Starting in March 2020, a series of blockades announced by the government to prevent the spread of the coronavirus in Bangladesh caused a collapse in the country’s economy. It has affected all kinds of businesses large and small. And the real estate business is no different.
The housing industry or the construction sector plays an important role in keeping the wheel of the country’s economy. There are around 458 sectors closely involved in this industry. The current Covid-19 disaster has brought the housing industry to a standstill like other sectors. In the first and second quarters of 2020, the entire housing sector came to a halt due to the lockdown which lasted for more than a month.
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However, the demand for apartments has increased due to lower interest rates on bank deposits and home loans. Many are now interested in buying apartments rather than renting them out.
Situation of real estate activity in Bangladesh before the pandemic
To understand the real situation, it will be necessary to go back to 2012. The recession in the housing sector started in 2012. The following year, the housing sector took a terrible turn because of the political turmoil.
During this time, many real estate companies were unable to find a client, even after reducing apartment prices. In addition, many buyers also canceled their reservations due to non-payment of down payments. After this turbulent period, the real estate business situation improved a little in 2016, but the crisis was not yet over.
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However, in mid-2018, it was announced to give home loans to government employees at 5% interest. The process of reducing the cost of registration also started in 2019. As a result, the housing activity was in a positive trend until Covid-19.
Current situation of the real estate market in Bangladesh
Market watchers say money is scarce for the common man. Mid-sized businessmen and traders have also been hit by the crown. Even then, the demand in the housing sector is increasing. In this trend of increasing demand, it is mainly civil servants who are in the driver’s seat. They buy apartments and land using government loans and other facilities. Market watchers say silver is scarce for the general public.
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Why is the real estate industry seeing an increase in Bangladesh?
Government employees have received housing loan facilities of up to Tk 70-75 lakh. This facility has played a big role in the expansion of land and apartment business as claimed by real estate companies. In addition, the approval of non-tax income investments announced last year has also played an important role in this regard.
After the announcement of this opportunity, more than 3,200 crore of tax-free investment was invested in the housing sector. In addition, measures such as 9% interest on mortgage loans, the reduction in the rate of property transfer tax from 2% to 1% and the reduction of the stamp duty from 3% to 1.5% have also played a role. a catalytic role for the expansion of the sector.
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Even before the outbreak, the housing sector was booming early last year. Despite the occasional outbreak, the market gradually recovered, improving the situation and using government facilities. Investments in this sector have been on the rise since the middle of last year.
Currently, this trend continues even amid new epidemics and lockdowns. According to “Bproperty,” an online real estate company, the housing industry has been on the rise since the second half of 2020. There is a huge demand for land.
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At the end of 2020, the demand for land has increased tenfold from the beginning. Investing in land is more profitable than real estate. As a result, the demand for land was high at that time.
However, land prices are still at an acceptable level outside of Dhaka, especially in areas like Purbachal. But even there it is growing rapidly. Therefore, many people are interested in buying land in these areas and this is expected to continue this year as well. People in general are also expected to start investing in earth after the corona effect is removed.
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The future of the real estate sector in Bangladesh
It is assumed that the situation in the housing sector returns to its previous level after the impact of the epidemic. Before the Coronavarus pandemic, many developers relied heavily on raising capital to sell apartments. The housing sector is facing a liquidity crunch as the number of buyers decreases due to the pandemic.
In addition, property owners have also been forced to significantly reduce apartment prices due to the drop in demand. Prices have not yet increased like the situation before the pandemic. Many see this situation as a possibility.
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According to real estate business owners, falling prices have created a new investment opportunity in the housing sector. Indeed, along with the economic recovery, house prices will also increase in the future.
The future of the real estate industry is very bright considering the future direction of human life. In the future, people will be able to create an opportunity for themselves and future generations by investing in this sector.
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Let’s do an analysis of the real estate company in Bangladesh by focusing on our macroeconomics. Unlike the developed world, real estate developers in this country are not dependent on debt. Typically, private sector real estate projects in Bangladesh are implemented through a joint venture with the landowner. However, much of the investment goes behind the land. Again, because of this joint venture, the industry is quite strong. Hopefully the Bangladesh real estate sector will be able to cope with the economic hazards caused by the pandemic situation.