Land prices in Dhaka are currently on an upward incline, driven by a population growth that currently stands at over 20 million, says London-based Research Intelligence Unit
Dhaka’s residential real estate market enjoys a steady growth in demand due to various factors, with rising income levels spurred by a period of sustained high GDP growth rates being a significant contributing factor, reads a report.
This disposable income growth generates higher demand for better housing across certain residential market segments including land, gated communities and luxury apartments, the Bangladesh Real Estate Market Report 2021 adds.
The report was published recently by the London-based Research Intelligence Unit (RIU), which adds to their extensive collection of exclusive reports on Asia's real estate markets.
In addition to a rigorous analysis of the Bangladesh economy, the report highlights Dhaka’s burgeoning real estate market with insights into key market segments, including the luxury and semi-luxury residential apartment market, the commercial real estate market, hotels and bare lands.
The report also presents updated data on current real estate inventory and stock whilst forecasting growth corridors in the context of evolving consumer demand trends and mega infrastructure projects.
The impact of the pandemic on the market is also examined in the report.
RIU Chief Executive Officer Roshan Madawela noted that a “combination of fundamentals, including a dynamic and active diaspora, will ensure that the top end of the market will be in good shape for many years ahead.”
According to RIU classification, the demand for luxury and semi-luxury apartments in Dhaka is dependent on price, location, facilities, features, fittings and developer branding.
The market classification follows a three-tier system -- tier 1 (luxury), tier 2 (semi-luxury) and tier 3 (affordable luxury).
The report also shows that the cumulative supply of apartment inventory amounts to over 120,000 units.
Bangladesh’s retail supply is categorized into organized and unorganized sectors, depending on the target audience.
Traditionally, Bangladesh has favoured a more unorganized category, particularly owing to the low purchasing power that dominated the majority of the market, the RIU report adds.
However, recent changing dynamics, increasing product elasticity and increasing purchasing power are spurring growth in demand for organized retail, especially within the capital.
Dhaka is the central point for high-end shopping malls with its annual and cumulative retail supply for the last decade standing at over 4 million square feet.
However, it is not the same with Bangladesh’s cumulative supply of office space and the top end has remained largely unchanged with little or no significant supply additions, RIU further says.
It took over a decade for the Grade A office supply to double to 20,000,000 square feet which could have possibly stemmed from both developers and investors being more attracted to the residential sector that typically delivers a faster return on investment (ROI).
The recent, rapid growth in Dhaka’s hotel industry is emphasized by the availability of star hotels now when compared to a decade ago.
Although for a long time Bangladesh was not seen as a tourist destination, the hotel industry witnessed growth in both international and local tourism sectors in the past decade causing a further increase in demands for high-end, modern and luxury tourist accommodations within the capital, the report reads.
Land prices in Dhaka are currently on an upward incline, driven by a population growth that currently stands at over 20 million.
However, land availability in prime locations such as Gulshan, Banani, and Uttara is another determinant in the Dhaka real estate market price variations.
Local commentators say that land prices depend on mutual agreements between the developer and landowner and whether it is an agreement to completely sell the land to the developer or a joint venture, according to RIU.
In celebration of Bangladesh’s 50th Independence Day, the metro rail is expected to open by December 2021 and these developments are already impacting the upcoming supply of real estate assets, it adds.