Bangladesh’s housing sector is facing a deepening crisis as new taxes, rising construction material costs, and higher electricity tariffs add pressure to an industry already struggling with a prolonged slowdown. Industry stakeholders warn that nearly five million jobs linked to the sector could be at risk if the current situation continues.
The real estate market has remained sluggish since the political transition in August 2024. Although national elections were held in February this year, the sector has yet to regain momentum. Developers say global uncertainties, including tensions between Iran and Israel, coupled with domestic economic challenges, have further weakened buyer confidence.
Industry leaders argue that the proposed taxes in the FY2026-27 national budget and the recent increase in electricity prices will significantly raise construction costs.
Md. Ayub Ali, Chairman of Aishi Properties, which is implementing several housing projects in Dhaka, said that despite completing a number of projects this year, the company has not sold a single apartment in the past five months. Under normal circumstances, several units would be sold each month, he added.
Meanwhile, Md. Shahjahan, Chief Operating Officer of leading real estate company Sheltech, said apartment sales have dropped by around 20 percent since the political change. He warned that higher taxes could further increase apartment prices, reducing property registrations and ultimately affecting government revenue collection.
The cost of producing steel rods, a key construction material, is also expected to rise. The proposed budget includes higher duties and taxes on raw materials used in rod production and seeks to increase VAT per tonne of rod from Tk 2,700 to Tk 3,400.
According to the Bangladesh Steel Manufacturers Association (BSMA), increased taxes and electricity tariffs could raise rod production costs by Tk 11,000 to Tk 12,000 per tonne.
BSRM Deputy Managing Director Tapan Sengupta said rod prices would be adjusted after the budget is finalized and in line with international raw material costs. However, he noted that the additional expenses would ultimately be passed on to consumers.
Real estate developers estimate that rising construction costs could increase apartment prices by as much as Tk 2,000 per square foot.
The proposed budget also introduces a new tax burden on landowners. Under the new rules, landowners entering development agreements will have to pay a 15 percent capital gains tax not only on signing money but also on apartments or other benefits received from developers.
REHAB leaders argue that the measure will significantly increase costs for landowners. They cite 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 representatives fear that the new tax regime could discourage investment, delay project implementation, and push homeownership further out of reach for middle-income families.
According to sector insiders, the housing industry has direct and indirect links with around 269 related industries, including steel, cement, ceramics, paint, transportation, and construction materials. As a result, a prolonged slowdown in the housing sector could have wider repercussions for the national economy.
