Bangladesh's Residential Property Market Analysis 2025

Elevated construction costs and a slowdown in new development brought by administrative constraints continue to put upward pressure on apartment prices in the capital of Bangladesh, furthering the deficit of affordable housing amid rapid urbanization.

This extended overview from Global Property Guide covers key aspects of Bangladesh's housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Supply and Demand Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

A precise assessment of residential property price dynamics in Bangladesh is complicated by the duality of the market, split between rural areas dominated by mud houses and urban areas with a higher concentration of concrete housing (including apartment buildings), as well as the absence of official statistical reporting on price movements.

In the last few years, the Bangladesh Bank (BB), with technical assistance from the International Monetary Fund (IMF), has been working on the development of an experimental residential property price index (RPPI), focusing on the country's capital and largest urban agglomeration of Dhaka. The 2024 IMF report on the latest RPPI mission to Bangladesh mentioned the upcoming publication of the experimental RPPI for Dhaka; however, as of April 2025, the data has not been made publicly available yet.

At the same time, anecdotal evidence and assessments from local experts indicate a general upward trajectory for housing prices in Bangladesh, with especially pronounced growth observed in Dhaka, where scarcity of land available for new development and stagnation in project launches due to restrictions in the Detailed Area Plan (DAP) add to the pressure put on prices by inflated costs of construction materials and strong underlying demand fueled by urbanization.

"Due to already high costs of construction materials, even the cost of small flats now exceeds 75 lakh taka [USD 61,475]. The cost of large and medium flats has increased even more. Although the prices of the main construction materials, rods, and cement, have recently decreased slightly, it has not affected the completed flats. The currently ready flats were not built with lower-cost materials. As a result, sellers are being forced to sell them at higher prices," explained Md. Wahiduzzaman, president of the Real Estate and Housing Association of Bangladesh (REHAB).

According to the REHAB, elevated prices in the primary market stimulate demand for more affordable secondary properties in areas with public transit connections and reliable access to utilities such as electricity and gas, which in turn pushes up prices in this segment as well.

The research carried out by Global Property Guide in April 2025 found the average advertised apartment price for a 2-bedroom unit at USD 35,970 in Dhaka and USD 37,826 in Chattogram.

Average advertised apartment price, by unit type:

When it comes to residential hotspots within the capital city favored by affluent locals and expats, insights from the REHAB, cited by Jago News, show apartment prices in upscale areas of Dhaka grow by 25-40% in the last two to two and a half years, currently ranging BDT 25-35 thousand (USD 205-287) per sqf in Gulshan, BDT 20-25 thousand (USD 164-205) per sqf in Banani and BDT 17-25 thousand (USD 139-205) per sqf in Dhanmondi.

"Areas like Gulshan, Baridhara, and Banani are highly sought after due to their desirable civic amenities, which has significantly boosted demand and, consequently, prices. <…> The price increases in these areas have been exceptionally rapid over the last decade," noted Md. Wahiduzzaman of the REHAB.

According to Aysha Siddiqa, executive director of Building Technology and Ideas (BTI) development company, developers are also compelled to raise prices in these popular areas due to the demand for premium amenities, as the cost of development is significantly higher when larger plots are needed to accommodate these amenities. "The shortage of large plots suitable for modern buildings is a major factor driving up prices," she pointed out to The Daily Star.

Supply and Demand Highlights:

Deficit of Affordable Housing, Slowdown in Sales and New Development

The development of the housing market in Bangladesh in recent decades has been determined by rapid population growth and urbanization. According to the results of the latest population and housing census, the country's overall population expanded by over 93 million since 1974 and reached 169.8 million in 2022. During the same period, the share of the urban population increased from 8.9% to 31.7%. About 25% of Bangladesh's urban population is concentrated in its two largest cities: Dhaka, with 10.3 million residents, and Chattogram, with 3.2 million residents.

Data Source: BBS.

As of 2022, the total housing stock in Bangladesh stood at 35.6 million dwellings, of which about 8 million were urban dwellings. Only 22.5% of all dwellings are in stone/concrete structures (pucca), with a further 18.2% in structures of corrugated iron sheets (semi-pucca), and the remaining 59.4% represented by mud houses (katcha and jhupri).

The strong and growing demand for housing in cities across the country, created by rapid urbanization, has been outpacing new supply entering the market. The UN estimates the housing deficit in Bangladesh at about 6 million units, projected to rise to 10.5 million by 2030, with 70% of that unmet demand being for affordable options. The latest census data shows that over 1.7 million people in Bangladesh still live in slums, highlighting the urgent need for sustainable housing solutions.

A recent article on the issue in The Daily Star points out that Bangladesh requires around 100,000 new apartments every year, and while the developers believe they have the potential capacity to cover this demand, in reality, they are able to supply only 8% of the required units, leaving a substantial gap. Building density restrictions imposed by the Detailed Area Plan (DAP) in Dhaka, elevated costs of construction, and limited purchasing power of the population put a cap on the volume of new supply that can be delivered and absorbed by the market.

As a result, the residential sector as a whole is experiencing a slowdown in sales and new development, particularly in Dhaka. According to the REHAB data cited by Jago News, the average annual sales volume reached 14,000 apartments between 2017 and 2020 and 15,000 apartments between 2020 and 2022. More recently, against the backdrop of macroeconomic slowdown, domestic political turmoil, and the introduction of the new DAP, apartment sales dropped to about 10,500 units in FY23, 9,500 units in FY24, and about 4,000 units in the first six months of FY25.

Data Source: REHAB via Jago News.

The new Detailed Area Plan (DAP) for Dhaka, introduced in 2022 by the Capital Development Authority (RAJUK) was designed to regulate building height based on population density and civic infrastructure, prompting people to move to the outskirts as infrastructure expands. However, many industry experts argue that it has created ambiguities and disparities and severely impacted the industry. According to developers, the new DAP increased development costs and rendered a significant portion of building space essentially unusable for residential construction, causing businessmen and landowners to lose interest in launching new projects. According to the REHAB insights, the number of new development plans annually passed in each of the city's eight planning zones dropped from 2,000-2,500 to only 1,000-1,200 since the enactment of the new DAP.

"Academically, the DAP is sound, but it is based on models from developed countries. <…> For a 400-year-old city like Dhaka, you cannot implement such changes overnight, relocate all the people, and cut its density in half. Dhaka cannot afford to displace so many residents at once," FR Khan, managing director of BTI, told The Daily Star, adding that, if implemented, the plan will drive up land and apartment prices due to rising demand and limited supply.

The REHAB president, Md. Wahiduzzaman echoed this sentiment, saying to Jago News: "Due to this, everyone, including landowners, flat buyers, and sellers, is facing losses. We want DAP to be amended, otherwise, the housing crisis will increase, and house rents will also increase."

Looking ahead, FR Khan of BTI expects the next few years to be challenging for the industry but anticipates gradual stabilization of the market to begin within the next 18 months, as the macroeconomic landscape improves, inflation eases, and interest rates begin to decline.

Rental Market:

High Demand in Urban Areas and Consistently Growing Rents

The results of the 2023 Socio-Economic and Demographic Survey in Bangladesh revealed that 19.08% of households across the country were renting or sub-renting their dwellings. The share of paying tenants among the resident households was notably higher in urban areas (45.9%) than in rural areas (5.2%). In the Dhaka division, the share of households renting or sub-renting was 45%.

This substantial pool of tenants, especially in urban areas, maintains consistent demand for rental properties, which, coupled with high inflation, puts upward pressure on rates charged by landlords in the absence of enforceable rent control measures. SM Nazar Hossain, vice-president of the Consumers Association of Bangladesh, believes that property owners take advantage of housing undersupply and the lack of practical implementation of the existing Premises Rent Control Act. "If the act is enforced, then rent costs could be somewhat controlled," he said to The Daily Star in the fall of 2024.

The Daily Star article also points out that the consistently increasing house rents now outpace the growth of incomes and put an additional burden on the country's middle and lower-income people, forcing many to sublet, share housing, or seek affordable options outside of more expensive urban areas.

The latest available figures from the Bangladesh Bureau of Statistics (BBS) confirm that rents across Bangladesh continue growing at a steady pace. In the quarter ending December 2024, the nationwide House Rent Index (2021-2022=100) demonstrated a 0.50% quarter-on-quarter and 5.97% year-on-year increase. In Dhaka Division during the same period, the index registered a slightly more pronounced growth at 0.54% quarter-on-quarter and 6.20% year-on-year.

Data Source: BBS.

According to the research conducted by Global Property Guide in April 2025, the average monthly rent in Dhaka reached USD 173 for 1-bedroom units, USD 189 for 2-bedroom units, USD 247 for 3-bedroom units, and USD 515 for larger units with 4 bedrooms or more. In the country's second-largest city, Chattogram, the average rents were reported at USD 180 for 2-bedroom units, USD 222 for 3-bedroom units, and USD 452 for 4+ bedroom units. The corresponding gross rental yields averaged 6.87% for the capital city and 4.67% for Chattogram.

Mortgage Market:

Elevated Interest Rates and Limited Lending Volume

Following the political turnover in the country in August 2024, the new administration of the Bangladesh Bank (BB) continued to tighten its monetary policy, aiming to curb inflation, which at the time had reached double-digit values. The central bank's policy rate was raised by 150 b.p. in two consecutive hikes and reached its current standing of 10.0% in October 2024.

With inflation indicators stabilizing somewhat in recent months (albeit remaining elevated), the regulator is expected to maintain its policy rate at this level for the remainder of the financial year ending in June 2025. The most recent BB Monetary Policy Committee resolution in February 2025 kept the rate unchanged.

"Despite the recent moderation, inflation continues to exceed the target level for end-June 2025. Therefore, BB remains steadfast in its commitment to a tight monetary policy stance for the second half of FY25. <…> BB will persistently monitor inflation dynamics, recalibrate interest rates, and adjust liquidity measures as required," said the central bank in its latest monetary policy statement.

In line with the monetary policy trend, the weighted average interest rates on all categories of advances by scheduled banks and non-bank financial institutions (NBFI) in Bangladesh remain elevated, however, the previously observed pace of increases appears to be moderating. As of January 2025, the BB reporting shows the indicator at 11.89% for banks (up from 9.75% a year prior and 7.24% two years ago) and 13.78% for NBFI (up from 11.77% a year prior and 8.88% two years ago).

When it comes to interest rates on housing loans specifically, according to the available data from the BB, most state-owned banks offered this type of credit within the 9%-14% range in February 2025, while the offer from private banks varied from 10% to 18%. Interest rates on housing schemes by non-bank financial institutions announced during the same period ranged from 7.8% to 18%.

Data Source: BB.

Overall, despite demonstrating notable growth in recent years, the housing finance sector in Bangladesh is still in its early development stages, characterized by limited lending volumes and a relatively weak regulatory framework.

As of the end of the financial year ending in June 2023 (FY2023), the BB reported the total value of outstanding housing loans from banks and other financial institutions (including specialized lenders like the Bangladesh House Building Finance Corporation) standing at BDT 1,191 billion (USD 11.2 billion), up 12% since the previous year and 48% in five years. However, this combined loan stock (including credit extended to individuals and developers for residential construction, commercial housing, renovations and repairs, and other types of advances) made up only 8% of total credit to the private sector and equaled about 2.7% of the country's GDP in the corresponding financial period.

More specifically, the value of outstanding loans for flat purchase from scheduled banks and NBFI increased by 31% since the end of 2023 and by 106% in the last five years, reaching BDT 378.1 billion (USD 3.2 billion) or about 24% of all consumer credit in December 2024. The growth for this category of loans has been primarily driven by state-owned and specialized banks, which currently maintain about 44% of the stock, with the remaining share split between private banks (28%), NBFI (21%), and foreign banks operating in Bangladesh (6%).

Data Source: BB.

Socio-Economic Context:

Mounting Uncertainty Amid Slowing Growth and Civil Unrest

Bangladesh's real GDP growth decelerated to 4.2% in FY2024 (ended 30 June 2024), the lowest rate recorded in four years. This slowdown reflects the combined impact of sustained inflation, reduced consumer purchasing power, and contractions in both exports and imports. In its April Outlook, the Asian Development Bank revised its GDP growth forecast for FY2025 to 3.9%, down from 4.3%, citing "continuous economic challenges".

A moderate recovery is projected in FY2026, with growth expected to reach 5.1%. The IMF issued a similar forecast, anticipating a slightly sharper rebound: "Real GDP growth is projected to slow to 3.8 percent in fiscal year (FY) 2025 due to output losses caused by the public uprising, floods, and tighter policies but is expected to rebound to 6.7 percent in FY2026 as policies relax".

Inflation in Bangladesh remained elevated in FY2024, averaging 9.7% compared to 9.0% in FY2023. The increase was primarily driven by rising food prices, along with contributing factors such as electricity tariff hikes, volatility in global crude oil markets, and depreciation of the taka. In response, the Bangladesh Bank introduced a series of policy rate increases, raising the key interest rate to 10.0% by October 2024. However, inflation remained well above the official FY2024 target of 6.5%. While the central bank projects a gradual easing of inflation over the current year, significant risks remain due to external economic volatility and ongoing fiscal constraints.

Data Source: IMF.

The most recent labor market data from the World Bank's modeled ILO estimates indicates that Bangladesh's unemployment rate declined slightly to 4.20% in 2023 from 4.30% in 2022, continuing a slow recovery from the pandemic-era high of 5.30% in 2020. Despite this overall improvement, youth unemployment (ages 15-24) remains elevated at 11.5%, reflecting structural barriers to youth labor market integration. These include a misalignment between academic qualifications and market demand, contributing to growing discontent among young people. The disconnect between expectations and opportunities played a key role in the large-scale protests of July 2024 over civil service job quotas.

Data Source: World Bank.

The so-called July Revolution, a wave of nationwide protests triggered by a Supreme Court decision to reinstate a controversial quota system for government jobs, marked a turning point in Bangladesh's political trajectory. The student-led protests rapidly escalated, and violent crackdowns reportedly resulted in approximately 1,400 deaths, according to a United Nations report. Mounting public anger and international pressure led to the resignation of Prime Minister Sheikh Hasina on August 5, 2024, after which she fled the country. An interim government led by Nobel Laureate Muhammad Yunus was subsequently installed to oversee the transition. The political upheaval significantly undermined investor confidence, accelerated capital flight, and delayed external financial assistance, further dampening growth prospects and exacerbating inflation and unemployment.

By early 2025, Bangladesh's sovereign credit ratings were downgraded by all three major rating agencies amid heightened political instability, shrinking external buffers, and mounting macroeconomic vulnerabilities. Fitch Ratings lowered its rating from 'BB-' to 'B+' in May 2024, citing diminishing foreign exchange reserves and exposure to external shocks, while maintaining a stable outlook due to anticipated support from IMF-led reforms. Moody's followed with a downgrade to 'B2' in November 2024, assigning a negative outlook and flagging increasing liquidity stress and rising risks within the banking sector post-July Revolution. Similarly, S&P Global Ratings downgraded the country to 'B+' in July 2024, noting the adverse economic effects of political unrest, though it acknowledged early signs of stabilization driven by policy interventions.

Sources:

1. Bangladesh Bureau of Statistics (BBS)
   1. Population and Housing Census 2022, National Report Volume I: https://bbs.portal.gov.bd/
   2. Report on Socio-Economic and Demographic Survey 2023: SEDS_2023_Report_(Revised).pdf
   3. Price and Wages: https://bbs.gov.bd/
   4. Gross Domestic Product (GDP): https://bbs.gov.bd/
2. Bangladesh Bank (BB)
   1. Monetary Policy Statement January-June 2025: https://www.bb.org.bd/
   2. MPC Resolution, January 21, 2025: https://www.bb.org.bd/
   3. Monthly Economic Trends, March 2025: https://www.bb.org.bd/
   4. Announced Interest Rate Chart of Scheduled Banks: https://www.bb.org.bd/
   5. Announced Interest Rate Chart of Financial Institutions: https://www.bb.org.bd/
   6. Scheduled Banks Statistics October-December 2024: https://www.bb.org.bd/
   7. NBFI Statistics October-December 2024: https://www.bb.org.bd/
   8. Annual Report 2022-2023: https://www.bb.org.bd/
3. National Housing Authority (NHA)
   1. National Housing Policy 2016: https://nha.gov.bd/
4. Capital Development Authority (RAJUK)
   1. Detailed Area Plan 2022-2035: https://rajuk.gov.bd/
5. International Monetary Fund (IMF)
   1. Country Overview: Bangladesh: https://www.imf.org/
   2. Bangladesh: Technical Assistance Report-Report on Residential Property Price Index (RPPI) Mission (May 19-27, 2024): https://www.imf.org/
   3. IMF Reaches Staff-Level Agreement on the Third Review of Bangladesh's Extended Credit Facility…: https://www.imf.org/
6. World Bank
   1. World Development Indicators: https://datacatalog.worldbank.org/
7. United Nations Development Program
   1. Why Housing Matters: https://www.undp.org/
   2. OHCHR Fact-Finding Report: https://www.ohchr.org/
8. Asian Development Bank
   1. Asian Development Outlook (ADO) April 2024: Bangladesh: https://www.adb.org/
9. The UK House of Commons Library
   1. Bangladesh: The Fall of the Hasina Government and Recent Political Developments: https://commonslibrary.parliament.uk/
10. Fitch Ratings
    1. Fitch Downgrades Bangladesh to 'B+'; Outlook Stable: https://www.fitchratings.com/
    2. Uncertainty Remains Heightened in Bangladesh amid Political Transition: https://www.fitchratings.com/
11. Moody's Ratings
    1. Moody's Ratings downgrades Bangladesh's ratings to B2: https://ratings.moodys.com/
12. S&P Global
    1. Bangladesh Long-Term Ratings Lowered To 'B+' On Elevated External Vulnerabilities: https://disclosure.spglobal.com/
13. PropertyGuide
    1. Property Price Trends in Bangladesh: https://propertyguide.com.bd/
14. Asian Journal of Economics, Business and Accounting
    1. Challenges and Prospects of Housing Finance Sector: A Comprehensive Study in the Context of Bangladesh: https://journalajeba.com/
15. The Associated Press
    1. Turbulence in Bangladesh as New Government Grapples with Aftermath of Sheikh Hasina's Ouster: https://apnews.com/
16. The Daily Star
    1. BB to Hike Policy Rate in Two Phases to Fight Inflation: https://www.thedailystar.net/
    2. Policy Rate May Remain Unchanged: https://www.thedailystar.net/
    3. Rising House Rent Piles Pressure on Low-Income People: https://www.thedailystar.net/
    4. Increase in House Rent Puts Further Burden on Tenants: https://www.thedailystar.net/
    5. House Rent Saw Faster Growth in Oct-Dec: BBS: https://www.thedailystar.net/
    6. A Guide to Dhaka's Real Estate Hotspots and Their Property Values: https://www.thedailystar.net/
    7. Bangladesh Needs One Lakh Flats Annually: https://www.thedailystar.net/
    8. Who is Afraid of DAP?: https://www.thedailystar.net/
17. Jago News
    1. Real Estate Traders are Not Having a bad Time (BN): https://www.jagonews24.com/
    2. Crisis in Real Estate Sector as Sales Plunge: https://www.jagonews24.com/
    3. Realtors Struggle, Demand for Old Flats Surge (BN): https://www.jagonews24.com/
18. The Business Standard
    1. DAP Stalled 80% Construction Approvals for 2 Years: Dhaka Landowners: https://www.tbsnews.net/
19. The News International
    1. How Pakistan Can Fix Its Housing Finance Crisis: https://www.thenews.com.pk/