Foreign investors put Tk30Kcr in real estate – more to come

Infographic: TBS

At a time when the global housing boom is running out of steam, Bangladesh has been on a hot streak with continued inflows of foreign investment in the real estate sector, thanks to growing demand.

Over the last 17 years, around 43 foreign companies from countries like Japan, Singapore, the UAE, Malaysia, Qatar, China and Korea have entered the country's thriving housing sector with investments amounting to Tk30,000 crore, according to the Bangladesh Investment Development Authority (Bida). 

Attracted by the strong housing market in Bangladesh, more and more foreign real estate companies continue to come in – as industry people say there is around Tk30,000 crore more in the pipeline that is expected to flow in next year.

Though the foreign investment in housing slowed in 2020 when Covid-19 had brought the economy to almost a halt for months, it returned to pre-pandemic level of Tk1,800 crore just the next year, according Bida statistics.

Not just that, a Singaprean housing firm has signed a project with a private entity, while another firm from the same country expressed its interest in a government township project – both in Dhaka involving Tk28,400 crore.

While inflow of foreign capital is believed to make housing affordable for homebuyers, the local real estate sector, however, fears it may create an unhealthy competition in their business.

The first large foreign investment in the country came in 2006 when Japan Taguchi Construction Co Ltd invested around Tk5,000 crore in Japan Garden City, a very large apartment complex in Mohammadpur, according to company sources.

In 2015, another Japanese company Creed Asia Company Limited jointly with Bashundhara Group made an investment of Tk3,000 crore in the Bashundhara residential area.

In the three years from 2015 to 2017, Rakeen Development Company from the Middle-East built 2,000 flats on 50 bighas of land in Mirpur with an investment of around Tk8,000 crore.

The company is now implementing another project named Rakeen Tranquil Town in Narayangaj's Kanchpur with around Tk3,000 crore, a high official of the company told The Business Standard.

Besides, many other foreign companies that have made investments jointly with local real estate firms include JCX Development, Japan Bangladesh Friendship Retirement Homes, China Garden City Developers Ltd, Asia Japan Real Estate, South Korean companies Hyosung Corporation and Daelim Corporation, and Tokyo Development Engineers Ltd.

The Japanese companies so far have made the highest investments at more than Tk10,000 crore, according to sources at foreign companies.

More investments from different foreign companies are now on the way. For example, recently, Singapore's Raffles Infrastructure Holdings Limited has entered a joint venture with the Army Welfare Trust, a major real estate deal, to build a Tk8,400 crore township, one of the largest housing projects in Dhaka.

The Army Welfare Trust owns the 51.93-acre project land in Baunia designated for the development of an integrated residential town, "Trust Green City", adjacent to Mirpur DOHS and Uttara in the north-west of the city. 

More than 5,000 apartments will be built there, each covering 600-4,000 square feet area, said sources in the know about the development. 

Besides, in 2014, another Singapore-based company, Platinum Holdings Ltd expressed interest to the housing and public works ministry in constructing around 10,000 flats in the Purbachal New Town Project on the outskirts of Dhaka.

Engineer Ujjal Kumar Mallik, project director of Purbachal New Town Project, told TBS that the Singaporean real estate company will invest Tk20,000 crore in the Purbachal new town as per a memorandum of understanding recently signed with it.

The company along with the government will begin construction once the remaining project work is finished, he noted.

Economist Dr Ahsan H Mansur told TBS that the inflow of foreign investment in the country's housing sector is good for both the economy and people as it will make housing affordable for a large section of people as well as provide the government with a large amount of revenue.

Besides, many people will get jobs in such housing projects, he said.

However, the Real Estate and Housing Association of Bangladesh (REHAB) is opposed to foreign investment in the housing sector.

REHAB President Alamgir Shamsul Alamin (Kajal) said inflows of foreign investments may lead to an unhealthy competition between domestic and foreign companies.