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Bangladesh’s real estate sector stands at a defining moment. With an annual housing demand of nearly 100,000 new apartments and rapid urbanisation, the sector holds enormous promise. Yet affordability, regulatory constraints, volatile economic conditions, and weak financing continue to hold it back.     As cities like Dhaka and Chattogram sprawl under population pressure, a more inclusive, well-regulated, and investor-friendly environment is crucial to unlock the sector’s full potential. Industry leaders and analysts agree that timely reforms and coordinated strategies are vital for steering real estate towards sustainable growth.   A Burgeoning Market   Over the past two decades, Bangladesh has seen unprecedented urbanisation, driven by rural-to-urban migration. Dhaka alone absorbs around 300,000 new residents each year, fuelling soaring demand for both residential and commercial spaces.   “We developers have the capacity to meet the entire demand,” said FR Khan, managing director of Building Technology and Ideas (bti). Yet the current supply meets only about 8 percent of annual demand, revealing both opportunity and inefficiency.   At the same time, housing preferences are shifting. Buyers are seeking wellness-focused, eco-friendly and community-oriented living rather than plain apartments, reflecting changing lifestyles and higher expectations.   Affordability and Rising Costs     Homeownership remains out of reach for most middle-income families due to high borrowing costs. Mortgage rates of 12 to 13 percent make long-term loans unaffordable, while the standard 30 percent down payment blocks many aspiring buyers.   In a high-inflation economy where daily living costs keep rising, saving for such an amount is nearly impossible.   “Even those with stable jobs and moderate incomes can’t commit to housing loans due to high rates and economic uncertainty,” said M Hoque Faisal, director of sales and marketing at Tropical Homes Ltd. “What we need is a subsidised loan scheme for the middle class—say, at 5 percent interest.”   Most banks cater to high-net-worth clients, leaving middle-income households with limited financing options. Without tailored financial products, millions remain excluded from the housing market.   Rising construction costs and land scarcity have worsened the crisis. Fluctuating exchange rates and higher VAT and customs tariffs on materials such as steel, lifts, and cement have sharply pushed up costs. The taka’s depreciation against the US dollar has further compounded the problem.   Land acquisition in urban areas is also becoming prohibitively expensive. “Shortage of land is making investors pay a fortune,” said M Mahbubur Rahman, CEO of Rupayan City. These twin pressures have squeezed developer margins and pushed housing prices even higher.   Economic and Political Instability     Real estate is highly sensitive to broader economic and political trends. Inflation, currency instability, and election-year uncertainty have all dampened investor confidence.   According to Bangladesh Bank data, outstanding construction loans fell to Tk 1.23 trillion during April–June FY2024–25, down from Tk 1.26 trillion in the previous quarter. Residential housing loans for urban buyers dropped by 3.96 percent, while infrastructure loans declined by 2.05 percent.   “Banks and developers are becoming increasingly cautious,” said economist Dr Masrur Reaz. “Commercial housing has shown resilience due to higher margins, but overall lending has slowed, signalling a contraction in the sector.”   The DAP Controversy   The Detailed Area Plan (DAP), introduced by Rajuk in 2022, has sparked heated debate among developers. The main concern is the Floor Area Ratio (FAR), which limits how many units can be built on a plot.   “While the DAP is academically sound, it doesn’t account for the dense, historic nature of Dhaka,” said FR Khan. “It’s based on planning models from low-density, developed cities.”   Since the DAP’s implementation, over 200 industries connected to real estate have been affected, according to the Real Estate and Housing Association of Bangladesh (REHAB). Landowners are increasingly reluctant to offer their property for joint ventures, citing reduced profitability under stricter zoning and height limits.   REHAB has formally urged the government to revise the DAP to reflect Dhaka’s ground realities and revive sectoral momentum.     Market Trends and Opportunities   Even as high-end housing demand cools amid declining purchasing power, the mid-market segment is expanding. Many people are investing in real estate to hedge against inflation, viewing property as a safer long-term asset.   Rental yields in Dhaka and Chattogram have remained relatively stable. The sector is also a major employment driver—ranking as the country’s third-largest employer—and supports industries such as cement, steel, transport, and home electronics.   In 2020, the government’s policy allowing undeclared income to flow into real estate channelled over Tk 20,000 crore into the sector, generating Tk 2,000 crore in tax revenue.   Sustainability: A Growing Focus   Environmental awareness is reshaping real estate practices. The Bangladesh National Building Code (BNBC) now promotes energy-efficient designs, rainwater harvesting, and sustainable materials. Green-certified buildings appeal to climate-conscious buyers and help developers access international green financing.   Policy Roadmap for Reform     To unlock the sector’s full potential, experts call for coordinated action between the government and private developers. Home loans must become more affordable through lower interest rates, while fixed-rate mortgage options can shield buyers from rate volatility. Raising loan-to-value ratios would let buyers borrow a greater share of property value. Bangladesh Bank could introduce targeted credit lines for first-time and middle-income buyers to expand access to financing.   Registration fees and stamp duties should be reduced to encourage participation in the formal housing market. Lower VAT and import duties on materials would cut construction costs. Tax rebates or subsidies for first-time buyers, especially from middle-income brackets, would make ownership more achievable.   The DAP’s FAR and zoning rules need to better reflect Dhaka’s urban density. Increasing FAR in suburban and peri-urban areas would promote growth beyond the city centre, while planning models should align with Bangladesh’s infrastructure capacity and population dynamics.   Investment in satellite towns equipped with schools, hospitals, markets, and transport links would ease pressure on Dhaka and Chattogram. Strengthening inter-city connectivity and ensuring public services and job opportunities outside major cities would support balanced regional development.   Licensing and