The housing needs of ordinary Nepalis in the middle and lower income brackets have to come to the centre-stage of any real estate developer’s focus in order to achieve planned and organised urban development.

“At present, housing developers are only concentrating on catering to the upper echelons of the society and that is one reason why the realty market is doing poorly at present,” said joint secretary at the Ministry of Physical Planning and Works Suresh Prakash Acharya, addressing real estate developers during an interaction programme on ‘Urbanisation and Existing Real Estate Scenario’ organised by Nepal Land and Housing Developers’ Association (NLHDA).

“In Nepal, there are more low and middle income population that want to and need to buy houses. If developers can introduce low-cost housing then everyone will benefit,” he added, saying that the government also needs to facilitate the promotion of such housing projects by preparing required infrastructure.

His opinions were seconded by vice president of Nepal Bankers’ Association Upendra Poudel. “Housing projects are going through difficulties in making sales because the units are not affordable for a majority of Nepalis,” he said.

“Banks are ready to finance individual home buyers but we are apprehensive about lending to housing projects because we are not seeing much sales happening,” he said, pointing out that banks will not lend unless they are ensured that repayment will be made on time.

Deputy governor of Nepal Rastra Bank (NRB) Maha Prasad Adhikary also pointed out that despite the ceiling on single sector lending by financial institutions there is enough space for banks to lend to the housing sector.

“Total exposure of financial institutions to housing and realty at present is about 14 per cent of total loans that leaves ample space for lending, however, the projects have to convince the lenders on their repayment capacity,” said Adhikary.

Third vice president of NLHDA Om Rajbhandary stressed that the demand for new housing units exceeds the supply capacity of current developers.

“If the general public are steered towards planned housing from the current trend of self-built houses, 500 more housing developers can find work in the valley,” he said while making a presentation on the topic.

“At the current rate of urbanisation, Nepal will need 40,000 new houses every year,” he said. “Though the housing industry is going through a depression, we feel that recovery is in near sight as both developers and buyers are undergoing price adjustment,” Rajbhandary said.

According to him, the sector will boom once again if the government provides facilities to first home buyers through tax exemption and subsidising interest paid, among others.

“Moreover, if NRB loosens the ceiling of 60 per cent of lending of fair market value to 80 per cent we will see a lot of buyers,” said Rajbhandary who is also chairman of Comfort Housing.

source: the himalayan times,5 may 2013