Ashish Garg is the executive director of Clean Developers Private Limited, a company promoted by Clean Energy Development Bank Limited that comprises of professionals from different walks of life and business houses, who aim to benchmark the next era of real estate development in Nepal. He spoke to THT Property Plus about the situation facing the real estate sector.

As a new entrant, how do you plan to compete in this sector? What are the projects you have in the pipeline?
We started two years ago with the agenda of getting into real estate in a very dif ferent way. We wanted to focus not just on profit but on contributing to society through environmentally friendly projects and even our business model focuses on this. When our customers buy our products, they also contribute to social aspects like the envi ronment. At the moment we are into constructing a one million square foot project in Kathmandu. Our first project was Central Park premium apartments. This was the largest devel opment project within the ring road and we had an overwhelming response from our customers. Almost 60 per cent of con struction is complete and we expect to hand over in less than a year. The second project is Central Business Park in Thapathali, which is almost ready to be launched. It is a commer cial building where we are selling office space to corporates. This is the need of the hour as corporates are looking for good office space at good locations with infrastructure such as parking space, power back up, central air-condition ing, etcetera. The third pro ject is the individual bunga low project, which is on the drawing board and we expect to come to the mar ket in the next three to four months. We feel we have managed to make a place for ourselves in the real estate market. Other than this, we are into clean infra structure development. We are now also moving into hydropower development and won the bid for devel opment of 40 MW lowers Solu Hydro Power Project. With foreign investors, we are all set to start construction in the next six months. We are also thinking of get ting into road projects as we want to be a development company. Our total business volume is of around Rs 20 billion as of today and we are proud to have made such achievements.

How does this clean development benefit consumers ? What kind of cost benefits do they get?
When we do business within the development context, the first thing is that it should be commercially viable. When we start designing our projects, we ensure green elements are incorporated so that artificial light is not required during the day and this means lesser electricity costs and power consumption. We also use solar thermal power which has a quicker payback and this provides hot water to all the apartments. Then we have water recycling so the cost of purifying the water and its scarcity problem is addressed. All these elements lead to cost benefits and if you add up the tangible and intangible, this amounts to quite a lot of savings. We are also learning and pioneering as we don't claim to be experts.

What are the kind of hurdles facing this sector?
The hurdles in this sector are many, but the biggest is the lack of a single window to get clearances. We have to run to around 10 different agencies, which is very discouraging. The process is not streamlined and we ourselves don't know just how many approvals we need. Hopefully, witj the housing association we will get these matters on the table and find a solution through discussion with the concerned authorities. Another problem that the real estate sector faces is that of image. Issues like the misconception that the sector is run by the mafia, that of speculators and also the talk that there is a bubble in housing waiting to burst has affected the sector.

But isn't there a gap between demand and supply which has caused this problem?
In a city of five million, at least 10,000 high-rise buildings are required and at present there are just 2,000.
We see this as an opportunity for new players to come in and older players to consolidate. There is a gap between demand and supply. What we feel is real estate development is needed.Also, real estate is a very volatile sector. There is also the speculative element where people buy with the hope of selling at higher prices. But the government has to differentiate between real developers and speculators. This is very important because development can also take a backseat in such a situation.

Is the real estate sector really developing in a planned manner? What needs to be done?
In Kathmandu, we have infrastructure for a population of one million but the actual population here is five million. So the infrastructure is inadequate and we face problems for water, garbage, etcetera. So what do we do? The government perhaps needs to plan for satellite towns and extending infrastructure but the government has not been able to do this because of the political situation. We as real estate developers try to work to save resources and build according to the present needs like making provisions for water, back up electricity, etcetera. This is contributing to the development of the city. So the private sector is developing infrastructure and this is a contribution. We are doing the work of the government as well as paying towards the exchequer. The fees we pay are exorbitant and the support we get is minimal. This mindset must change.

With very low transactions, how long do you think developers can sustain? Will the prices tumble?
As far as the financial model of our company is concerned, we have proceeded in a very hybrid manner. We have brought in foreign investors and large business houses from outside Nepal and we have the financial recourses to get into the long gestation projects. We have the right mix of investments.
Prices are coming down. As we can see, the prices of land in certain areas are unsustainable, unrealistic and artificial. So if developers buy that property at those prices, the project is not viable. The way the banks have curtailed the lending through the Nepal Rastra Bank Directive and their own internal control is commendable. There should not be such high concentration.These prices should come down and they are coming down. But on the other hand, there is a real demand for houses but not at these prices. This should continue and prices will come down.We are developers and we understand that development is the need of the hour.

But having said that, we are not going for such high land prices. That would be like going for suicidal ventures.
The situation is very scary but that is because of the unstable political situation and the liquidity crisis. There is limited money and whatever is there is very costly. Bank rates are very high so the overall real estate sector is affected.

source: The Himalayan Times (2011),"Challenges within the real estate sector", The Himalayan Times: property plus,1 jan 2011, p.1