Realty sector could bring economy down‚ say realtors

The realtors have cautioned that in the absence of prompt measures the realty market will soon bring the whole economy down.

“Some concrete step has to be taken to boost the market, if not then the ripples will be felt in the whole economy,” cautioned president of Nepal Land and Housing Developers’ Association (NLHDA) Ichhya Raj Tamang during a workshop on ‘Urban Scenario and its Future’, organised by Federation of Nepalese Chambers of Commerce and Industry’s (FNCCI)Urban Development Forum and NLHDA here today.

“The banks have high exposure to real estate and its default will bring many banks down,” he pointed out explaining that of around Rs 700 billion loans, some Rs 200 billion worth loan is extended to the real estate and housing sector.

He also criticised the seeming apathy of the central bank. “Despite the repeated requests from the realtors and bankers of revising home loan ceiling to Rs 10 million from current Rs 8 million, it has not come up with any effective measure,” he added. “The repercussions of delay will be visible from the second quarter’s balancesheets of banks and financial institutions.”

The authorities say that market will revive once the overvalued realty price is corrected but after the price correction also, it has remained unchanged,” Tamang said, arguing that as since 2009 till date, the real estate price has come down.

His views were seconded by another housing developer and coordinator of FNCCI’s Urban Development Forum Om Rajbhandary. “The central bank need to refinance the realty loans and allow restructuring for once,” he said, “or else once thriving industry will die with a large number of casualties.”

Giving a presentation on importance of urban development in the crowded city like Kathmandu, he urged the government to support well planned urban development through housing developers encouraging policy to facilitate urban housing.

Rajbhandary also pointed out the need for developing satellite townships to the nearest districts of the valley. “The growing urban population in the valley needs to be relocated and accommodated to the nearest district or township with required infrastructures and services,” he added.

To move away from the current slump, correction of regulatory stance, pricing and behaviour are must, according to CEO of Commerz and Trust Bank Anal Raj Bhattarai. “If the real estate market fails, it will be extremely difficult for the banking sector to survive,” he added. Director of Nepal Rastra Bank Bashudev Adhikary assured that central bank will be taking a step to address their problems soon.

“The housing developers need to focus more on constructing affordable housing units keeping the ordinary people in mind instead of building luxurious and difficult to sale condominiums,” he said.

The workshop also saw a comprehensive presentation regarding the situation of housing developments in Kathmandu by director of Thai Real Estate Business School Dr Sopon Pornchokchai.

Source: thehimalayantimes

1Ropani