After witnessing slowdown for nearly 10 months, the housing business seems to be back on track. Developers are competing with each others to offer the most competitive prices to lure buyers to their projects. Nearly a dozen developers have opened booking for this festive season. According to developers, the initial response is overwhelming and they are hopeful of getting good booking during the Dashain-Tihar season. They say the new directive of Nepal Rastra Bank, which came into effect a month ago, has eased banks and financial institutions´ lending to the sector. Prior to this, the central bank had asked banks and financial institutions to limit their loan exposure to the housing and real estate sector to 25 percent and 15 percent of their total loan portfolio respectively. The provision had hit the developers hard as they were facing difficulties in arranging loans for their project. But the scenario is fast changing. Nearly a dozen developers, including Ayusha Developers, Kohinoor Hill Housing, Eastern Apartments, Classic Developers, Sunrise Housing, Bajra Shangrila Residency, Seng Yoan and City View Apartments, have opened bookings. Ichchhya Raj Tamang, the president of Nepal Land and Housing Developers´ Association - the organization of real estate and housing developers, said people are excited to put money in housing as they have no other secure alternative. “Through the new directive, the central bank has recognized housing business as a productive sector,” Tamang said. He further added that people, who earlier refrained from investing in housing hoping that the prices will cool down, have started investing in the sector. Rabi Budhathoki of Oriental Developers has seen booking increased by 25 percent in recent months. “Our main focus is on remittance income and the rise in remittance flow is helping boost our sales,” he added. However, Rajan Singh Bhandari -- the vice president of Nepal Bankers´ Association - has a different story to share. “Developers are pushing forward with their business because they have the pressure to pay back bank loan and interests,” he said, adding, “Since they have already made a huge investment in their project, they have no alternative to collecting capital to pay back loan and interest.” Economists say relaxation of bank lending to housing and real estate sectors is one of the reasons behind the revival of real estate and housing sector. Economics Chiranjibi Nepal said the new NRB directive has given new lease of life to the housing and real estate. “The changing lifestyle of people and the subsequent rise in demand for apartments is the other reason behind the growth in real estate and housing business,” Nepal added. Tamang informed Republica that there is a demand for at least 50 apartments every day. “People are investing in land and apartments also because of low rate of return in other sectors,” he added. Economist Nepal echoed Tamang and added that housing and real estate sector promises better return. “The stock market is on the wane and other businesses are also not yielding positive results. Buying an apartment means investing in a secure sector.”
Source: republica