Are you confused about fractional investment in land vs. flats in Bangladesh? Know all the market trends and tips to choose the best investment for you.
Land vs Flat: Winner of Fractional Investment in Bangladesh
ByTamanna TazrinFebruary 17, 20247 min read
Investing in Bangladesh has become quite easy with fractional and micro-investment options. However, it can still be complicated for beginners. Recent economic developments have boosted the investment market. Also, bank loans are more accessible to investors. But people are confused about whether they should invest in land or a flat. However, both options have their benefits and drawbacks. The right choice will depend on factors like your budget, the location, and your long-term financial goals.
In this article, we will talk about the pros and cons of fractional investment in land and flats in Bangladesh. We will help you figure out which one might be the better investment for you.
Current Fractional Investment Scenario in Bangladesh
Fractional investment is a relatively new concept in Bangladesh. However, with the rise of fintech platforms and changes in regulations, it has gained traction in recent years. Bangladesh's investment market was dominated by large investors who could afford entire properties. But now, the fractional investment trend has become a viable option for beginners.
A recent study by the Institute for Planning and Development found that land prices in Dhaka have increased by up to 2,740% from 2000 to 2021. This means land prices have gone up over twenty-seven times. In comparison, flat prices have increased about seven times.
The highest increases in land and flat prices were seen in areas like Gulshan, Dhanmondi, Shantinagar, and Uttara. In Gulshan, a one-katha plot of land cost only Tk 25,000 in 1975. By 2020, the price had jumped to Tk 5 crore. Experts say the big increase in prices in these areas is mainly because of a shortage of land and a growing population.
High capital requirements and complicated property documentation processes have kept many people out of the real estate market for a long time. Here, fractional investment allows individuals to invest in a portion of a property. This system helped small investors to enter the market with the least amounts of capital with more options now available for micro-investment in both land and flats.
The future of fractional investment in Bangladesh looks promising with significant growth and change. The country has seen a major economic rise and improvements in infrastructure in recent years. This growth has attracted many local and foreign investors to grab new opportunities.
Bangladesh is experiencing more urbanization and industrialization than ever before. Many people are moving from rural areas to cities like Dhaka and Chittagong - two major industrial hubs of Bangladesh. This has led to increased demand for housing and future accommodation security. That’s why fractional investment in land or flats has become more popular.
No matter whether you're investing in land or a flat, it's important to understand the market trends and investment potential.
Benefits of Fractional Investment in Land
Fractional Investment in land includes several benefits. Some of them are -
Lower Entry Cost: Fractional investment in land helps you to invest with a smaller amount of money. It changed the traditional investment rules of investing lots of money upfront. Fractional investment lets you own a share of a property without flowing a huge amount of capital.
Minimum Risk Involved: Fractional investment allows you to spread your investments across different properties and locations. Thus, It reduces the risk of huge capital loss and provides a balanced investment.
Access to Premium Land: One of the major advantages of fractional investment in land is the flexibility it offers. You can invest in high-value lands in prime locations choosing from hundreds of options. In prime areas of Bangladesh, land prices have increased by 10-15% annually over the past decade.
Professional Management: Fractional investment comes with professional management services like Jomee Jomaa. They will handle all your paperwork and property maintenance, so you don't have to worry.
Emergency Liquidity: Platforms like Jomee Jomaa offer you the option to withdraw your investment in case of an emergency. You can sell your share and liquify it to a secondary marketplace if needed before the investment maturity term. You don’t need to worry about the current inflation as Jomee Jomaa offers an annualised ROI of up to 25%.
Long-Term Appreciation: Land tends to appreciate over time. When cities expand and develop, the value of land in good locations usually increases multiple times. This can make land a great long-term investment. You can sell your land share after a certain time when the land matures for the maximum resale value.
Lower Maintenance Costs: Land does not require the same level of maintenance as a flat. You won't have to worry about repairs, renovations, or maintenance. This can save money over time. Land is more sustainable to any environmental damage such as storms, floods, or earthquakes than a flat.
Scarcity Factor: Land is a finite resource, meaning there is always a limited amount available. This scarcity makes land a valuable asset. As the population grows, more land is needed for housing, businesses, and infrastructure. As a result, your invested land becomes more scarce, driving up its price.
No other investment can have this much flexibility to adapt to market trends, personal needs, or future opportunities.
Available Fractional Investment in Dhaka
Dhaka is the capital and the largest city in Bangladesh. Fractional investment in land in Dhaka can be a good idea due to the city's continuous growth. Areas like Uttara, Basundhara, and Purbachal are popular choices among them.
Right now, Purbachal’s land is in high demand, and its value will increase more after the Purbachal Model City project's completion. Investing in land in Purbachal can bring significant long-term gains.
You can start fractional investment in land with Jomee Jomaawith an exclusive 5 katha plot. These plots are in Sector 15 of Purbachal Model Town and start your fractional investment at just 1000 BDT for the maximum profits!
Benefits of Investing in Flats
Now let’s talk about the benefits of investing in flats.
Immediate Rental Income: Investing in a flat has the highest chance for immediate rental income. This can provide a steady cash flow for you.
Easier to Manage: Flats often come with property management services that handle maintenance and repairs. This can make it easier for investors who don't want to manage a property themselves.
Resale Value: If your invested flats are in good locations, they tend to have a high resale value. If the flat is located in an urban area, it mostly has easy transportation, schools, and shopping centers. As the demand for housing increases, the value of flats can rise.
Low Initial Cost: Investing a flat usually requires less initial investment than land. It makes the flat investment accessible to more investors.
Drawbacks of Investing in Flats
Some of the drawbacks of flat investment are -
Higher Maintenance Cost: Flat investment includes maintenance fees for services like security and common area upkeep. These charges can add up over the years and cost you more bucks.
Limited Control: When investing in a flat, you have limited control over the building's management and rules. Decisions about maintenance and other issues are made collectively, which can lead to disagreements or delays.
More Depreciation Risk: Flats can easily depreciate if the building is not well-maintained or if the area becomes less accessible to investors.
Land vs. Flat: The Ultimate Fractional Investment Winner
When it comes to fractional investment, land can be declared as the ultimate winner. Fractional land investment has a higher ROI due to its scarcity and appreciation potential. Land investment offers lower entry costs, reduced risks through diversification, and lower maintenance costs, making it an attractive option for fractional investors.
While flats may provide immediate rental income and easier management, they also come with higher maintenance costs, limited control, and depreciation risks. The appreciation of flat prices has been slower, averaging around 5-7% annually.
So, If you're looking for long-term appreciation, fractional investment in land is the better option. But If you need immediate rental income, a flat could be an alternative. However, think of your budget and long-term financial goals before making a decision.
FAQs
How to Choose the Location for Fractional Land Investment?
You need to consider factors like urbanization, infrastructure development, and market demand when choosing a location. Also, look for future resale value.
Are There Tax Benefits to Fractional Investing in a Flat or Land?
There might be some Tax benefits, but it depends on local laws. You can consult with a financial advisor for accurate advice.
Closing Words
By now, you must have understood the difference between Fractional Investment in Land vs Flat. Both of them can be a great way to build a secure financial base.
Fractional investment provides you with a steady income through value proportion with a long-term appreciation. Choose the right type of investment that meets your future needs and financial goals.
