Print Edition - 2015-04-22 | MONEY
Realty sector rebounds from prolonged slump
Apr 21, 2015-
The real estate sector has rebounded from a prolonged slump on increased demand for houses and apartments, property developers said. According to them, 7,274 stand-alone houses, townhouses, condominiums and land subdivisions have been sold since a revamped real estate concept was launched in Nepal in 2000.
The developers estimate that only 1,335 houses and apartments remain unsold as of now. They said that 381 housing units worth Rs3.07 billion had been sold since January.
Speaking at a programme here on Tuesday, Om Bahadur Rajbhandary, chairman of the Urban Development Committee of the Federation of Nepalese Chambers of Commerce and Industry, said, “Around 8,609 housing units have been put on sale since the real estate business was launched in Nepal. Considering the business trend this year, the entire stock could be sold out within the next five and a half months.”
According to the Nepal Land and Housing Developers’ Association (NLHDA), the real estate business that suffered a slowdown during the period 2009-13 has regained pace from last year. Six housing projects had launched 324 housing units last year.
The real estate market went into a downward spiral in 2008-09 after Nepal Rastra Bank capped realty lending by banks and financial institutions (BFIs) to prevent a bubble burst.
However, the sector started seeing its business grow from last year. Government statistics show that revenue collection from property transactions surged more than 50 percent to hit a record high of Rs7.81 billion in 2013-14.
A study carried out recently by the NLHDA reveals that the number of property transactions has been increasing in areas outside the Ring Road. According to the study, developers have been selling around four housing units monthly.
Presenting the study report, Sopon Pornchokchai, director of Thai Real Estate Business School, Thailand said that a number of developers had planned to launch new projects citing the growth in business.
Pornchokchai said that the land sub-division market had been increasing along with the housing business. He urged developers to offer lower cost housing units to promote business among the middle income group.
NLHDA President Ichchha Raj Tamang said that they were now ready to launch new projects while maintaining prices. Meanwhile, Jagadish Chandra Pokharel, former vice-chairman of the National Planning Commission, stressed good coordination among government bodies like the Urban Development, Land Reform and Local Development and Federal Affairs ministries to stop proliferating land plotting in the name of real estate business.
“The government has to introduce legal measures and policy reform to prevent fertile land from being lost due to plotting,” he said.
Upendra Poudel, president of the Nepal Bankers’ Association, said investments by BFIs amounting to Rs81 billion remained stuck in unsold housing units despite an improvement in public confidence in the property market.
Poudel urged the government to form a separate body to regulate and supervise housing projects. “Besides, there is a need to establish an Assets Management Company to manage unsold and problematic housing projects,” Poudel added.
Published: 22-04-2015 09:33