ADB Backs Bhutan’s Affordable Housing and Urban Growth with $13 Million

The $3 million JFPR grant will fund the construction of 56 affordable rental housing units for vulnerable families in Thimphu and Phuentsholing.

The Asian Development Bank (ADB) has approved a $13 million financing package to help Bhutan strengthen urban infrastructure and expand affordable rental housing for low-income and vulnerable families. The investment will support safer and more resilient communities in Thimphu and Phuentsholing, two of the country's fastest-growing urban centres.

The financing package includes a $5 million concessional loan, a $5 million grant from the Asian Development Fund (ADF), and a $3 million grant from the Japan Fund for Prosperous and Resilient Asia and the Pacific (JFPR), funded by the Government of Japan through ADB.

Focus on Flood Protection and Affordable Homes

Bhutan's growing urban population has placed increasing pressure on roads, drainage systems, water supply, and housing, leaving many low-income households exposed to floods, landslides, and poor living conditions. Phuentsholing, the country's main commercial gateway to India, faces recurring flooding that affects essential services and local businesses.

The project will upgrade key infrastructure in the Ammochhu local area plan, including drainage networks, water supply systems, sewerage facilities, roads, pedestrian walkways, and flood protection works. These improvements will build on earlier ADB-supported investments under the Phuentsholing Township Development Project, helping close infrastructure gaps while making the city more resilient to natural disasters and creating new opportunities for future urban development.

The $3 million JFPR grant will fund the construction of 56 affordable rental housing units for vulnerable families in Thimphu and Phuentsholing. The project will also strengthen urban planning and land management while supporting Phuentsholing's development as a stronger and more resilient cross-border gateway city.

Creating Inclusive Communities for the Future

ADB Country Director for Bhutan Sonomi Tanaka said Bhutan's cities are expanding rapidly, making it essential to invest in infrastructure that keeps communities safe and improves living conditions for everyone. She noted that better municipal services, affordable housing, and stronger planning systems will help create more livable cities while opening greater opportunities for vulnerable households.

The project also places strong emphasis on gender inclusion by creating on-the-job training and employment opportunities for women during implementation. At least 30% of the affordable housing units will be reserved for women-headed households, helping improve access to secure housing for families facing economic hardship.

The Asian Development Fund, which provides grants to the poorest and most vulnerable countries across Asia and the Pacific, supported 384,000 people in moving out of poverty and helped generate around 500,000 jobs between 2021 and 2024. Bhutan's latest urban development initiative builds on that commitment by combining stronger infrastructure with affordable housing and inclusive urban planning.