The country’s real estate market faces a downturn as the Detailed Area Plan (DAP) and soaring construction costs have stifled new projects, leaving sales stagnant. Over the past three months, sales have nearly ground to a halt, with only previous bookings being handed over. With demand shifting, old flat prices have risen as more people seek affordable housing options.
Decline in new flat sales
According to REHAB, the housing market once saw robust sales, with an average of 15,000 flats sold annually from 2010 to 2012, tapering to around 12,000 from 2013-2016. The years 2017-2020 saw an annual average of 14,000 flats sold, while sales inched close to 15,000 between July 2020 and June 2022. But the fiscal year 2022-23 witnessed a drop to around 10,000, and sales in 2023-24 slipped further below that mark. Since July, political instability has compounded DAP’s impact, causing monthly sales of 850 flats to plummet to virtually zero.
Realtor Kamrul Islam remarked, “The new DAP has led to project delays, and with high construction costs, sales have slowed drastically. We’re stuck waiting for the DAP approval while our investments sit idle.”
Rising prices despite material costs dropping
The construction season typically sees price hikes for materials like rod and cement. However, this year, prices of rod and cement have declined by five to seven thousand taka per ton and 10-15 taka per bag, respectively. Yet, other materials like sand, stone, and bricks remain expensive. “Even as rod and cement prices dropped, other costs stayed high, limiting any positive impact on project affordability,” said Aminul Islam, a construction materials supplier.
Escalating flat prices in key areas
Flat prices per square foot have surged across Dhaka’s popular neighborhoods: it hovers between Tk 26,000 and Tk 35,000 in Gulshan which was earlier Tk 20,000–25,000, in Banani, it is now Tk 20,000–25,000 which was earlier Tk 16,000–20,000, and it Dhanmondi not it is Tk 17,000–25,000 which was earlier Tk 12,000–18,000.
In peripheral areas like Mirpur, prices now range between Tk 6,000 and Tk 9,000, up from Tk 4,000–5,500 just three years ago.
Demand shifts to old flats
As affordability declines, more buyers are turning to older flats, especially in areas like Mirpur, Manipur, Badda, and Uttarkhan, where essential amenities are more stable. “Half my salary goes to rent. With family needs growing but income stagnant, I’ve opted for an old flat using savings and loans,” said Ahsan Ahmed, a banker.
DAP sparks controversy
The DAP, introduced in August 2022 by the Capital Development Authority (RAJUK), was designed to regulate building height based on population density and civic infrastructure. However, developers argue that the DAP has created ambiguities and disparities, which have severely impacted the industry. “Under DAP, 60% of building space is now unusable, affecting landowners, buyers, and developers alike,” said REHAB Vice President Liaquat Ali Bhuiyan.
While the authority has suggested a shift to the Floor Area Ratio (FAR) system to mitigate these issues, this adjustment has not significantly improved the market. “Unless the DAP issue is resolved, we’ll face more losses, with new projects stalled and costs sky-high,” Bhuiyan added.
A bleak outlook
The rising demand for old flats reflects a growing inability of buyers to afford new housing amid uncertain policies and high costs. Buyers like Sabiha Tanmoy, who had hoped to own a home, find themselves priced out. “I wanted to escape the cycle of rent, but my savings can’t keep up with the rising prices,” she said.
The market may stabilise if construction costs decrease and the DAP issues are resolved, but without intervention, housing affordability will continue to worsen.