The real estate sector, which had been mired in uncertainty, is finally showing signs of perking up after budget provisions were announced last month. In the past, Nepal Rastra Bank (NRB) had capped the credit flow to the sector, which had led to a decline in real estate transactions. t Although real estate entrepreneurs are now fairly hopeful about the future, the t actual ascent in transactions t is yet to take place. Kamal e Timilsina, under secretary at the a Department of Land Reform and Management, says, “The budget brought forward good provisions and it has a lot of positive points. However, I feel that it is individualistic, for it focuses more on individual investors. Moreover, we set our targets higher than the previous year, despite the fact that there were indications of a downfall.“
According to Timilsina, investment and transactions in real estate have always risen dramatically after any major political changes. He adds, “The sector began to boom after the political movement of June 2006 and skyrocketed for the next few years. So, it was bound to take a downward nose-dive, like it did last year.“

According to him, the monetary policies of the government and NRB are still not very favourable for the real estate sector. “The liquidity crunch in the financial sector has tightened credit flow to housing and real estate and this is yet to loosen up. Though we will officially publish the monthly data at the end of the month, looking at the present trends we can say that there has not been much change.
As of now, transactions are almost exactly as they were in the last month. We expect to collect around the same average revenue as in the last few months -between Rs 270 million to Rs 280 million.“

However, he is hopeful that things will improve in the future, with foreigners and Non-Resident Nepalis (NRNs) now being allowed to purchase housing units in Nepal. This could help in raising the number of transactions and prices.

Meanwhile, housing companies also have their fingers crossed for the coming year.Though the impact will truly be felt only around the year-end, they are hopeful about it.

Dekendra Kumar Shrestha, executive director of Downtown Housing Company Private Limited says, “Though we are yet to see any concrete impact, the budget has certainly lifted up our hopes. The provision that permits foreigners and NRNs to purchase property is a very thoughtful step from the government's side. However, budget alone does not account for much, so we are all waiting for the monetary policy to back it up. The existing attitude of the NRB and monetary policies are not at all conducive for the development of real estate.“

Shrestha opines that although the budget is good for the sector, it is not without shortcomings.He says, “I feel that USD 200,000 should have been the ceiling amount for real estate purchase, but the budget considers it to be the starting amount. We plan to request the government to revise it, as very few apartments are available at such a high amount. Also, it is a little too ambitious for the Nepali market.
Moreover, the budget has given permission to purchase only vertical spaces, houses are still out of reach for non-Nepalis.“

According to him, the housing companies are organising a housing expo from August 25 to 28 this year to interact with customers and make them aware of present situation of the sector besides familiarising them with pricing and products.

The budget is also being praised for its clause which states that women will be given concession of 25 to 40 per cent on land registration depending on the region they are from, to ensure reduction in land distribution disparity. Moreover, citizens over 75 years are provided discount in land registration process. This is also expected to increase the transaction rate.

Although limitations and challenges of the budget and current monetary policies are still to be sorted out, realty's hopes are beginning to rise.

source: Koirala, Sneha(2011),"Hoping for Improvement", The Himalayan Times, 14 August 2011