The performance of real estate is stagnant, the real estate market is still scrambling to stand on its own since the Rastra Bank's intervention. Realty transactions in the Kathmandu Valley were down 48.82 percent in the first quarter compared to the same period the previous fiscal, maintaining a downtrend that began a year ago. The slump is reflected in the reduced revenue collected by the five Land Revenue Offices (LRO) in the valley.
Ajay Shrestha, CEO of Bank of Kathmandu, said that the real estate is stagnant. "There is very little buying and selling taking place. In the recent past it became a huge speculative bubble. Real estate was overplayed vis-à-vis demand. The only fear now is who will take that loss if the market comes back to its natural size: the seller, the buyer, the banks?," he added. According to the Department of Land Reform and Management, collection dipped to Rs. 417.6 million in the first quarter of 2010-11 from Rs. 814.99 million in the same period in 2009-10. Govinda Prasad Sapkota, director of the Department of Land Reform, said that real estate transactions had been facing a continuous downturn due to the directives of Nepal Rastra Bank. “The slump in realty transactions is likely to continue if the government doesn’t come up with policy intervention,” he added. Referring to the volume of transactions recorded over recent weeks, LRO officials assessed that the gloomy situation in the real estate transactions will continue in the next period of this fiscal as well. An official at the LRO said, adding that the latest trend was indication of market taking a course of correction. Transactions of land and housing in the western city of Pokhara have dropped to a three-year-low over the first two months of the current fiscal year. According to Land Revenue Office (LRO), Kaski, only 1,501 new transactions were carried out during the first month, ending mid-August, and 1,518 transactions were recorded during the second month, ending mid-September, 2010.
Narayani land and house development society president, Dinesh Kumar said that "the price of land is in downward trend. Most of the investors quitting this sector to invest in other", he further added.
"If the government did not change its policy, it could turn hundreds of investors penniless" real estate investors reported.
1Ropani.com