Building costs surge 20% in a year, squeezing real estate

Construction costs in the real estate sector have soared by nearly 20% over the past year, directly affecting business operations, said M Hoque Faishal, director of Sales and Marketing at Tropical Homes Ltd, in an exclusive interview with The Business Standard's Foisal Ahmed.

How much have construction costs increased?

The cost of construction materials, particularly steel rods, has skyrocketed, with a tonne now priced at around Tk96,000 compared to Tk56,000-Tk58,000 just 18 months ago. Prices of other materials, including cement, tiles, and various construction essentials, have also surged.

Additionally, the cost of electromechanical products like lifts and generators has risen sharply due to the increasing dollar rate, as most of these items are imported. Local alternatives, especially for lifts, often lack the desired quality, making imports essential.

What has been the impact on business?

The surge in construction costs and product prices has significantly affected businesses, particularly in the economic or lower-range apartment market. Prices in this segment have climbed, making these units less affordable for buyers.

In contrast, mid-range and high-end segments have been less impacted, as buyers in these categories generally have more financial flexibility.

What are the current prices of different apartment segments?

Economic apartments are priced between Tk6,000 and Tk8,000 per sqft, mid-range apartments range from Tk9,000 to Tk15,000 per sqft, and top-range apartments are priced between Tk18,000 and Tk30,000 per sqft.

What kind of real estate projects are in demand now?

Condominium projects are currently in high demand. They offer numerous amenities, such as open spaces, gymnasiums, swimming pools, gardens, and walking areas — benefits particularly valued by Dhaka residents who are in need of relaxation and fitness facilities in an increasingly congested city.

Condominiums also offer buyers extended installment periods, typically two times longer than those available for standard projects.

Which apartment size is most in demand?

Mid-sized like three-bedroom apartments are the most sought-after in the market.

How many real estate companies operate in Bangladesh and where does Tropical Homes stand?

A total of 891 real estate companies are registered with the Real Estate & Housing Association of Bangladesh, with 100-150 actively engaged. Tropical Homes Ltd ranks among the top 10 in the industry, and our position is steadily improving as we continue to innovate and grow.

Why should customers choose Tropical?

Customers choose us for our commitment to quality and timely project handover. We have been operating for 29 years, and our reputation for delivering on promises has built trust with our clients. We also offer a wide range of products to meet diverse needs.

How many projects has Tropical worked with?

To date, we have worked on a total of 92 projects (already handed over 61 residential and 31 high-rise commercial buildings).

And currently, we are working on 26 ongoing projects, with another 10 in the pipeline.

One of our flagship projects is the construction of the tallest building in the country, a 45-story building with six basements in Malibagh.