Preliminary estimations show that the real estate sector has incurred losses amounting to at least Rs 7.5 billion due to the devastating earthquake of April 25. The ongoing assessment in the sector by the government has also revealed that majority of apartments and housing projects faced heavy damages.

Majority of housing projects have been damaged and apartments like Park View Horizon and Cityscape have been issued ‘red’ stickers, which means they are not safe to use for now, as per the Department of Urban Development and Building Constructions (DUDBC) officials. They said that of the total projects inspected so far, more than 65 per cent have been issued yellow stickers.

Depending on the situation of the physical infrastructure, the department’s inspection team marks each housing unit with red, yellow or green stickers. Yellow refers to requirement of maintenance before use and green means it is safe to live in, according to the department.

Nepal Land and Housing Developers Association (NLHDA) said that the earthquake had badly affected the real estate sector, which was gradually improving after witnessing a slump due to the cap enforced by the central bank.

“Our rough estimation shows that there are losses amounting to Rs 7.5 billion to Rs eight billion,” said Min Man Shrestha, general secretary of NLHDA.

He added that the loss would make it hard for the developers to pay the interest and repay the bank loans.

It is estimated that around 150 developers have invested over Rs 250 billion in the real estate sector. After the sector witnessed a slowdown for five years, the demand had started to pick up again from last year. Developers said that due to the damages and negative impact, the sector would again face slowdown in the days to come.

The government has been issuing permits for construction of high-rise apartment as per Ownership and Joint Housing Act 1997. Irate owners of the apartments said that damages were caused because the developers had flouted the building codes and the government had failed to introduce and enforce strict rules.

So far, the DUDBC has issued permission for the construction of 70 housing complexes and apartments in Kathmandu Valley. Of them, construction of 56 housing complexes and apartments have already been completed and it is estimated that around 8,500 housing and apartment units have been sold by the developers in the county.

Now, it is uncertain what will happen to the projects that are undergoing construction.Similarly, there is also confusion over who will take responsibility for the required maintenance, demolition or reconstruction of the apartments.

Many housing and apartment projects have witnessed damages like external and internal cracks and damages to the partition walls. After the earthquake, there have also been cases of people residing near high-rise buildings demanding their demolition as such infrastructures pose risk to their homes and property.

NLHDA is preparing to organise a press meet on the impact of the earthquake in the realty sector on Wednesday.

source: the himalayan times,12 may 2015