Khulna, the country's third-largest divisional city, has been experiencing a significant developmental phase in the real estate landscape over the past decade. The dynamics of this progress are driven by factors such as the city's urban characteristics, consumer demands, and developers' involvement.

Covering an area of 65 square kilometres, the city is predominantly defined by low-rise buildings and abundant vacant land. Although official statistics are unavailable, market insiders estimate that around 50 real estate companies operate in the city, collectively developing approximately 500 apartments across 60 buildings.

"Since 2009, we have observed a growing demand for real estate-developed apartments, which took another five years to result in visible changes through construction. Over the last decade, the city has undergone a noticeable transformation, albeit not on a very large scale compared with Dhaka and Chattogram," said S. M. Nazimuddin, Associate Professor in the Department of Architecture at the University of Khulna, mentioning two fundamental pillars of real estate development: land and buildings.

The cityscape of the Notun Bazar area, with the Bhairab River flowing beside it.

"There is a huge scope for urbanisation. Eighty percent of the buildings in the city are one- or two-storey structures," he added.

Khulna's dynamics stand apart from those of larger metropolitan areas like Dhaka and Chattogram. Traditionally, residents of Khulna have not favoured apartment living. However, a noticeable shift in mindset has emerged in recent years.

Long-time inhabitants of the city are rarely seen buying apartments. "The apartment buyers are mostly new residents from surrounding suburban areas and professionals, particularly doctors, engineers, government officers, and bankers. Factors such as better educational facilities and the intention to move into the city are commonly observed," said an industry insider.

"When we started in 2014, we were doubtful whether we could sell apartments, as two or three Dhaka-based big companies had failed to complete their projects. The client base was extremely low initially, mostly consisting of networks of developers. It can be referred to as a push sale. Over the last 10 years, the number of clients has increased," said MD Atikur Rahman, Director of Operations at CDC Properties Bangladesh.

The iconic landmark of Khulna city, ‘Royeler Mor’.

For apartments, the Nirala and KDA-planned areas, as well as the first and second phases of Sonadanga, are highly sought after due to their civic amenities and prime locations compared to other areas within the city. These areas have seen heightened demand and, consequently, rising prices. Ahsan Ahmed Road, Shamsur Rahman Road, and Kabir Road, though established as older affluent neighbourhoods, continue to enjoy strong demand. Meanwhile, other areas of the city are also witnessing development, albeit at a slower pace.

Apartments are broadly divided into three segments, primarily differentiated by size, price, and location. Premium apartments typically range between 2,800 and 3,000 square feet and are located mostly in Sonadanga 2nd Phase and Nirala, with prices ranging from BDT 7,000 to 8,000 per square foot. The second segment consists of apartments sized between 1,400 and 1,500 square feet, costing around BDT 5,500 to 6,000 per square foot. Currently, flats of about 1,000 square feet are being sold for BDT 4,000 to 5,000 per square foot.

"The lower range of our flats is currently priced at around BDT 5,500 per square foot. When we began our journey as a real estate company in Khulna in 2011, the price was around BDT 1,800 to BDT 2,000," said Arshad Hossain, Director of Nandan Design & Development Ltd., a company that offers quality apartments with competitive pricing and sizes.

"Apartment prices are closely linked to the cost of land, which is also increasing in Khulna City, much like in other major cities across Bangladesh. Over the last five years, land values in these locations have risen by 30 to 50 percent," he added.

Other factors influencing the price dynamics of apartments include the rise in raw material costs and the sharing ratio with landowners. The price was around BDT 1,800 to BDT 2,000 per square foot in 2014. By 2015, it had increased to approximately BDT 3,500, and by 2019, the cost range was BDT 4,200 to BDT 4,500. "The rising cost of raw materials is impacting property prices in a pattern similar to Dhaka. However, the sharing ratio, which was 30 percent earlier, has now increased to 40 percent, significantly affecting price dynamics. In line with that, land prices have also risen by 30 to 50 percent. Now, one katha in prime locations such as Ahsan Ahmed Road costs around 70 lakhs to 1 crore," said MD Atikur Rahman of CDC Properties.

Mohammad Nagar area in Gollamari, located beside the serene Mayur River.

In 2024, the city has witnessed a boom in locally grown real estate companies. "Only four to five companies operating in the city are performing well, maintaining quality while meeting customer demand," said architect S. M. Nazimuddin of Khulna University. He mentioned that these companies are striving to build a market that is both demand-oriented and trustworthy.  According to market insiders, Sisvas Developments Ltd has established itself as a market leader, excelling in reliability and consistently meeting customer demand, alongside a handful of other companies.

The main challenge is the extremely high initial investment in Khulna, as it is difficult to find customers in the early stages. Additionally, the foundation cost is high due to the soil conditions.

"Trust plays a huge role, as the market is still growing. People in Khulna prefer to purchase projects with visible progress to assess whether the project will be completed. The sales ratio is higher in the later phases of a project. Supporting the initial investment is crucial for all companies here," said Atikur Rahman of CDC Properties.

Before purchasing any apartment, sector experts advise thoroughly checking the company's portfolio. "By violating rules and regulations and compromising on quality, many companies offer apartments at low costs, approximately BDT 1,000 per square foot," said an industry insider.

Real estate development is closely linked to the economic growth of a specific region. In this context, Tanjil Sowgat, Professor of Urban and Rural Planning at Khulna University, emphasised that Khulna, once known as a crucial industrial hub, has seen a decline. The other two important sectors—fisheries and secondary processing industries—have not experienced significant growth, and no new industrial base has emerged. According to a report by the Khulna Development Authority (KDA), the city's income-generating sector is primarily the service sector.

"If a city's regional economy is heavily dependent on the service sector, it lacks economic vitality. The city is somewhat stagnant in terms of development; it hasn't expanded. Since there is no demand, roads haven't developed accordingly. The vacant land within the city also isn't under much pressure. What happens is that whenever people have money, they invest in land on the outskirts of the city, ranging from lower-income to higher-income individuals. The investment ratio in land is higher compared to apartment-based development," he added.

A challenging aspect is that land development in the peripheral areas of Khulna city has occurred in a very informal and unstructured manner. Professor Sowgat noted that the way the city has been developing might bring irreversible challenges in the future, and some areas are already facing problems due to a lack of amenities, such as narrow roads.

"None of the housing companies selling land by creating plots have licenses from the Khulna Development Authority (KDA). Proper planning, enforcement, and the development of a strong economic base are crucial," Professor Tanjil added.

Architect S. M. Nazimuddin emphasised that educating the local population about matters associated with real estate development is paramount.

Market professionals and experts are hopeful that the development of communication infrastructure due to the Padma Bridge will play an important role in improving people's lives.

Photo Courtesy: Habibur Rahman