Ask an investor which city pays better, Dhaka or Chattogram, and the answer usually arrives as a single number: the rental yield. The number sounds scientific. It is a percentage, it can be ranked, and it invites a clean conclusion. The trouble is that rental yield is not a verdict. It is a starting point, and the things it leaves out are often the things that decide whether an investment works out.
The basic calculation is straightforward. Gross rental yield is annual rent divided by the property's price, expressed as a percentage. If a flat costs Tk1 crore and lets for Tk40,000 a month, the annual rent is Tk4,80,000 and the gross yield is 4.8 per cent. Net yield goes one step further: it subtracts annual costs — service charges, maintenance, repairs, insurance and tax where applicable — from the rent before dividing by the price. Both versions are useful. Neither is complete.
Dhaka and Chattogram differ in ways that make a direct yield comparison tempting but treacherous. Dhaka is the larger, deeper rental market: more tenants, more corporate demand, more churn, and purchase asking prices that, on Estate News tracker figures, reach Tk20,000 per square foot in Gulshan and Dhanmondi, Tk13,888 in Banani, Tk12,500 in Uttara, Tk9,865 in Bashundhara Residential Area and Tk8,700 in Mirpur. Those are asking medians from listings, not transaction prices, and not rents — but they illustrate the scale of capital a Dhaka buyer commits. Chattogram's market is smaller and more port-linked: demand follows trade, shipping, industry and the families connected to them, and its housing stock and tenant pool are shaped by that economy. A yield comparison that ignores those structural differences compares two different kinds of risk as if they were the same.
What yield includes — and what it misses
Yield includes rent and price, and that is almost all it includes. Consider what it leaves out. Vacancy is first. A flat that is empty for a month between tenants loses a twelfth of its annual rent, and in a thinner market that gap can stretch longer. A yield calculated on twelve months of rent for a flat that actually lets for ten overstates income by a fifth. Maintenance is second: lifts, generators, repainting and plumbing all cost money, and older buildings cost more. Tax is third, and its treatment depends on the owner's circumstances; a gross yield that ignores tax flatters every property equally, which is to say it flatters none of them honestly.
Then there is price risk, the largest omission of all. Yield says nothing about whether the property's value rises, falls or stays flat. A flat with a high yield because its price has fallen is not necessarily a bargain; it may be a warning. Conversely, a flat with a modest yield in a strong location may deliver most of its return through price growth over a decade — or may not. Yield also says nothing about liquidity: how quickly the flat could be sold, and at what discount, if the owner needed to exit. A property that cannot be sold without a long wait and a price cut is riskier than its yield suggests.
An illustrative worked example makes the point. Take, purely for illustration, two flats each bought for Tk1 crore. The Dhaka flat lets for Tk45,000 a month and the Chattogram flat for Tk38,000 a month. On gross yield alone, Dhaka wins: 5.4 per cent against 4.6 per cent. Now allow, illustratively, one month of vacancy and Tk1,20,000 of annual maintenance and service costs on each. The Dhaka flat's net rent falls to Tk4,95,000 minus costs in effect — more precisely, eleven months' rent less Tk1,20,000, which is Tk3,75,000, a net yield of 3.75 per cent. The Chattogram flat, with the same illustrative allowances, yields eleven months at Tk38,000 less Tk1,20,000, or Tk2,98,000 — 2.98 per cent. The ranking is unchanged, but the gap has narrowed and the absolute returns look far less exciting. Change the vacancy assumption — two months empty in Chattogram, none in Dhaka — and the gap widens again. These figures are illustrative only, not market data, and no market yield for either city is claimed here. The lesson is that the assumptions do the work, not the formula.
Why a single yield number misleads
A single yield figure misleads in at least three ways. First, it hides the quality of the rent. Rent from a long-standing corporate tenant on a multi-year lease is not the same as rent from a tenant who may leave at short notice, even if the monthly figure is identical. Second, it hides the quality of the price. An asking price is not a transaction price, and a yield built on an asking price moves the moment the real purchase price is known. Third, it hides time. Yield is a snapshot; property returns play out over years, through cycles of rent growth, cost inflation, interest-rate change and neighbourhood change. A snapshot cannot capture a cycle.
For a buyer comparing Dhaka and Chattogram, the better approach is to build a small, honest model rather than chase a headline number. Start with gross yield, then adjust for realistic vacancy, maintenance and service charges, and tax advice specific to your situation. Ask how long comparable flats in the area typically take to let, and what they actually let for — not what they were listed for. Look at the building: its age, its management, its major repair needs. Look at the tenant pool: who rents here, why, and how stable is that demand? And ask the hardest question: if you had to sell in three years, who would buy, and why?
There is also a human dimension that yield ignores. Managing a property from another city, or from abroad, adds cost and hassle that a local owner does not face. A Chattogram flat owned by a Dhaka-based investor, or a Dhaka flat owned by someone overseas, carries management risk that a yield figure cannot price. That does not make either city a bad choice — it makes the choice personal, dependent on the investor's location, time and tolerance for hands-on management.
None of this means yield should be discarded. It remains the quickest way to compare rental income against capital committed, and it is a useful screen: a property whose yield is far below comparable properties deserves a hard question about why. But a screen is not a decision. The investors who do best in either city are usually those who treat yield as the first question, not the last — and who insist on seeing vacancy, costs, tax, liquidity and price risk before they decide.
This article is general information only, not financial advice. Property investment carries risk, including the risk that rents fall, costs rise or a property cannot be sold quickly at the expected price. Take professional advice before committing capital.
Follow Estate News on Facebook for daily property, market and money updates: https://www.facebook.com/profile.php?id=61593817347872
