Let’s start with a fundamental question – Why would you invest in property? The most probable answer would be that an asset will give you a higher return over an extended period than a bank deposit. In short, we invest so that we enjoy greater asset value in the future. There are however many investment opportunities in the market with a critical decision being to decide upon the right opportunity. Also, timing is a very crucial factor in investment decisions as your return on investment (ROI) changes with time. An excellent example of this is the property market as the market value of a property fluctuates over time based on certain reasons.
Despite the risks, the property market has been a reliable choice of investment to Bangladeshi’s for a very long time mainly for two reasons. Firstly, there can be stable growth over a long period, and secondly, once you buy a property, it provides a sense of security in our society. Like every other industry, there are good and bad times to make an investment and property market has seen both over the years. This again leads back to our question – when would be the right time to invest in a property? The answer is right now.
Overview of The Property Market
According to a study by MTB, until 2015 the market size of the real estate and the rental business was BDT 540 billion with a market growth of 40% in just ten years. Now, consider the fact that, last year (2016) our GDP grew by 7.11%. Moreover, per capita income increased to USD 1,602. This means that shortly, there will be an influx of people joining the middle class. Undoubtedly they will have a direct impact on the demand for properties. Eventually, it will lead to an increase in the property prices and hence demand.
Impact of Urbanization And Demography In Investment
UNDP predicts that by 2020, 40% of our population will be urbanized. As more and more people are coming to Dhaka and other major cities, we need more rooms for these new city residents. According to REHAB, in 2016 the total number of unsold apartments came down to 27,185 from 35,000 with Dhaka alone having over 12,000 ready flats to be sold. This urbanization will undoubtedly be another contributing factor behind the increase in property demand. Hence increase in the property price in next couple of years as well.
Furthermore, the age of the population is also relevant as there is a significant portion of the population are young. They will undoubtedly drive the middle class in the coming years. Once they begin earning a salary, considering their taste and desired living standards this will provide a significant impact on the demand for property. Certainly, this will fuel the growth into new areas in the coming years.
Decline In Price & Interest Rate
If you have followed the news, you will be aware of the political instability that Bangladesh has seen recently. Sadly, one of the impacts is that it delayed individual’s investment decision which led to property prices reducing. Consequently, over the last three years, most property developers have seen a decline by as much as 25% of the value of the property to attract new investors.
The government has also taken initiatives by lowering interest rates to create a better environment for investments in Bangladesh. Given the combination of lower prices for property and lower interest rates, it appears to be an opportune time to consider purchasing that desired property or investment you have.
In summary, the property market has a bright future in Bangladesh. With with increased demand in the property market, prices are expected to rise over time. So what time can be better to invest in properties than now?