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Bangladesh’s real estate sector is sturdier than most sectors and has been growing steadily over the years. With constant developments, rising housing demand, and soaring per-capita income, it would not take much time for the market to become fully mature had it not for the pandemic. 

But thanks to all the initiatives taken by the government, the real estate sector has gotten back on the right track with a different momentum. That is to say, the newly implemented policies have not only impacted how we do real estate, but also redefined a few important aspects as well.  

So if everything stays the same, what does the future actually hold for the real estate business in Bangladesh?
What are the potential future prospects surrounding investment opportunities, government regulations, and other associating factors?
And what are the possible challenges that the real estate sector may face in the future?

Today, in this article, we will discuss everything from the present real estate market scenario to the future prospects.

Current situation

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The impact of the pandemic is pretty visible throughout the real estate sector

While it’s still unclear how much the pandemic has affected the real estate business in Bangladesh, it’s pretty evident that our lifestyle is not the same anymore.

Many people lost their jobs and incurred huge losses in their businesses because of back-to-back lockdowns and other measures that refrained people from engaging in any economic activity. In effect, it created a cash flow shortage that affected every industry and real estate is no exception.

But when the sector was about to get worse, the government came up with some much-needed timely measures to save it from the impact. 

The permission to invest untaxed income in real estate in Bangladesh, the implementation of single-digit interest rate, and the slashing of overall property registration cost from 14-15% to 10-11.5% of the total deed value are three of the most effective courses of action that our government took to keep the sector steady.

Soon after the legalization of undisclosed money in real estate, over BDT 3,200 crores was invested in the sector during the first six months of FY 2020-21 alone. And as everything starts to normalize, with reduced interest rates and registration fees, it is considered to be an optimum time for buying a house.

As a result, many people are resorting to banking and non-banking institutions for home loans and the real estate sector seems to be rebounding again. However, with the lowest interest rate of 4% and the maximum loan facility of 75 lakhs, it is the government employees who are greatly contributing to the real estate industry.

Future prospects

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Despite the hurdles, the future looks promising for real estate in Bangladesh

From where the current real estate business in Bangladesh stands, the future is looking great. The demand for housing is on the rise again. 

According to the Bangladesh Bank, the housing loan demand in FY 20-21 was BDT 1,544 billion which was 3.2 % higher than the last fiscal year. Meaning, more people are interested in buying real estate than ever. And with a single-digit interest rate of loans, this trend will not be slowing down anytime soon (unless of course there is a change of regulation in the next fiscal year).

Also, on the back of huge development initiatives taken by the government, the real estate business in Bangladesh is expected to thrive in the areas associated with the development. 

That is to say, areas like Purbachal, Bosila, Keranigonj, and the outskirts of Dhaka city where there is an abundance of underdeveloped spaces, which are yet to be fitted with modern urban infrastructures, are expected to experience a real estate boom in near future.

However, this can only be possible if the government takes necessary steps to promote essential amenities and facilities including educational institutions, healthcare facilities, and public transportations facilities.

The good news is, the government has already undertaken huge projects including roads and highways development and structured urbanization under Dhaka Structure Plan 2016-2035 to increase accessibility and livability inside Dhaka.

If things go as planned then, it will create new investment opportunities and lead people to ultimately invest in and around these areas.

Challenges

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With economic adversities come new challenges

However, the future of the real estate business in Bangladesh is not without its challenges. The continuous increase of raw material prices is becoming a matter of concern. 

When the pandemic was at its peak in 2020 and the entire world went into a lockdown state, it made it difficult to import scrap materials and similar necessary goods for producing steel, cement, and other construction materials. 

In effect, it made a serious dent in the construction industry and it negatively impacted all the related ancillaries. This made the raw material price go up by several folds.

Currently, according to a report published on the Daily Star in November 2021, per tonne steel will cost you BDT 77,500 and per 50kg cement will cost you BDT 430 which was BDT 53,000, and BDT 360 before July 2020 respectively; 46% price increase for steel and 19.4% for cement.

This, in turn, increases the overall price of the property. That is why, right now if you want to buy a newly constructed property, it can cost you more than a similar property constructed before the price hike, which creates an imbalance in the fabric of the real estate business in Bangladesh.

Another thing that needs to be surfaced is the proposed Building Construction Rules – 2021 in DAP(Detailed Area Plan 2016-2035). If it’s finalized, it can significantly drive up the price, which will impact both the buyers and the business.

Previously, you could build an 8-storey building with 13,500 sft. livable space on a 5 katha land by a 20 feet road, but now according to the proposed Building Construction Rules – 2021, you can only build 9,000 sft. in that similar building. 

Also, according to the Dhaka Structure Plan 2016-2035, you can’t build past a fixed limit (depending on the area). This also means that developers wouldn’t be able to make much profit out of selling apartments as they used to.

Final Thoughts

From pandemics and regulations to economic and political stability, there are hundreds of factors that can actively impact the real estate business in Bangladesh. It is really hard to predict when the real estate sector will veer away from the course and how everything is going to turn out. But if history is to be believed, the real estate business in Bangladesh will boom again.

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