Prakash Bajracharya is the managing director of Bajra and Bajracharya, which in collaboration with partners is involved in construction of two housing projects -Sun City and Mero City.Also involved in the business of sanitary ware and fashion accessories, the company launched its new housing project Bajra Shangrila at Sanepa in October 2010. Bajracharya talked with THT Property Plus regarding the current situation and future prospects of the housing business in Nepal. Excerpts:

1. What is the situation facing the housing sector at present?
This sector is currently stagnant due to the directives issued by Nepal Rastra Bank (NRB). The directives seem to be aimed at forcefully controlling rather than monitoring this sector. In addition, the housing business has been affected by the liquidity crisis and the hike in the interest rate on loan from banks. Due to all these factors, transactions have dropped from 70 per cent last year to 30 per cent this year.

2. But the NRB had to step in to prevent the bubble effect. Or do you feel intervention is without any valid reason?
It is justified in some cases. Pre viously, the market for the housing sector was booming, part of which was also because of speculation. In such a condition, it was NRB's responsibility to stabilise the sec tor. But NRB has been imposing the system rather than monitoring and correcting. The frequent intro ductions of new directives, along with numerous updates in the ex isting ones, have confused the cus tomers. Instead, NRB must come up with lasting vision for sustain able upkeep of the real estate and housing sector, which contributes about 15 per cent of the total revenue of the government.

3. Is it difficult for developers to get loans from commercial banks these days?
We, the entrepreneurs, as well as customers are having a hard time getting loans after NRB's move to tighten the loan exposure of commercial banks. The process involved is very lengthy and cumbersome and the banks are taking more time than necessary to approve the loan.

4. How enthusiastic are developers about the opening of apartments for expatriates?
The plan of letting foreigners buy human-erected property is in the initial phase, and lots of work needs to be done to implement it.Foreign investment could be a major factor in boosting the economy of our country. If the idea is implemented at the earliest, it could even aid in fostering Nepal Tourism Year 2011 and make foreigners feel more secure and welcome in Nepal. But one cannot predict the future as we live in a country where change in policies are concurrent with the government in power. 5. Can the customers be assured about structural security and safety of the housing complexes?
We assure customers of complete security and safety, as all developers have to follow the standards set by the government like the building codes, among others. This busi ness will expand only if we can deliver as per the expectation of the customers.

6. What are the current challenges in this sector?
At present, the main challenge is the scarcity of Nepali labourers, due to which we have to bring in labourers from India and other third world countries. Nepali labourers are going abroad in the search of better opportunities and facilities. To retain Nepali workers, the government must ensure a safe and lucrative working environment.
Nepalis have full potential and expertise in this field. There are a couple of Nepalis who are even involved in town planning in the US and Australia. But the main problem is that they do not want to work here due to lack of security and unstable government.

We are not in a position to get into aggressive marketing and there is unhealthy competition among developers when they are vying to attract customers. Apart from these, we have to get approval from various ministries to commence any project and it is very time consuming. For instance, to get environmental impact assessment (EIA) approval, we may have to follow-up for as long as three years, which is a very long time in terms of implementing a project. I feel if we had a single body that addressed all the issues of the housing sector, many matters could be resolved quickly and efficiently.

7. What does the future of housing sector in Nepal look like?
Since shelter is one of the basic needs, there is no alternative option for the housing sector than to grow. There is a need of an additional 35,000 houses in Kathmandu every year. Since there is very little space for horizontal expansion, the demand will now be for space-saving vertical constructions. This demand will keep on increasing in the years to come. There is a bright future for the housing sector and it will surely pick up, though it is facing serious challenges at present.

source: The Himalayan Times: Property Plus(2011),"NRB directives seem to be aimed at forcefully controlling rather than monitoring the housing sector", The Himalayan Times, 26 feb 2011