KATHMANDU, NEPAL
Industrialist Shashikant Agrawal procured 11 ropanis of land in Naxal from investor Nirmal Pradhan at Rs 2.70 million per anna. Pradhan had put the price of his land at Rs 7 million per anna just a year ago.
Agrawal had also purchased 43 annas of land in Thamel from Sahadev Kakshapatu at Rs 3.70 million per anna a year ago to construct a three-star hotel under the Marriott chain. The price of that land was around Rs 10 million per anna when the price of land was at its peak around five years ago. CE Construction has procured land of Vibor Development bank in Bansbari, that was traded at around Rs 2.50 million an anna until last year, at Rs 1 million per anna. Prakash Thapa of Balkot, Bhaktapur sold five annas of land, that would cost up to Rs 1.40 million around five years ago, at Rs 800,000 per anna last week.
These are just a few examples of the falling price of commercial and residential land in Kathmandu Valley that had risen unnaturally a few years ago. Entrepreneurs claim that price of the big plots of land that were procured for commercial purpose has fallen by up to 50 percent while smaller pieces by around 20 percent. The debtors are trying to repay the loans by selling the land, like Pradhan did, as banks are preparing to auction off the land kept as collateral. The banks help find the customers for expensive plots that cannot be found easily. Secretary of the Nepal Land and Housing Developers Association Bhojraj Lohani stated that the price of land, that has been on a downward spiral for the past three years, has started to fall still drastically in the past one year. “The price must have fallen by 20-50 percent in the last one year,” he claimed.
There have been dozens of transactions to prove his claims. Realtors, who had procured plots by borrowing from banks, are trying to sell land at a lower price instead of bearing the burden of debt. Even smaller pieces are also sold at a cheaper rate due to the pressure of interest of bank loans. Bijesh Joshi sold two ropanis of land in Dhobhighat at Rs 2.30 million an anna a few months ago. The value of that land was around Rs 4 million per anna until a year ago. Lohani said that the price of land in the Valley had risen unnaturally from 2007 to 2010 and it can no longer be traded at that price.
He revealed that the realtors currently have two type of mindsets with some improvement in transaction since the last year. “Some are preferring to wait and watch while others are selling at a cheaper rate. This is the right time to procure land as the price has started to fall,” he opined. But the buyers feel that the price will drop further. “The price of land had increased unnaturally as it was traded through unorganized and unregistered persons and institutions. The realty sector is in the hands of the actual buyers only now,” President of the Professional Real-Estate Agents Association Dilip Neupane stated.
The Department of Land Reforms and Management data shows that realty transactions started to rise from the fiscal year 062/63. While the government had targeted to raise Rs 4.80 billion in revenues from realty transactions 065/66, Rs 7.49 billion was raised. This is the highest revenues collected from transactions of land till date as the price was at its peak then. “The price of land in the capital will never rise to that level again,” section officer at the department Raju Basnet said. The number of permissions acquired for land planning, joint residency and collective residences was also the highest then.
The sector has been on a downward spiral since the Nepal Rastra Bank (NRB) brought a provision on December 17, 2010 that stipulated that the loan amount should not exceed 60 percent of the value of the land that is kept as collateral. Vice President of the Nepal Bankers Association Upendra Poudel said the valuation of land by the banks has also dropped with the falling market price. The price of land and the bank valuation both have fallen, according to him, as the realtors are in problem.
Major govt/NRB decisions on realty sector
December 17, 2009: Banks stopped from investing more than 40 percent of the total loans in the sector
August 21, 2010: Those who have taken personal home loans have to repay 30 percent of the loan until mid-July 2011, and another 25 percent until mid-July 2012.
March 18, 2011: Ceiling of Rs 6 million for personal home loans.
Budget for 068/69: Ceiling of personal home loans pushed to Rs 8 million from Rs 6 million. The loans can be renewed only if all the accrued interest is cleared until mid-July 2012.
January 8, 2012: Ceiling of personal home loans pushed to Rs 10 million from Rs 8 million. The banks have to recover all the loans by mid-July, 2013 if more than 25 percent of loans have been invested in the sector.
Source:Karobar Daily, 22nd June 2013
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Industrialist Shashikant Agrawal procured 11 ropanis of land in Naxal from investor Nirmal Pradhan at Rs 2.70 million per anna. Pradhan had put the price of his land at Rs 7 million per anna just a year ago.
Agrawal had also purchased 43 annas of land in Thamel from Sahadev Kakshapatu at Rs 3.70 million per anna a year ago to construct a three-star hotel under the Marriott chain. The price of that land was around Rs 10 million per anna when the price of land was at its peak around five years ago. CE Construction has procured land of Vibor Development bank in Bansbari, that was traded at around Rs 2.50 million an anna until last year, at Rs 1 million per anna. Prakash Thapa of Balkot, Bhaktapur sold five annas of land, that would cost up to Rs 1.40 million around five years ago, at Rs 800,000 per anna last week.
These are just a few examples of the falling price of commercial and residential land in Kathmandu Valley that had risen unnaturally a few years ago. Entrepreneurs claim that price of the big plots of land that were procured for commercial purpose has fallen by up to 50 percent while smaller pieces by around 20 percent. The debtors are trying to repay the loans by selling the land, like Pradhan did, as banks are preparing to auction off the land kept as collateral. The banks help find the customers for expensive plots that cannot be found easily. Secretary of the Nepal Land and Housing Developers Association Bhojraj Lohani stated that the price of land, that has been on a downward spiral for the past three years, has started to fall still drastically in the past one year. “The price must have fallen by 20-50 percent in the last one year,” he claimed.
There have been dozens of transactions to prove his claims. Realtors, who had procured plots by borrowing from banks, are trying to sell land at a lower price instead of bearing the burden of debt. Even smaller pieces are also sold at a cheaper rate due to the pressure of interest of bank loans. Bijesh Joshi sold two ropanis of land in Dhobhighat at Rs 2.30 million an anna a few months ago. The value of that land was around Rs 4 million per anna until a year ago. Lohani said that the price of land in the Valley had risen unnaturally from 2007 to 2010 and it can no longer be traded at that price.
He revealed that the realtors currently have two type of mindsets with some improvement in transaction since the last year. “Some are preferring to wait and watch while others are selling at a cheaper rate. This is the right time to procure land as the price has started to fall,” he opined. But the buyers feel that the price will drop further. “The price of land had increased unnaturally as it was traded through unorganized and unregistered persons and institutions. The realty sector is in the hands of the actual buyers only now,” President of the Professional Real-Estate Agents Association Dilip Neupane stated.
The Department of Land Reforms and Management data shows that realty transactions started to rise from the fiscal year 062/63. While the government had targeted to raise Rs 4.80 billion in revenues from realty transactions 065/66, Rs 7.49 billion was raised. This is the highest revenues collected from transactions of land till date as the price was at its peak then. “The price of land in the capital will never rise to that level again,” section officer at the department Raju Basnet said. The number of permissions acquired for land planning, joint residency and collective residences was also the highest then.
The sector has been on a downward spiral since the Nepal Rastra Bank (NRB) brought a provision on December 17, 2010 that stipulated that the loan amount should not exceed 60 percent of the value of the land that is kept as collateral. Vice President of the Nepal Bankers Association Upendra Poudel said the valuation of land by the banks has also dropped with the falling market price. The price of land and the bank valuation both have fallen, according to him, as the realtors are in problem.
Major govt/NRB decisions on realty sector
December 17, 2009: Banks stopped from investing more than 40 percent of the total loans in the sector
August 21, 2010: Those who have taken personal home loans have to repay 30 percent of the loan until mid-July 2011, and another 25 percent until mid-July 2012.
March 18, 2011: Ceiling of Rs 6 million for personal home loans.
Budget for 068/69: Ceiling of personal home loans pushed to Rs 8 million from Rs 6 million. The loans can be renewed only if all the accrued interest is cleared until mid-July 2012.
January 8, 2012: Ceiling of personal home loans pushed to Rs 10 million from Rs 8 million. The banks have to recover all the loans by mid-July, 2013 if more than 25 percent of loans have been invested in the sector.
Source:Karobar Daily, 22nd June 2013
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Nepalese Rupee falls to Rs.95.99 against the US Dollar
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