Uptick in realty sector, but still in turmoil

Despite an uptick in the real estate sector last month, the recently introduced Land Use Regulation 2022, along with liquidity crunch continues to pose challenges for the realty market, with the number of transactions slumping by nearly 60 per cent.

According to the records of the Department of Land Management and Archive (DoLMA), altogether 29,184 houses and plots of land were bought and sold across the country in a one-month period between mid-November and mid-December this year.

As per the department, the total number of properties sold stood at 69,412 in the same period of previous fiscal 2021-22, which clearly paints a gloomy picture of the property business of the country.

According to Bidhur Dhamala, acting president of the Nepal Land and Housing Developers Association (NLHDA), the government's new rules regarding land utilisation has exacerbated the challenges facing the realty sector, which had been struggling due to Nepal Rastra Bank (NRB)'s strict policy.

"Even as the commercial banks have tightened loan disbursement to the realty sector due to liquidity crunch, the realty business had started witnessing a gradual uptick.

But introduction of the government's new policy has resulted in the business coming to an almost standstill," Dhamala told The Himalayan Times.

According to him, despite the good intentions behind introducing the regulation for systematic urbanisation, it is irrelevant for a developing country like Nepal.

"With the inadequate budget and manpower, it is a daunting task for the local government to classify the land as agricultural or non-agricultural," he added.

As per the new regulations, land has to be categorised as agricultural, residential, commercial, industrial, area of mines and minerals, forest, public use, area of cultural and archaeological importance, and others based on topographicalfeatures, efficiency and utility of land, its existing use and necessity.

The regulations prohibit the commercial land plotting and its sale in areas except in classified areas for residential purposes.

Dhamala further stated that the banks' high interest rates have also discouraged the people from investing in real estate.

"People that are planning to buy properties have put their decision on hold and have deposited their money in the banks because it is a safer investment and the returns are also good at present," he added.

Although the number of properties traded decreased in the review period compared to the corresponding period of last year, it went up by 1,245 compared to the earlier month (mid-October to mid-November), when 27, 939 properties (houses and land) were sold across the country.

However, the revenue generated from real estate business decelerated in the review period.

According to the department, the government collected revenue worth Rs 2.64 billion from real estate transactions in the review month, a fall of Rs 358 million compared to the previous month, when revenue worth Rs 3.01 billion had been generated from real estate business.

Meanwhile, the property sales in the Kathmandu valley also slightly improved in the review month.

According to the data of the Land Revenue Department, nine Land Revenue Offices in the three districts of the valley reported sales of 3,195 properties compared to 2,779 properties in between mid-October and mid-November.

As per the department, the highest number of property sales was from the Land Revenue Office (LRO) Lagankhel, with 715 land and houses bought and sold.

Likewise, 565 land and houses were sold and bought from LRO Bhaktapur, 553 from LRO Kalanaki, 424 from LRO Sankhu, 349 from LRO Chabahil, 281 from LRO Manamaiju, 146 from LRO Dilli Bazaar, 155 from LRO Tokha and 7 from LRO Gotikhel, respectively.

source: the himalayant times, 17 December 2022

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