The cost of living in Dhaka is on the rise. Yet, the capital is growing rapidly at a higher pace than before. The impact of this growth has been on the real estate sector for quite some time. 2024 is a crucial year for the property market in Bangladesh. Alongside the national election, many other factors will decide the trajectory of the market. This article focuses on those details to help prospective buyers make an informed decision.

Primary Real Estate Market

Primary real estate consists of newly developed or under-construction properties. These properties are directly bought from the developers or construction companies. There are different types of properties available in the primary real estate market. Luxury, duplexes or studio apartments are widely available in the prime locations of Dhaka. These residences can be designed according to preferences. However, this market is significantly connected to the demand. With the increasing demand and a lower number of available land, the prices of brand-new apartments in Dhaka are increasing. Additionally, the price hike in construction materials worldwide is also affecting the construction sector, which ultimately has an impact on the prices of the properties. For these reasons, primary real estate markets require a larger budget these days.

Secondary Real Estate Market

The secondary real estate market is the resale or existing home market. Unlike the primary real estate market, the secondary market does not usually involve developers or builders. The deal involves individual homeowners, investors, or entities that have already purchased the property from a developer. However, the property conditions can vary widely in terms of age, condition, and maintenance. Renovation and redevelopment of some properties can make it as good as new. For these reasons, secondary properties are budget-friendly and provide an opportunity to own an apartment in Dhaka’s prime location.

Overall Real Estate Market Scenario

Considering the recent political movement and the national election of 2024, it was evident that buyers would hesitate to buy properties. It’s mainly because of the uncertainty during the election. The property purchase rate in 2023 slowed down at the end of the year and will tend to remain till the election. However, after the election, when the overall situation stabilizes, new and used apartments in Dhaka will see a rise in purchases. The secondary property market is anticipated to attract the most customers among these purchases. There are some important things that the real estate sector relies on. To analyze Bangladesh’s current real estate market, we need to consider these essential factors that influence the market and audience.

Supply and Demand Dynamics

Supply and demand dynamics are fundamental drivers of trends in the real estate market. Changes in these factors influence important factors like property price, construction activity, and overall market condition. As of 2022 data, the primary or brand new demand for housing in Bangladesh is 60 lakh units annually. In response to this demand, only 31,500 units are supplied. This high demand and low supply for a brand new property has impacted the overall price of the primary properties.

On the other hand, the secondary property market is much bigger than the primary market. It can meet the rising demand of the real estate market in Bangladesh. Additionally, different types of options are also available in this segment, providing budget-friendly properties for different kinds of needs. The availability of properties at reasonable prices has increased the popularity of the secondary property market in Bangladesh.

Economic Conditions

The economy is majorly connected to the real estate market. Economic indicators such as GDP, employment, manufacturing, and prices of materials have a direct impact on property pricing. Previously, Covid made the economic conditions worse for almost every country in the world. After finally somewhat recovering from the pandemic’s hit, the war between Russia and Ukraine has increased the cost of construction materials again. This price hike in the materials has increased the price of building construction by approximately 500 Tk per square feet. It is a clear indication that in 2024, newly constructed residential and commercial properties will be higher in price to cover the overall construction cost. In this case, individuals planning to purchase a property have to think about the secondary property. Since secondary properties were already developed before the price hike, they offer lower prices and a good location as well.

Government Policies

In the fiscal year of 2023-24, the government has changed the registration cost for purchasing properties. Previously, buyers were required to pay 15% of the property value for registration costs. However, with the new fiscal year, the registration cost has jumped to 19%. This means the more expensive the new apartment in Dhaka is, the more the buyer will pay for the property registration. Let’s say you want to buy a brand-new apartment priced at 2 crores. You will have to pay an additional 38 lakhs Taka just to register the property. This increase in registration alone can cost a large amount of money for people looking to purchase a brand-new property. Alongside the increased cost of construction, it is only logical for people to go for secondary properties to align their budget with the registration cost. Until the next fiscal year and a decrease in these associated costs, the demand for secondary property will keep on increasing.

Demographics

Demographics is another key metric to understand the property market trend. Factors such as urbanization, purchasing power, and economics influence the real estate market. As Dhaka’s population growth continues, the demand for housing is currently at an all-time high. However, one needs to pay a hefty amount of money to purchase the available options for new properties in established areas. For this reason, people opt for a used apartment for sale in Dhaka’s prominent area to make it affordable and live in an area that offers a proper residential environment. Additionally, these locations also offer proximity to essential amenities and convenient transportation.

Conclusion

The time after the election is crucial for prospective buyers considering residential or commercial space in Dhaka. To make informed decisions, individuals should carefully assess factors such as supply and demand dynamics, economic conditions, government policies, and demographic trends. Whether opting for a brand-new or used property, an understanding of these factors will contribute to more informed and strategic investment decisions.

Frequently Asked Questions (FAQ)

Which market is anticipated to attract the most customers post-election?

After the election, the secondary property market is expected to attract the most customers among new and used apartment purchases.

How does the increased registration cost affect buyers of more expensive properties in Dhaka?

Buyers of more expensive properties will incur significantly higher registration costs.

Why is the period after the election considered crucial for those planning to buy residential or commercial spaces in Dhaka?

The post-election period is crucial as the overall situation stabilizes, influencing the demand and pricing in the real estate market.

How does the increased registration cost align with the demand for secondary properties in the current market scenario?

The increased registration cost for new properties drives buyers towards the more budget-friendly secondary properties until associated costs decrease.