The changing tides of real estate in Chattogram
The real estate industry in Chattogram has seen steady development over the years as the region is home to Bangladesh's premier seaport, which makes it a hub for various industrial activities, according to market players.
However, this is not to say that the growth came without challenges that persist even today.
For all latest news, follow The Daily Star's Google News channel. As per market research by Navana Real Estate, the industry began its journey in the seaside region back in 1988.
Although the Chattogram chapter of the Real Estate and Housing Association of Bangladesh (REHAB) currently boasts more than 83 members, roughly 15 to 20 of these companies remain active.
This is because many local developers face adversities due to the inflated unit prices resulting from high registration, raw materials, and other input costs.
As such, the active real estate companies are unable to meet even 30 percent of the demand in Chattogram, where about 150 projects are constructed annually with a combined market value of up to Tk 3,000 crores.
"The demand for flats is increasing every year with middle-income people being the main buyers," said Abdullah Al Harun Chy Mehedi, Senior Assistant General Manager and Head of Department (Sales) at Navana Real Estate, Chattogram.
Demand is mainly centered on flats ranging from 1,200 square feet to 1,800 square feet in size, which require investments of between Tk 75 lakh to Tk 1.2 crores.
Mehedi informed that apartment sales have been increasing by about 25 percent annually, with total investment in the industry expected to reach Tk 15,000 crores within the next 10 years.
"Investment in the housing sector would increase by about four times if all the ongoing government development projects in the greater Chattogram region are completed," he further said.
However, Mehedi also mentioned that the local real estate industry had collapsed by around 60 percent during the Covid-19 pandemic. Although the business returned to normalcy in 2022, the real estate market now finds itself in trouble again due to the ongoing economic slowdown, with the US dollar shortage and inflation having increased raw material prices.
Navana Real Estate started its journey in Chattogram in 2007 and has so far successfully handed over 13 residential projects while two others are underway.
One is a 10-story apartment complex at CDA Avenue, East Nasirabad of Chattogram city.
Once complete, the project will feature 27 units of around 1700 square feet each. The second project is another new residential complex in the Panchlaish area. The 12-story building will comprise about 44 apartments ranging from 1,900 to 2,000 square feet in size.
Citing how property registration fees in developed countries range between 4 and 7 percent, Mehedi informed that the high registration fee of 13 percent in Bangladesh deters customers from buying flats.
"If developers cannot get projects with the scope of public-private partnerships, then the flat cost will increase and buyers will be discouraged. So, if the registration cost cannot be reduced, there will be an additional burden that will decrease the sale of flats," he added.
Mehedi also explained that as the price of building materials and taxes are increasing quite fast, so are apartment prices.
"Besides, land owners don't want to sell plots at low prices, pushing up the acquisition cost day by day and thereby affecting the selling price of the flat," he said.
Mehedi also pointed to how the availability of home loans with lower interest rates would drive the demand for apartments among general customers.
Other than being home to the country's premier seaport, some development initiatives are underway across Chattogram. Additionally, foreign investment in different sectors of the local economy has also been expanding.
For example, the country's largest economic zone is being set up in Mirsarai of Chattogram while another economic zone is being built in the Anwara upazila with Chinese funding.
Moreover, the completion of the Bay Terminal and Karnaphuli tunnel projects are set to turn Chattogram City and Anwara upazila into "One City, Two Towns" as is the case in Shanghai, China.
Against this backdrop, it can be considered that the growing employment opportunities facilitate the need for more housing, Mehedi mentioned.
"But the required quantity of apartments is not being built," he pointed out.
Other industry people echoed the same, stating that while the real estate industry in Chattogram is booming, only two to five big real estate companies are currently active in the region.
However, they also said that customer demand in Chattogram is gradually shifting to the premium segment, as is the case in Dhaka, with people looking for more sophisticated units.
As such, developers have started using environmentally friendly materials while also ensuring upscale facilities such as indoor recreation centers, swimming pools, rooftop gardens, and more.
"The Chattogram scene is booming with many companies from Dhaka now looking to open operations in the region," said Shahriar Iftekhar, Senior Executive of Branding and Communications at Bay Development.
"So, further growth in the Chattogram market is imminent," he added.
Abdul Kauiam Chowdhury, a former Vice-President of REHAB, noted that not only in Chattogram, but the country's overall real estate industry is struggling from a lack of government support.
"The government should allow the use of undisclosed income for purchasing property as the money ends up leaving the country otherwise," he said.
"Besides, the process for land and property registration should be easier to boost activities in the sector," Chowdhury added.
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