Reality’s Time Has Not Come Yet

There is a certainly a mismatch between the housing options available and the demand for them in the Kathmandu valley and elsewhere in the country. By any standards, there are more people looking to own a house than the number of houses ready and being built for the prospective customers. But the real problem is high cost of the housing units and poor financing options available. As everybody is talking today, the banks and financial institutions have lent so much to the realty sector that the very existence of the banks and financial institutions has come under threat.

At one of time, it was believed that some banks have exposure to the realty sector to the extent of 85 per cent. As experts will tell, recovering money from the realty sector is time-consuming and depends on many factors, especially financial and political stability in the country. Given the fragile economy and the informal nature of banking and finance in the country due to fluid political situation, it is hard to find buyers for apartments costing upwards of Rs 5 million. Owning an apartment is traditionally not the first choice of the people; they would prefer buying an independent unit. That's a fact.

In line with trends outside, Nepal too has a number of realty companies ready with projects but most of them do not seem based on firm fundamentals.

For example, the entire range of suburb within the Kathmandu valley in the three districts of Kathmandu, Bhaktapur and Lalitpur, there are any number of residential area being developed out of agricultural lands, by demolishing hills and moulds into plain land and by creating plots for independent housing. The cost to develop a property for a modern residential project is exorbitant and the companies are not finding enough buyers at the astronomical rates at which these plots are on sale. These plots were developed with the money of the banks and financial institutes but they now lie disused as there are fewer takers for them in view of a retarding economy.

The property business in the country can take off only when the economy shows a constant growth over a period of 5 to 10 years at least. Expecting exciting moments in the realty business at this time is tantamount to wrong calculations.

- Sanjay Neupane

Bhaktapur

 

 

Kudos to  Smart Telecom

The interview with Subhas Bajracharya, CEO, Smart Telecom Pvt Ltd, in June 2011 issue of New Business Age was quite informative and in-depth. The fact that Smart Telecom has already made its services available in 40 districts in the country is worth praising. It is not easy to create telecom infrastructure in the rural parts of our country because of difficult topography and poor road infrastructure. Smart Telecom has really shown commitment and a sense of purpose but by all counts its formidable presence in the rural telecom sector has not been complemented by the government. Telecom policy in the country is all about earning more revenues without any incentive for any worthwhile progress made by the telecom companies. Bajracharya should take heart and know that the investments that his company has made in terms of capital and commitment will win him the market share as well not only in existing markets but also in the new markets. But for all that he will have to wait for some time till the government comes out with a more plausible policy.

- Pradeep Rimal

Ghattekulo

 

 

For Higher FDI,  Stronger GDP a Must

There is no denying the fact that the country needs more FDIs and that would come to the country in due course, that is when the political situation becomes normal and economy is firmly grounded. But for both, the country needs to stabilize itself first. And, some serious thinking has to be done as to how to increase the GDP from the current level to say some 10 times bigger in the short term. Only a robust GDP can attract FDIs. FDIs come seeking profit and if the economy is not in a position to return that profit, FDIs are known to have flown out of the country as well. In that case, it harms more than it benefits. Trade regime between Nepal-India and Nepal-China is a far cry from what the giant neighbours are witnessing. Nepali economy needs to be harmonized with the economies of its neighbours to reap the benefits of the gigantic progress being made by the two countries. That alone can guarantee a jump-start to both the economy and FDI inflow.

- Sanatan Dhakal

Koteshwor