Around 3,000 completed and under-construction apartments worth billions of rupees remain unsold after the government and the Nepal Ratsra Bank (NRB) put a ceiling on loans for realty sector stating that the unnatural price hike has imperiled the economy and the banking sector.

"Only half of the 6,000 completed and under-construction units of apartments have been sold till date," Secretary of the Nepal Land and Housing Developers' Association (NLHDA) Bhesh Raj Lohani said. "The problems have compounded following negative rumors due to ungenerous policy of NRB toward the realty sector," he added and claimed that even those who had booked apartments have demanded their money be returned due to the negative rumors. The entrepreneurs have been holding discussion with the government about different policies to ensure security of their investment but the discussions have yet to bear any fruit. They are now planning to convert the empty apartments into hotels. The government is also positive about this but it has not been able to make any clear policy arrangement.

The government has brought forward the plan of procuring 75 units of apartments for senior government officers as an alternative after the entrepreneurs urged the government some time back to adopt flexible policies stating that their investment of billions is under risk. The Ministry of Urban Development is preparing to invited bids for that. The entrepreneurs have started discussions after finding the government positive about the alternative. The Ministry of Tourism, the Ministry of Urban Development, NLHDA, and the Hotel Association Nepal (HAN) had recently agreed to convert the unsold apartment to hotels. They had decided to convert the units of only those projects that are completely unsold or sold in negligible proportion stating that converting the units of partially sold projects will create problems for the residents. "Under-construction projects are prioritized for conversion as converting them into hotels will be easier," Lohani stated.

The entrepreneurs estimate that the demand for apartment hotels will rise as the government has targeted to attract two million tourists every year by 2020. Secretary at the Ministry of Tourism Sushil Ghimire said plan has been forwarded in a way to ensure that the apartment hotels will fulfill the demand as the infrastructures have not been developed in accordance with the target for attracting tourists. "The government is positive about converting the apartments meeting the requisite standards of hotels into ones, and those not meeting the standards into service apartments for tourists," he added. "We can construct service apartments by even targeting the foreigners that have completed their service here. We have to amend the visa regulations for that," he stated.

Spokesperson at the Ministry of Urban Development Suresh Prakash Acharya said the ministry is ready to help as the apartment entrepreneurs will have their problems solved and the hotel sector will also develop. "The problem is compounding due to lack of proper development of joint and collective housing despite the high demand and low supply of residences in Kathmandu Valley," he stated. "There is a high potential for sale of apartments in the valley as the latest data of the Central Bureau of Statistics shows that 58 percent of people in the valley live in rented apartments," he added.

But buyers have not been attracted as the price of apartments has not fallen though the realty sector is on a downward spiral. "More than 90 percent of the apartments and houses built in the valley are above the purchasing capacity of the general public. There will not be any problem if the entrepreneurs were to prepare apartments and houses as per the financial status of the general public," he opined.

Former president of HAN Yogendra Shakya also said the apartments can be converted into hotels if they fulfill the standards. "The government must formulate clear policies on services, employment and other aspects while converting the apartments into hotels. There should be policies that clearly define hotel apartments," he demanded.

The Department of Urban Development and Building Construction said 64 projects have taken permission in the valley but only 13 of them have received certificate of completion from the department till date. NLHDA said 15 projects are in the process of taking the certificate while 24 are under construction.

source:karobardaily,29 June 2013