Degendra Kumar Shrestha is the executive director of Downtown Housing Pvt Ltd (DHPL). DHPL is currently involved in City View Apartments and has completed Downtown Apartments. He spoke to Prakriti Pathak of THT Property Plus about the current situation, opportunities, challenges and future of the real estate sector.
Excerpts:

What is the actual situation of housing and real estate at present?
As every sector is slackening, the business of real estate and housing companies is not an exception. Transactions are at a minimum and business is in a stagnant phase. But this does not mean that prices of housing projects have come down. People have this misconception as the prices of a number of housing projects currently offered are at minimum prices, along with special offer packages.

But customers should be aware of what might have been done to cut down the prices and offer the projects at such low ra t es.During purchase, they must compare the facilities being offered at completion with the ones they were promised earlier on during booking. Most developers are simply compromising on facilities such as interiors and other features. For instance, a few years ago, an area of 500 to 600 square feet may have been allocated for recreational activities.
But now, developers are doing away with such frills and facilities, so the prices have dropped. Similarly, a couple of years ago, row houses were built in four aanas and priced at Rs 10 million but today, they are built in just one and half aanas and cost around Rs 60,00,000.

You have mentioned that developers are compromising on facilities and product features. Does that mean customers are getting low quality houses?
It is true that developers are compromising on the facilities, but certainly not on the quality.They should not be involved in such unscrupulous practices either. Forty to fifty per cent of total cost contributes to the structural design and no one can negotiate or tamper with it. So, the overall structure cannot be called low quality. As I said earlier, the compromise is only with the facilities. I think it is good that customers are being offered lower prices but at the same time, they should be informed about the legal validity of projects -whether or not they have been provided everything according to previous commitments. It is very sad to say that only 25 per cent of developers are delivering as per the initial contract. Customers will ultimately suffer.

Of late, we have seen a spurt in the number of housing projects and papers are flooded with their advertisements and promotions. What is the real situation?
It is good to notice the increase in individual houses and apartments. But the serious question is -are they legally valid? The reality is much worse than it appears on paper, as few housing projects advertising in media are constructing without permission from all concerned bodies and authorities. We have informed this to the government time and again and they are aware of it. But they are least bothered and state that they lack the budget to inform and raise awareness among the public by disseminating notices about it in the newspaper.

Till now, no action has been taken against such unscrupulous companies. It would also be better if the media carries advertisements only after ascertaining legal validity of the project, as it is the source of information for public. There is a threat that the image of all developers may be tarnished due to a dishonest few.

What are your expectations from the forthcoming Real Estate Expo 2011?
The realty expo will definitely support our business, as it will feature almost every sector and professionals required for construction -housing developers, construction material companies, architects, engineering consultancies, interior designing and electrical equipments, et cetera. Since about 95 per cent of houses are constructed by individual home owners, this expo aims to create awareness among the public about the fact that it is the job of developers, as professionals, to provide them with affordable houses since qualified people are involved in it. Our competition is not between developers; rather it is between us and individual home makers. And most importantly, this expo will inform customers about the latest materials available in the market.

What is the future of the real estate sector in Nepal?
Since shelter is a basic need of human beings, the future of the housing sector is bright.But to accelerate the market, the government must ensure free market economy model.The role of NRB and government should be as regulators and not enforcers. I hope that the upcoming budget will address and bring out flexible policies for the realty sector, which will pave the path in the right direction.

source: Pathak, Prakiti (2011),"To accelerate the market, government must ensure free economy model", The Himalayan Times,25 June 2011

photo: The Himalayan Times