Bangladesh’s real estate sector, once a symbol of rapid urban growth, is now facing its most severe downturn in decades. Despite price cuts of up to 20 percent, sales of both under-construction and ready flats have dropped by nearly 50 percent since last year, realtors report.
The downturn is attributed to political instability, economic challenges, and regulatory barriers, creating a perfect storm for developers.
The sales decline is linked to political unrest triggered by last year’s student-led protests, which disrupted investments across the economy, with the housing market feeling the brunt more than other sectors.
Md Ayub Ali, Chairman of Oisi Properties Ltd., shared the gravity of the situation,“I have 10 ongoing projects in Dhaka, but sales are almost stagnant. Only a handful of apartments, priced between Tk 70-80 lakh, are being sold, mostly through installments.” “Compared to normal times, sales have dropped to just 20 percent of our usual volume.”
Developers point to uncertainty as a major factor, with many potential buyers holding back due to inflation and the economic slowdown. “Those with money are holding back, and inflation and the economic slowdown have increased stress on average families,” Ali explained. According to realtors, the stagnation is expected to continue until political and economic stability is restored.
Tighter regulations, restricting the flow of undeclared money into the housing market since July, have compounded the issue. Government officials, wary of scrutiny by the Anti-Corruption Commission (ACC), have refrained from investing.
Smaller developers face heightened financial pressure. Ali said, “Many developers are unable to repay their debts due to slowing sales. The liquidity crisis is making it harder to meet financial obligations.”
Luxury apartments, especially in prime areas such as Gulshan, Banani, Baridhara, and Dhanmondi, have been hardest hit. “Sales of luxury apartments have plummeted by as much as 80 percent,” said one realtor. “The key buyers—those with political ties—have almost disappeared from the market,” said a senior executive of a premium apartment construction firm, speaking on condition of anonymity.
“Even in 2023, I was selling luxury apartments to Awami League politicians and government officials at high prices. Now, it seems the market does not exist,” he added.
According to realtors, mid-range flats, popular with Dhaka’s growing middle class, have seen a 40-50 percent drop in sales. Lower-priced apartments, typically in high demand, have seen a 20-30 percent decline.
In contrast, commercial spaces have shown resilience, with only a slight dip in sales. However, concerns about payment irregularities for high-end commercial properties persist.
The real estate boom in Dhaka, which began in the 1990s, is facing its biggest test. The sector, which flourished with over a thousand real estate firms supplying 8,000–10,000 units annually, now faces a difficult recovery from the current downturn that followed a 40-50 percent price hike in just four years.
A significant factor in this downturn is the Detailed Area Plan (DAP) for 2022-2035, which has reduced the floor area ratio (FAR) for central Dhaka. Developers can now build only 60 percent of the floor space they were previously allowed.
This change has made joint ventures with landowners less attractive, and fewer new projects are being launched. The Real Estate & Housing Association of Bangladesh (REHAB) is lobbying for changes to the DAP, but bureaucratic delays have hindered progress.
The slowdown in housing sales is impacting industries closely linked to real estate, such as steel, cement, ceramics, and furniture, with reduced demand threatening broader economic consequences, including job losses.
“An extended downturn in real estate will not just harm developers—it will have a ripple effect across the economy, hurting employment, incomes, and other industries tied to construction,” said industry people.
Despite the challenges, some industry players remain cautiously optimistic. Demand for housing in Dhaka and other major cities is still strong, driven by urban migration and demographic pressures. However, recovery depends on political stability, economic improvements, and more flexible urban planning regulations.
“We are offering price reductions, flexible installment plans, and new designs to attract buyers, but the market is still slow,” said Emdadul Haque, Managing Director of Haque Homes Ltd. and a Director of REHAB.
“Even with a 15-20 percent price reduction, sales at my six Dhaka-based projects have only reached 30 percent of normal levels,” he added.
Haque pointed out that many buyers traditionally rely on bank loans to finance their purchases, but with the struggling banks restricting loan availability and the ongoing liquidity crisis, demand continues to stagnate.
“Currently, over 1,500 housing projects are under development by REHAB members in Dhaka, but 70 percent of these units remain unsold, costing realtors more,” said the REHAB Director.
Developers are facing an uncertain future and are now looking to policymakers for some policy flexibility and economic stability to revive the housing sector.
