A sector under pressure, but supported by steady demand

The real estate sector is currently going through a difficult but necessary transition. Demand has not disappeared, but overall market activity has slowed amid high interest rates, rising construction costs, and a more cautious investment climate. The impact is most visible in the luxury segment, where apartment sales have declined significantly in areas such as Gulshan, Banani, Dhanmondi, and Khulshi Hills in Chattogram.

In my view, what we are witnessing is not a structural collapse in demand, but rather a crisis shaped by three interlinked factors: confidence, financing, and cost pressures.

The first and most immediate challenge is financing. Consumer purchasing power has weakened considerably. Home loan interest rates, which were around 9% at the beginning of 2022, surged to as high as 17% in 2024 and currently remain at around 14%. At these levels, long-term borrowing becomes extremely difficult for middle-income buyers, effectively narrowing the pool of eligible customers.

The second pressure point is rising construction costs. Over the past few years, prices of key materials such as steel, cement, bricks, sand, and stone have increased by more than 40%. This has significantly pushed up project costs across the board, limiting pricing flexibility for developers and affordability for buyers.

The third factor is confidence. In the wake of recent political and economic shifts, many potential buyers and investors have adopted a wait-and-see approach, slowing decision-making even where demand fundamentals remain intact.

Despite these challenges, I do not see this as a demand crisis. Bangladesh continues to urbanise rapidly, new households are being formed every year, and rural-to-urban migration is steadily increasing. These structural drivers ensure that long-term housing demand remains fundamentally strong.

When it comes to expectations from the new government, our outlook is practical and long-term in nature.

The first priority is affordable, long-term financing for the housing sector. Home loan rates need to be brought down to a sustainable level—ideally within 5%—with tenures extending 20 to 30 years. In most developed and emerging economies, housing is supported through targeted long-term financing because it is not just an asset class, but a basic human necessity and a pillar of social stability.

Bangladesh's banking system, however, remains heavily dependent on short-term deposits. This structural constraint has limited the development of a robust long-term mortgage market, despite housing loans being globally recognised as relatively secure, asset-backed investments with low default risk. A specialised housing finance framework, refinancing mechanism, or dedicated mortgage market is therefore essential to bridge this gap.

The second area is transaction cost rationalisation. Registration fees, stamp duties, and related charges on apartments and land should be reduced to more reasonable levels. Lower transaction costs would stimulate higher market activity, which in turn could broaden the tax base and ultimately enhance government revenue. The sector should be viewed not merely as a source of taxation, but as a catalyst for broader economic growth.

Third, there is a strong case for bringing underutilised or unproductive state-owned land into planned housing development. Through structured policies and public-private partnerships with experienced developers, such land can be transformed into affordable housing projects for middle- and lower-income groups.

At present, land acquisition constitutes a major portion of total project costs. If the government contributes land, developers can deliver quality housing at significantly lower prices. Such an approach would not only address a fundamental social need but also support planned urbanisation, employment generation, and wider economic activity. Several countries have successfully implemented similar PPP-based affordable housing models, and Bangladesh has a clear opportunity to adapt this approach.

Most importantly, the country needs a comprehensive National Housing Policy that provides a long-term roadmap for the sector. The guiding vision should be clear: "Home for All." Housing is not only an economic objective but also a foundation of dignity, social security, and inclusive nation-building.

On the question of investing undeclared income in the construction sector, any mechanism that channels idle funds into productive investment can support economic activity, but the design and safeguards are critical.

The recent budget provision allowing declaration of the difference between deed value and actual transaction value may help mobilise some unaccounted funds into the formal investment pipeline. Similar measures in the past have attracted significant investment and generated additional revenue.

However, two considerations are important. First, the overall tax structure must remain investment-friendly. Excessively high tax burdens risk undermining the intended impact. Second, such measures should be transitional in nature. The long-term goal must remain the development of a fully transparent, compliant, and accountable investment ecosystem.

Regarding CPDL's current operations and future direction, our focus goes far beyond constructing buildings. We are working to build an integrated ecosystem centred on lifestyle, community, and long-term value creation.

Our residential and mixed-use projects in Dhaka and Chattogram are progressing on schedule, with around 50 projects currently under construction. Across all of them, we have remained committed to delivery timelines and quality standards, even in challenging market conditions, because trust remains our most important long-term asset.

Looking ahead, we are moving beyond the traditional apartment sales model towards income-generating and investment-linked structures that allow customers to participate in broader value creation, not just ownership.

At the same time, we are investing heavily in property management, service excellence, digital transformation, and operational efficiency.

One of our key upcoming developments is the Mall of Chattogram, envisioned as a large-scale destination mall that will redefine retail, family entertainment, and urban lifestyle experiences in the city.

We are also expanding into hospitality and serviced living through initiatives such as Galleria – Your Second Home, which represents a natural extension of our real estate ecosystem.

The future of real estate will be greener, more technology-driven, and more community-focused. That is why we are prioritising solar integration, smart building systems, energy-efficient design, and enhanced property services.

Ultimately, every cycle of disruption also creates space for reinvention. Rather than viewing the current slowdown purely as a downturn, we see it as a period of structural realignment for the sector. With the right policy support, stronger consumer confidence, greater adoption of technology, and long-term planning, Bangladesh's real estate industry can emerge stronger and more resilient.

At CPDL, we are preparing for that future—not just to build structures, but to help shape better lifestyles, sustainable communities, and long-term value for generations ahead.