Real estate demand growing
Compared to the same period last year demand has grown by 200 per cent
The demand for individual housing has increased significantly after earthquake in 2015. According to real estate developers, of late demand and sales have doubled for plotting and individual houses in the valley. Earlier the government temporarily banned new construction after the massive earthquake hit the country. Later the real estate industry faced turmoil due to the blockade and confusion over housing policy. Now with clarity on policy and a gradually improving economy, the real estate industry is also growing.
Developers stated that buyers are now gaining confidence. “In the last six months, we have got overwhelming demand for individual houses. Compared to the same period last year, the demand has grown by 200 per cent,” said Gaurav Ratna Sthapit, Business Advisor at Civil Homes. Citing that they have reached a similar market situation as before the earthquake, he said, “We have introduced new projects in Godawari, Dhapakhel, Sunakothi and Sitapaila. And we have got an overwhelming response.”
With the increase in demand, the price of both land and houses have increased. On average the price of land has increased by 40 to 50 per cent while the cost of the housing increased by 20 to 30 per cent. “Due to the price hike in construction material, the price of construction has also increased this fiscal year,” Sthapit informed. According to him, their clients include both first time home buyers and investors. Being optimistic about the future, he said, “If everything goes right, the real estate industry will surely boom this fiscal.”
Despite high demand for individual houses, developers said that they are not able to introduce new projects due to complex provisions on acquiring land. “Land acquisition has become one of the biggest challenges for us to start a new project,” said Bijay Rajbhandary, Chairman of CE Construction, adding, “The ceiling of land acquisition up to 60 ropanis is still not clear whether it is for a single project or for the company.”
Rajbhandary said that they plan to come up with another new project at Hattiban. “We will probably launch this project just before Dashain. Now we are busy developing a master plan,” he said. According to him, the company has increased construction cost by Rs 500 from Rs 4,500 per sq ft to Rs 5,000 per sq ft owing to the price hike in construction material. He also informed that they have even started to sell apartment units of Retreat and Grande Tower.
With the escalating investment in real estate, Nepal Rastra Bank has taken corrective measure by reducing the limit of real estate lending for commercial purpose by 10 per cent. In a new monetary policy, NRB has limited the loan value of collateral from 60 per cent earlier to 50 per cent. “NRB’s corrective measure also shows that the investment in real estate sector is growing,” said Minman Shrestha, General Secretary of Nepal Land and Housing Developers’ Association. He said, “Booming share market, slow down in businesses and the basic need for housing has started to make people invest in real estate.” According to him, due to soaring demand, land prices have been hiked by 40 to 45 per cent in general while in some specific areas the price has doubled.
Citing that the future of apartments is also bright in the valley, Shrestha said, “For some time now, individual houses will be in demand but ultimately the scope of apartments is immense.” He further added, “Apartments are affordable as compared to individual houses. One can acquire a one room bedroom apartment at only Rs three million and that comes along with facilities and security.” He said that the minimum price of an individual house is around Rs 10 million. He stressed on the need for fostering the apartment projects properly with proper zoning and one-door system.
A version of this article appears in print on August 27, 2016 of The Himalayan Times.