June 29: Trading of land has dramatically increased in the urban areas of the country. “Land trading that was rising since 2014 has again taken the pace after the last year’s devastating earthquake,” says Sushil Prasad Acharya, Director of Land Reforms and Management Department. The rise in transaction of land is actually based on registration fees raised from land revenue offices all across the country.

During the 11 months of current fiscal year, registration fee totalling Rs 9.94 billion has been raised. As per the department’s data, such registration fee amounted to Rs 9.71 billion in the same period of the last FY.

Apparently, consumers are more interested on buying land rather than residence after the devastating earthquake. However, the land trade still falls short due to the last year’s earthquake,” mentions Acharya.

Meanwhile, land trading has significantly increased in the major cities of the country including Kathmandu Valley, Pokhara, Chitwan and Butwal. According to Acharya, increase in land trading in big urban cities can be attributed to rise in flow of remittances. “People with deep pockets tend to purchase land in big cities. Meanwhile, those with less money first invest in land in villages and smaller cities. They enter big city after accumulating money by selling the lands,” he adds.

“Before the earthquake, people particularly in Kathmandu used to live in joint families. After the disaster, people are now living separately whose houses were fully or partially damaged,” says Ishwori Prasad Kharel, Central President of Real Estate and Agent Association Nepal (REAAN).

“Land trading has soared as BFIs are offering real estate loans at low interest rates. Moreover, increase in real estate transactions is also due to the very limited investment options in the country,” says Kharel.

Similarly, real state traders opine that consumers are being attracted towards purchasing lands as they feel that homes constructed before the earthquake were not earthquake resistant . Similarly, market analysts also point out to the opportunity to earn profits quickly in trading of lands as the prices have been increasing steadily.

Nevertheless, with the significant increase in real estate prices, investment risks have also become a matter of concern to many.  Reviewing the situation, Development Bankers Association has suggested the government to toughen lending rules on real estate loans through monetary policy. The association has warned of potential risks to real estate collateral if the loans are not controlled in time. As per the statistics of NRB, BFIs have issued a total of 15 percent loans amounting to Rs 233 billion on real estate sector in the 10 months of period of current FY.