Realty sector sees an uptrend of late

Publish date : 22 April, 2015

KATHMANDU, APR 22: Encouraging sale of houses and apartments has given new hopes for investment in the real estate business of late.

Last year, 819 units of houses were sold. Of a total of 8,609 houses built till date, only 1,335 houses are left to be sold. Of the total 91 projects involved in developing housing facilities and apartments in Nepal, 34 projects were able to sell their products before 2012.

A recent survey conducted by a team led by Sopon Pornchokchai, director of Thailand-based Thai Real Estate Business School, has said that real estate market is improving in the country as the rental income is gradually picking up in Kathmandu since late last year, as compared to previous three years.

The survey was conducted on the initiative of Brihat Investment Pvt Ltd — a privately-owned real estate developer of the country. “Increase in rental income is due to lack of houses in Kathmandu, which shows the demand for houses is increasing,” said Pornchokchai. “In Kathmandu, rental income increased by five per cent last year, which hardly increased by less than half in Thailand.” However, he found developers reluctant to make fresh investment to start new projects.

Due to this reason, land prices have been stagnant since the last few years in Kathmandu. Unveiling the preliminary findings of the survey at the Federation of Nepalese Chambers of Commerce and Industry, Pornchokchai said that the cost of houses increased by 40 per cent from 2012 to 2014. That increment within a two-year period is lucrative return for investors.

High returns in investment might attract investors, who are involved in buying (from developers) and selling (to consumers) as well, as per Pornchokchai.

He further states there will be a shortage of houses and it will be hard to get one in Kathmandu Valley after about six months if new projects are not initiated soon.

“If a project sells four houses in a month, there will be no house available for sale in Valley after around six months.” In the programme, Ichha Raj Tamang, president of Nepal Land and Housing Developers’ Association, suggested the developers to start projects with proper planning for working capital for the entire project so that they do not have to wait to sell a particular house to develop another one even for single projects.