The real estate sector had been experiencing a tough time since 2010 with the central bank's cap to limit aggressive loan exposure to 25 per cent of each bank's total investment portfolio by the end of the fiscal year 2012-13. The central bank's directive to prevent the overheated real estate bubble from bursting has been seriously affecting the real estate sector especially private housing development companies. With the imposition of the directive, which has discouraged banks from investing in the sector, Nepal's realty sector witnessed negative growth in business.

However, realtors also blame the existing political instability as another major hurdle in the revival of the sector.

Of late, as most of the banks have succeeded to adhere to the central bank's directive before the deadline of this fiscal year, banks are once again witnessing flexibility in terms of home loan structures. Today, interest rates on home loans have come down to around 8.5 per cent to 11 per cent. Compared to regular months of a year, the recent festive season was also a promising opportunity for the slow-paced real estate sector. The sector experienced some positive movement in transactions. Realtors are also optimistic about revival of the sector after the successful accomplishment of the Constituent Assembly elections.

Prakash Bajracharya, managing director of Bajra Shangrila, said, “Since the festive season was encouraging, it seems that it is a sign of revival of the sector i n t h e n e a r f u t u re.“

He added that they have been receiving a significant number of inquiries in recent days. According to him, individual and corporate transaction of land and housing have already picked up some momentum while the bulk private housing is gradually gaining pace.
Bajracharya is optimistic about the revival of the sector if politi cal sta bility follows the formation of a new govern ment. “We are hopeful about the environment for the real estate sector improving in days to come. But, having said this, it largely depends on the political development of the country,“ he said .

Citing that the sector has improved to some extent, he informed that 80 per cent of their Sun City houses have been sold while merely 30 per cent of their houses in The Residency are yet to be sold. He opines that the government should entertain some 20 per cent of foreign national's investments in housing and apartments to take it to a comfortable zone.

Citing that the real estate sector is improving in recent times, Bijay Rajbhandary, chairman of CE Construction, said, “With encouraging home loans, the real estate sector has started to regain the public's confidence.“

He is of the opinion that though the sector is gradually improving, it will be even better after the post election government is formed. Citing that they are yet to sell houses in ongoing projects, he said, they would start new projects after the houses in these projects are sold out.

According to Narendra Bajracharya, director of The Comfort Housing, the real estate sector is yet to come to a comfort zone due to lingering political instability. “Despite banks have come up with convincing home loans, they have not been able to win the confidence of customers as much as expected,“ he said, adding that however, the frequency of inquiries are increasing. “Though banks seem to be comfortable with home loans to customers, they are not flexible with realtors,“ stressed Bajracharya, adding that they are continuing with their ongoing projects for the time being till the country gains more political stability. “We have no option than to wait and watch but we are optimistic,“ he said, adding that the future of the sector entirely depends on the new government and political stability of the country.

source: the himalayan times,23 Nov 2013