WHY REAL ESTATE IS ONE OF THE BEST SECTORS FOR INVESTMENT
In this era with a rapidly changing economy, which is particularly impacted by Covid-19, many of us are rethinking our venture plans or income sources. Despite the setbacks, the Real Estate Industry has not only persevered but, flourished too!In Bangladesh at the present, Real Estate Investment is among the most preferred choices for many Investors. In general, Real Estate Investment has always been one of the most lucrative and safest investment options all over the world. Let us explorethe top ten reasons as to why Investing in Real Estate is such a practical decision to take.
- Real Asset
The internationally renowned speaker on Real Estate, Grant Cardone, notably pointed out that, “Real estate is real, and it’s always a good idea to put your money in real assets.” Real Estate Properties, be it Residential or Commercial, are tangible assets and have a high intrinsic physical worth. Whereas the value of financial assets is contractual. This means, that they can lose their value at any time due to various factors like political unrest, economic depression, or even natural disasters.
- Basic Needs
One of the most important reasons to invest in Real Estate, especially in Residential Properties, is that it ensures our basic need for accommodation or shelter. It provides you with a space that you can utilize as you like. No other form of investment can directly benefit you like that.
- Capital Appreciation
The famous industrialist Andrew Carnegie once said that 90% of millionaires got their wealth through Real Estate Investment. This is very true in Bangladesh as well. Research Data from sources like the Real Estate & Housing Association of Bangladesh (REHAB) and Consumers Association of Bangladesh (CAB) shows that all property values have sky-rocketed in Dhaka City. To put into context, the price of land in the Gulshan area has increased at an extraordinary rate of over 1000% during the period of the 2000s to 2010s!
Over the past decade, infrastructural development works are taking place all over Bangladesh. Large areas are being Developed into self-sufficient gated communities like Rupayan City Uttara, Purbachal, and many more.It is crucial to invest during such a time with increasing economic activities. This is because, with more development works, GDP will rise, and hence the value of Real Estate will grow even more.
Even more, if you spend some more on improving your property, like conducting redesign and renovation works, you can force appreciate your asset value!
- Better Rate of Return
If we study the Capital Appreciation and consider the ROI of Real Estate Investment, and compare it with other forms of investment, it will be clear that Real Estate is the more profitable sector.The return from Interest rates by depositing money in Banks has been dropped from12%-10% to even 6% in many Banks. Shanchayapatra interest rates have also decreased to 10% from 12%, along with tax imposed on the gain.
On the other hand, as discussed in the previous point, the Real Estate Value has appreciated drastically over the decades yielding a much higher Return on Investment. Even the rental rates have risen by 388 percent on an average over the past 25 years.
- Diversifying Portfolio
An investment in real estate can also diversify your portfolio.A diversified portfolio means that your risks are spread out into different investments. The investments which are performing positively can neutralize the negative performances.Or you can exit any investments and focus on the more desirable ones. This is also important for those who do not want to deposit money in banks or receive interests from any sources from a religious standpoint.
- Steady Income Source
One unique advantage of Real Estate Investment is the ability to generate a steady earning source. Commercial and Residential Properties both can be a source of income for you. You can rent out your properties to tenants or for office space. Or you use it on your own and save recurring rental costs.
Real Estate provides a consistent income. Economic instability has minimal effect on it. It is much safer than many other investments. As discussed, the contractual value of financial investment might fall at any time, but the real value of your property remains. This is such an asset that cannot be stolen or lost. All these factors will make you feel financially secure.
It is also the perfect investment for retirement. Not only that, but it also secures the future of your next generations. Real Estate is such an asset that is long-lasting and secure that can serve for generations.
- Inflationadjusted rates.
Inflation erodes the real value of the investment returns over time. The Inflation adjusted rate is the actual return rate that would have been obtained without any inflation. It is seen that the inflationadjusted rate of return is higher for Real Estate Investment than that of other forms.This is because inflation can occur due to economic upswings, but during those times, the demand for Real Estate also increases.
One very crucial significance of Real Estate Investment is that you can mortgage your properties when needed. You can take a loan by mortgaging your apartment or commercial property. You can also easily leverage the property that you want to invest in, i.e., using borrowed money to buy the property.
- Self Esteem
Investing in Real Estate is a matter of prestige, it represents your social status. It helps you connect and grow with a community. It is something that you can enjoy with your family and your friends. It is ultimately an opportunity to own a property that can boost your self-esteem.
It is always pragmatic to allocate a portion of our wealth with the expectation of some sort of benefit in the future. Real Estate Investment does require a significant amount of financial resources, and one needs to consider a lot of factors before proceeding. Despite that, it remains one of the most attractive sources for investment due to its market stability, high ROI rates, steady returns, and of course, the sense of fulfillment of owning your property.