opportunity for future and current value appreciation ratio is higher in the outskirts. But if you want to develop the land and build residential hotels or office spaces, investing in the outskirts may not be the best option. This is because there is less opportunity to develop a niche for these kinds of commercial properties.
On the other hand, if you want to build a residential complex for rental purposes, warehouses, factories, or recreational facilities, investing in the outskirts can get you a great yield or in some cases, it might even be the only option. However, as we have mentioned earlier, your investment goal plays an important role in determining the land’s location. So look for opportunities when it comes to investing in lands inside Dhaka vs outskirts.
What the future holds for a piece of land depends a lot on the future prospects and development planned for the area where the land is located. That is to say, if there is an ongoing development (road, infrastructure, and commercial) going on near the location of the land, chances are the value of the land will go up. That is exactly what happened in Bashundhara R/A.
According to a field survey conducted in 2008, the purchase value for a square meter of land was BDT 7792.54. But within 10 years’ time, the value for a square meter of land was raised to BDT 36,779. Although a lot of factors contributed to this price gain, it was mainly possible due to all the development that the area underwent at that time period. Now for areas like Purbachal which is located in the outskirts of Dhaka, you can expect a similar outcome as well considering all the ongoing development that the area is currently undergoing. So it is always wise to consider the future prospect of the area you are looking to invest in.
Every one of these factors plays an important role in determining your investment decision. A successful real estate investor will consider all of them before jumping into the real estate market. However, their impact in reality on the land can vary. For example, if the future prospects of an area are promising but have fewer investment opportunities currently, the land may still count as valuable considering all the prospects that are planned for the future. Hopefully, this article sheds some light on location selection and land investment.