Buddhi Narayan Shrestha is the president of International Real Estate Federation -- Nepal Chapter and immediate past president of Nepal Land and Housing Developers' Association (NLHDA).Shrestha spoke to THT Property Plus on the challenges, current situation and future of real estate and housing projects in Nepal.Excerpts:

What is the current situation of real estate?

From 2005 to 2009, land prices increased by 15 per cent annually.In 2010, land transactions began to slump and fell by around 40 per cent.However, transactions have not decreased in prime areas and the price is also constant in such areas. Areas like Thamel, Durbar Marg, Bagbazar, Putalisadak and Dillibazar have not been affected. Similarly, transactions in housing companies have fallen by 25 per cent and it is lower than when compared to land.

Post-budget, what are your expectations with regards to the sector?
This year, the budget somehow projects hope as it has relaxed ceilings. The reduction of capital gain tax on land by 5 per cent and extension of invitations to Non Resident Nepalis (NRNs) to invest in land and buy apartments are positive moves.Similarly, relaxation of income disclosure provision on land and housing purchase and raising the threshold to Rs 10 million will also help, as will introducing provision for registered brokers and rescheduling of loans.But the main question that arises is -will such policies be implemented or will they just be confined to paper?If all the policies stipulated in the budget are brought into practice, real estate will witness a revival.Transaction will follow an uptrend path but it is difficult to guess how high it will go. Recovery is impossible within one year, but I do think transactions will regain within three years. Half of the remittance will be spent on land and housing companies. However, artificial price growth must be stopped.

What are the challenges being faced by this sector ?
If all the provisions in the budget are addressed and implemented, this sector will face fewer challenges. But there is a big doubt on whether they will be implemented. One of the major problems is that consumers are being cheated due to the absence of registered brokers. Such unscrupulous brokers should be penalised and if they are to be granted a licence, they must be trained beforehand. However, the government cannot hand out licenses to any and everyone. There should be some ethics and code of conduct regarding the business. The government should also discourage individual owners from building homes and registered construction companies should be entrusted to construct all houses. I feel that the quality of independently made houses do not measure to houses built by developers. Policies like land use zoning bylaws should be formulated to discourage haphazard residential growth.

Do you mean that all projects carried out by developers are up to the mark and built according to the criteria and conditions set by the government?
I do not claim that all the developers and builders are 100 per cent perfect. There have been mistakes in the past also, like developers not being able to hand over the projects within the stipulated time and even before the handover, some projects had suffered from technical problems.However, I feel that 95 per cent of developers are on the right track and are working according to the laws. These issues have been discussed several times, but NLHDA has no right to penalise anyone and the government has not given them this permission and authority.

What are your expectations from upcoming real estate expo in August? 
With the relaxation on the ceiling, the expo will definitely promote the importance of developers among the general public.Throught the expo, people will get to know about the differences in the homes constructed by developers and those built by individuals.

What should be done to make the real estate business more systematic?
First of all, government should recognise real estate as an industry -only then will the prices come down. And most importantly, the private sector must come up with low-cost housing so that those people who cannot afford to buy now at the current prices can also have a home. For this, the government should provide raw land and once the project is completed, it must fix the price.

source: The Himalayan Times(2011),"The Private sector must come up with low-cost housing", The Himalayan Times, 30 August 2011