Private Sector construction down 20%

Private sector construction works, mainly housing and apartments, have come down heavily, thanks to tightening of housing and realty loans by Nepal Rastra Bank (NRB) about a year ago.

According to constructors and land developers, the private sector construction works have come down by as much as 20 percent this year as compared to the last fiscal year.

Shambhu KC, superintendent engineer of Department of Urban Development and Building Construction (DUDBC), told Republica that not a single apartment project received license from the department during the first nine months of fiscal year 2010/2011.

“Though 25 apartment projects with 2,500 units registered with us during the period, none of them showed up for final approval,” KC said. DUDBC Records show that a 54 projects with 2,500 units had received permission from the department in 2009/10.

“The companies seem to have kept their projects on hold for now as the market situation of residential project is gloomy,” added KC.

Similar is the case with housing projects. According to Nepal Land and Housing Developers Association (NLHDA), the sector has shrunk down by as much as 45 percent this year. “Not a single project has been registered so far this year,” said Min Man Shrestha, general secretary of NLHDA.

Yaksha Dhoj Karki president of Federation of Contractors’ Association of Nepal (FCAN), said the construction sector has been hit as the number of formal construction projects has come down sharply. “Business complexes and residential projects constitute larger share in formal construction sector. These areas didn’t witness fresh investment this year,” said Karki.

The sector’s contribution to gross domestic product (GDP) hovers around 8 percent. “But this may come down to just 6 percent next year,” said an FCAN official.

The construction sector was in boom a couple of years back when the realty and business sector were at their peak.Industries producing construction materials were also hit. According to industrialist, sale of construction materials have gone down by more than 40 percent.

Ichhya Raj Tamang president of Nepal Land and Housing Developers Association , said formal construction sector has gone down by 40 percent during the current fiscal year. “The sector also suffered, as many investors have stopped putting their money in residential projects due to high construction cost,” Tamang said, adding, “Construction cost has increased by around 35 percent this year.” According to FCAN , the sector employs more than one million workers.

source:myrepublica

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