The real estate market in Bangladesh is experiencing a slowdown as rising construction costs and regulatory challenges drive buyers toward older flats instead of new ones.
Rising Costs and Regulatory Hurdles: The high cost of construction materials over the past few years has significantly increased flat prices. Despite a slight drop in material costs since August 2024, stability has yet to return to the sector. The implementation of the Detailed Area Plan (DAP) and Floor Area Ratio (FAR) regulations has further impacted new housing projects, leading to fewer approvals and a surge in prices for ready flats.
According to REHAB (Real Estate & Housing Association of Bangladesh), construction costs have risen by 25%, making it difficult for developers to offer affordable pricing. Many small developers are struggling with financial pressure, with some even selling flats at a loss to sustain operations.
Market Trends: Buyers Shift to Old Flats: With new flats becoming increasingly expensive, many buyers are now turning to old or pre-owned apartments. Housing entrepreneur Kamrul Islam shared that while material costs have recently decreased, developers had purchased them at peak prices. “Selling at a lower price would mean financial losses,” he said.
Another developer, Mahmud Hasan, pointed out that political instability has worsened the situation. “If the overall situation does not improve, the housing sector could face a serious downturn,” he warned.
Flat Sales Declining: REHAB data shows a downward trend in flat sales:
2010-2012: 15,000 flats sold annually, 2013-2016: 12,000 flats sold annually, 2017-2020: Sales rebounded to 14,000 per year, 2022-23: Sales dropped to 10,500 flats, 2023-24: Further decline to 9,500 flats, First half of 2024-25: Only 4,000 flats sold.
Flat Prices across Dhaka: Gulshan-Banani: Now Tk 25,000-35,000 per sq. ft. (up from Tk 20,000-25,000), Dhanmondi: Tk 17,000-25,000 per sq. ft. (up from Tk 12,000-18,000), Mirpur: Tk 6,000-9,000 per sq. ft. (up from Tk 4,000-5,000), Banasree-Aftabnagar: Tk 8,000-10,000 per sq. ft., Uttara: Tk 7,500-13,000 per sq. ft.
REHAB Urges Amendment of DAP to Prevent Housing Crisis: The Real Estate and Housing Association of Bangladesh (REHAB) has called for an amendment to the Detailed Area Plan (DAP), arguing that its current provisions are discriminatory and detrimental to the housing sector.
DAP’s Impact on Construction and Housing Market: REHAB President has stated that DAP, which came into effect in August last year, has imposed different construction limits for planned and unplanned areas. This, he claims, has led to a 60% reduction in the allowable building area in most locations, negatively affecting landowners, developers, and flat buyers.
“The new DAP has created an imbalance in the housing sector. Due to this restriction, landowners are getting fewer benefits, flat prices are rising, and real estate businesses are struggling. If this is not amended, the housing crisis will intensify, and house rents will also increase,” said the REHAB President.
Housing Sector under Pressure: The reduced building area under DAP regulations means fewer flats can be built on the same plot size. With fewer new projects, demand is rising, leading to higher house rents and flat prices. Many developers are reluctant to invest in new housing projects due to the limited profitability under the new rules.
Call for DAP Amendment: REHAB and real estate stakeholders have urged the government to reconsider DAP to make it more investment-friendly and prevent further deterioration of the housing market. Without changes, they warn that both flat buyers and renters will face rising costs, exacerbating the housing crisis.
Future Outlook: Industry experts say that unless the government addresses DAP and FAR-related challenges, the housing sector may continue to struggle. Liaqat Ali Bhuiyan, Chairman of Brick Works Limited, stated, “New project approvals are not happening due to these restrictions. Although material prices have dropped slightly, the market remains unstable.” If the current crisis continues, the housing sector may see further declining investments and sluggish sales, impacting the overall real estate industry in Bangladesh.
