Bangladesh’s real estate sector is facing mounting challenges as new tax measures, rising construction material prices, and higher electricity costs add pressure to an industry already struggling with a prolonged slowdown, sector insiders have warned.
Industry leaders say the current situation could threaten the livelihoods of nearly five million people employed directly and indirectly in the housing and construction sectors if conditions do not improve.
The property market has remained sluggish since the political transition in August 2024. Although the national election held in February this year was expected to boost economic activity and investor confidence, the anticipated recovery has yet to materialize. Business leaders cite global uncertainties, including tensions between Iran and Israel in the Middle East, along with domestic economic concerns, as factors discouraging potential buyers from making investment decisions.
The proposed national budget for fiscal year 2026-27 has further intensified concerns by introducing new taxes and increasing electricity tariffs, which developers say will significantly raise construction costs.
Mohammad Ayub Ali, Chairman of Aishi Properties, a real estate company implementing several housing projects in the capital, said the market has virtually stalled.
“Although construction of several projects was completed this year, not a single apartment has been sold over the past five months,” he said, noting that under normal circumstances several units would be sold every month.
Similarly, Mohammad Shahjahan, Chief Operating Officer of leading real estate company Sheltech, said apartment sales have declined by around 20 percent since the political changes in 2024.
He warned that higher taxes could increase apartment prices and further reduce property registrations, ultimately affecting government revenue collection.
The sector is also bracing for higher costs in steel production, a key component of construction. The proposed budget includes increased duties and taxes on raw materials used in rod manufacturing and proposes raising value-added tax (VAT) on steel rods from Tk 2,700 to Tk 3,400 per tonne.
According to the Bangladesh Steel Manufacturers Association (BSMA), the combined impact of higher taxes and increased electricity tariffs could raise production costs by Tk 11,000 to Tk 12,000 per tonne of steel rod.
Tapan Sengupta, Deputy Managing Director of BSRM, said rod prices would be adjusted after the budget is finalized, taking into account international raw material prices. However, he acknowledged that consumers would ultimately bear the burden of the additional costs.
Real estate developers estimate that rising construction expenses could increase apartment prices by as much as Tk 2,000 per square foot.
The proposed budget has also introduced a new tax provision for landowners involved in land development agreements. Under the measure, landowners will be required to pay a 15 percent capital gains tax not only on signing money but also on apartments or other financial benefits received from developers.
Leaders of the Real Estate and Housing Association of Bangladesh (REHAB) argue that the new tax could substantially increase costs for landowners. They cited an example where a landowner receiving 12 apartments in a 24-unit project, with a market value of Tk 120 million, would be required to pay approximately Tk 18 million in taxes.
Industry stakeholders fear that the new tax regime could discourage investment, delay project implementation, and push homeownership beyond the reach of many middle-income families.
According to sector representatives, the housing industry is linked directly and indirectly to around 269 other sectors, including steel, cement, ceramics, paint, transportation, and construction materials. As a result, a prolonged downturn in the real estate market could have broader implications for the national economy.
