Market analysis of AAC block in Bangladesh: Demand, supply, and challenges
Walk around any construction site in Dhaka these days and you’ll notice something different. Next to the usual stacks of red clay bricks, you’ll often find pale grey blocks—lighter to lift, smoother to lay, and built for modern projects.
These are AAC blocks, or Autoclaved Aerated Concrete blocks.
Not long ago, they were almost unknown in Bangladesh. Today, they’re shaping into a million-dollar business. In this blog, we will show you a market analysis of AAC blocks in Bangladesh.
The market at a glance: Production demand and supply
Let’s be honest, demand is not the problem. From large government buildings to small housing projects, everyone is looking for AAC blocks. The trouble is supply. Bangladesh has only a handful of factories producing AAC, and
that’s nowhere near enough. As a result, the overall market share compared to clay bricks is still small.
The demand curve for AAC blocks is steep. In fact, AAC blocks first appeared here around 2021, and within less than a few years, the market has exploded. A shortage of suppliers and massive opportunities mean the market is calling
for almost 200 new plants.
Zihan Tech started serving in construction material machinery back in 2011 and now leads the AAC machinery market with integrity and confidence.
Geography Analysis
The market is anticipated to be driven by the growing need for affordable buildings and the rapid urbanization of the world. Asia-Pacific held 46.78% of global revenue in 2024 and is accelerating at a 7.28% CAGR to 2030.
China and India anchor demand, driven by housing mega-projects and state infrastructure pipelines. Bangladesh Government incentives for low-carbon building methods further tip specifications toward AAC.
Details
2021
2025
CAGR
Global AAC Market Sales Revenue
$14.7 Billion
$18.8 Billion
6.4%
Asia Pacific AAC Market Sales Revenue
$5.5 Billion
$7.1 Billion
7%
Europe AAC Market Sales Revenue
$3.7 Billion
$4.7 Billion
6.2%
America AAC Market Sales Revenue
$4.4 Billion
$5.5 Billion
5.9%
Why are AAC blocks in demand?
Nowadays, people are realizing AAC isn’t just about being eco-friendly. It’s about building smarter, faster, and cheaper in the long run.
Green building pressure: Construction is one of the biggest contributors to environmental damage. AAC blocks fit perfectly with the global and local push for greener solutions.
All project types: Residential apartments in Bashundhara, commercial plazas in Gulshan, or industrial setups in Gazipur—AAC blocks fit across the board.
Cost savings long term: While initial purchase cost is higher than red bricks, AAC blocks save 15–25% on structural cost, cut cement use by 10–15%, reduce mortar needs by 70–80%, and plaster by up to 60–70%.
The challenges holding growth back
There is a huge demand and opportunity for AAC blocks in local Bangladesh. Some challenges are holding back the growth of the AAC block market. The government is actually encouraging AAC because of its eco-friendly production.
Awareness: Many homeowners and small builders don’t even know what AAC blocks are, let alone why they should pay more upfront.
Skilled labor: Working with AAC requires slightly different techniques. Without proper training, masons often stick to what they know: clay bricks.
Limited production: With only a few factories in place, supply is nowhere near enough to meet demand.
The government policy for the AAC block
The government of Bangladesh is pushing for eco-friendly construction. It’s rare to see such a direct push. That’s why AAC is not just a market trend—it’s becoming a policy-backed necessity.
In 2024, the government issued a gazette banning the establishment of new clay brick factories. That’s a clear signal: the future is with alternatives like AAC.
VAT has been waived on AAC block sales, making them more attractive to buyers.VAT has been waived on AAC block sales.
The Public Works Department (PWD) has already committed to using AAC in state projects. The roadmap is clear: 20% of government construction by 2025–26, scaling up to 100% by 2031–32.
Competitive landscape
Unlike red bricks, where thousands of kilns fight for a share, AAC is a very different scene. Imported blocks are available but are priced too high for mass adoption. That’s why local production is the only sustainable solution. The
key player is Zihan Tech, the sole company in Bangladesh providing AAC block machinery, particularly through its DONGYUE production lines.
Mini line: 50,000–100,000 cubic meters per year
Small line: 100,000–200,000 cubic meters per year
Medium line: 200,000–250,000 cubic meters per year
Large line: 300,000–600,000 cubic meters per year
Super large line: 600,000–10,00,000 cubic meters per year
Pricing and cost factors
AAC blocks cost more upfront compared to red bricks. But the cost savings on construction materials and long-term efficiency make up for it.
15–25% less structural cost
10–15% savings on cement
70–80% less mortar use
60–70% less plaster requirement
Add to that reduced construction time and better thermal performance in our hot and humid climate, and you start to see why developers in Dhaka, Chattogram, and
Sylhet are warming up to AAC.
The future of AAC block and customer perception
Many still see red bricks as the “real” building material. Changing this mindset will require education and awareness campaigns. The market growth ahead looks strong. With demand already huge and supply still catching up, AAC is entering
what analysts call the “growth acceleration” phase. Here are the main factors that indicate the potential future of AAC block:
The Government has already issued a gazette notification banning the establishment of new clay brick factories.
Due to a shortage of land for soil mining, licensed brick kilns will face increasing difficulties.
As major government projects commence, demand for AAC blocks will rise significantly.
By 2025, government projects will make AAC more visible.
By 2030, AAC will become the standard.
Bangladesh may export AAC blocks to Nepal and Myanmar.
With the right investment, Bangladesh even has the chance to export AAC blocks to nearby countries like Nepal and Myanmar.
The role of Zihan Tech
Zihan Tech is the backbone of AAC growth in Bangladesh. We are the only official business partner of the Dongyue Group in Bangladesh. We have
given local investors the tools to set up factories across the country. Any organized company can use these machines not only for local supply but also to tap into export markets. That’s how industries grow.
Dongyue is one of the leading German standard AAC block machinery manufacturers in China. As their sole supplier, Zihan Tech provides all the related machines and client support for factory arrangement.
Yes, the initial cost is higher. But overall, construction becomes cheaper because you save on structural weight balance, energy, cement, mortar, plaster, etc.
Absolutely. AAC blocks handle humidity well, provide thermal comfort, and reduce sound transmission—ideal for apartments and offices in Dhaka or any city in the country.
Because only 3 factories exist. As more investors set up plans and execute smartly with world-class machinery, this trend is expected to change rapidly.
Yes, but they need training to work with the material properly. Once skilled, masons often find AAC blocks easier to handle than red bricks.
Yes. With bans on new clay kilns, VAT-free sales of AAC, and vast inclusion in government projects, the support is strong.
