How to Assess the Value of Commercial Real Estate in Dhaka
Commercial real estate in Dhaka has become one of the most profitable investment options for local and foreign buyers. The contributing factors to the demand for office space, retail space, and mixed-use developments are the rapid urbanization of the city, continued economic growth, and the development of new business districts.
One of the important aspects of investing is knowing how to assess the value of commercial property. In comparison to residential flats, where the location and amenities are the most important factor, more is involved with the valuation of commercial real estate, because numerous financial, legal, and market evaluations must be taken into account.
At BestBari, we guide investors to make educated real estate decisions. Here is a comprehensive approach to assessing commercial property value in Dhaka.
1. Location & Accessibility
Location is the most important variable in establishing the value of a commercial property. Commercial and business hubs, like Motijheel, Gulshan, Banani, Dhanmondi, and Uttara, can positively affect price due to interest and demand from offices, banks, and retail stores.
Key elements to verify:
Proximity to commercial hubs – When offices are near commercial or business centers, they will attract higher value tenants than offices located away from business areas.
Transportation access – Improving access by road, metro rail, or bus route, improves rental potential.
Surrounding infrastructure – The state of the surrounding stores, banks, and restaurants increase demand and rental price. Even a convenient market nearby, can have a notable impact.
Neighborhood planned infrastructure – Upcoming infrastructure projects in the vicinity (e.g., flyovers, or metro subway stations) can very likely have a large positive impact on future property value.
2. Rental Income Potential
The value of commercial property in Dhaka is directly linked to the consistent rental income that a property can provide. Investors often consider potential rental revenue earned through properties before proceeding with a purchase.
Current rental demand – Examine rental rates in the area with respect to average rate. For example, office property in Gulshan likely can generate more rental income than office property in Mirpur.
Tenant profile- Properties that are rented by reputable brands, banks, and multinational companies are higher in value.
Occupancy rates – Properties that are not vacant generally are in demand.
Lease terms – If the lease is long-term with the same tenant. This increases the level of security for the investment.
Tip: You should always review the rent-to-price ratio of this property and compare it to nearby properties to assure that the property is competitively priced.
3. Property Size, Layout & Usability
The worth of commercial property in Dhaka is directly associated with the ability of a property to produce even consistent rent. Often times Investors look at potential rental income a property may produce before moving forward on buying the property.
Current rental demand- Look at rental rates in the surrounding area, relative to average rate. For instance, office property in Gulshan likely has a higher rental income issue than an office property in Mirpur.
Tenant profile- Properties that are rented by recognized brand, banks, and multi-national companies generate higher value.
Occupancy rates- Properties that are not vacant are generally in demand.
Lease terms- If a lease is long-term, with an established tenant. This enhances your investment security of the investment.
Tip: You should always obtain the rent to price ratio of property and then compare that to the rent to price ratio of property nearby, so you know your property is priced effectively.
4. Condition of the Property
A well-kept property can vastly influence its value and rentability. Examples of spatial aspects to assess include:
The quality of construction – a strong foundation and modern structure will lead to tenants that pay more.
The maintenance history – a lack of maintenance can lead to expensive needed repairs.
The amenities available – elevators, backup generators, central air-conditioning, alarm systems, etc. These can increase appeal of the property.
5. Legal & Ownership Verification
In Dhaka, something very important during commercial property valuation is a clear title in the name of the seller. Properties with title disputes can often sell for lower price levels and come with higher risk.
1 Title deed verification – Confirming that the seller actually holds title in their name.
2 Mutation documents – Confirm that government land records have been also adjusted to note the transfer of the property.
3 Confirm Land use approval – This is to ensure you can legally operate your business when you take ownership of the property.
Mortgage status – Confirm the property is free and clear of prior owners financial liabilities.
💡 It is always best to consult with a real estate professional to review and approve any agreements
6. Market Comparisons (Comparable Sales Method)
The easiest way to estimate value is to compare the property with other comparable properties in the same neighborhood. Look at:
* Recent sales of office or retail properties that are similar in the neighborhood.
* Trends in price per square foot for properties in major commercial corridors and precincts of Dhaka.
* Changes in demand — demand for co-working space, for example, has been increasing in response to startup demand.
BestBari can provide you with detailed market analysis and comparisons to help flush out a realistic price.
7. Future Growth & Appreciation Potential
The potential appreciation of a property’s value largely depends on the trends of development in Dhaka. Factors include:
1 Future infrastructure development (such as expansions of metro rail lines and expressway projects).
2 Government plans – For example, taxes or a related policy to provide incentives in developed areas are often built into their future value.
3 Changes or trends of demand – For example, retail demand may increase if population demand increases in an area such as Mirpur or Uttara.
4 Properties in more developmental commercial areas, often provide higher (long term) apprecation.
8. Professional Valuation Methods
These methods are used by real estate professionals and investors:
– Income Capitalization Method = Values property based on expected rental income.
– Cost Approach = Values property based on current land value plus the costs to build it, minus depreciation.
– Market Approach = Values property based on assessing similar properties sold in that location recently.
If you have a significant investment, we strongly recommend engaging a certified property valuer in Dhaka.
Final Thoughts
Evaluating commercial real estate in Dhaka involves much more than determining the price per square foot. From location and rents to legal due diligence and future value, all factor into the real market value.
At BestBari we assist real estate investors, buyers, and sellers in navigating the complexities of the commercial real estate business in Dhaka. Whether you want to new office space in Gulshan, buy a retail shop in Banani, or build on what is being developed in Uttara, we have the advice you need.
BestBari can help you find the new commercial listing in our portfolio in Dhaka that will be your next investment opportunity.
