Trend of living in flats growing

ekantipur, 7-Feb-09

Sudhir Basnet entered business trading in telecommunications equipment. Today he is involved in real estate and housing, transportation and aviation. He is chairman of Kohinoor Hill Housing, Oriental Housing, Agni Yatayat and Agni Air. Basnet talked to The Kathmandu Post about his latest housing venture, a sector which he entered in 1995, and other businesses he is involved in. Excerpts:

You are one of the biggest real estate developers in Nepal. Tell us about your projects.

We were the first to introduce housing with flat system in Nepal. We initially made 100 apartments and sold them. When we started we had sold an apartment for just Rs. 800,000. The prices of those apartments have now doubled and tripled. We have now introduced a new project that will have 796 apartments at a single site. It took us fours years to prepare for the Vegas City project and we are now advertising the flats. Our flats are relatively cheaper than others. We want to sell the product for as little as possible building huge number of flats. Despite increased construction costs we are selling at a lower price with just 5-6 profit margins.

How much do your flats cost?
The prices are different depending on which floor they are on, where they face, and their sizes. All desire south-facing flats. But we can not provide similar flats for all. The middle range apartments cost Rs. 2.4 million and upper range ones cost Rs. 4.4 million.

As 796 families are staying in a single site, don't you think it will be difficult to manage so many families?
There will be a society of flat dwellers and it will manage the entire site. The society will hire professionals to manage the building. About 95 persons be employed in the building. We will establish a fund from which the employees will be paid. Flat dwellers will have to separately manage the recyclable and non-recyclable waste. Although the apartments will not be under our ownership, we are going to make some rules before handing them over to owners.

Can you tell us how this trend of living in flats is picking up?
People are increasingly coming to flats as the land has become expensive. People can not afford land inside the ring road and there is not enough land available. Building a house far from the centre will make it difficult to commute. There is also a security problem.

I have found four types of people living in flats. People whose children have gone to foreign countries and are alone in Kathmandu. Those who find it diffucult to manage a large house with limited family members, others are also choosing flats for security reasons and some seek community living provided by flats.

The prices of construction materials have nosedived recently internationally. Their prices have also come down in Nepal. How has it benefited you?
The prices of construction materials in Nepal are not as low as they should have been given that international prices have come down drastically. This is because the cement and iron industries are suffering from power outage. Prices of construction materials have decreased to some extent despite the load shedding. But, we have failed to capitalise on this opportunity due to same problem.

The banks are now more careful about real estate lending. How has this affected your business?
Yes, they are but they are not adverse to individual builders who are good customers. We are getting loans from banks without difficulty. We take loans to buy land and take advances from the customers who have booked flats. Banks alone can not finance us because our new project costs Rs. 2.5 billion.

You have begun a major project. Don't you think the government's attempt to seek sources of income will discourage your customers to buy flats?
The potential customers are more concerned about the government's tax policy. They are saying that they first would know about the tax policy before booking the flats. A third of potential customers are saying this. But I say that everybody should pay tax if he or she is lawfully required to pay. It is not that if anybody invests in the real estate, the source of income is identified and the source is not identified in case the investment is made in other sectors.

You are also involved with transportation sector. How has the existing syndicate system affected Agni Yatayat?
The situation of most of the companies is precarious because of continuous strikes and possibility of buses and trucks being burnt down. There is no need to fight for an individual transport company and companies running syndicates. We had problems regarding the system. But at present climate of insecurity we should not fight against each other.

How is Agni Air doing?
The aviation industry is doing well as people are increasingly travelling by planes nowadays. This situation has come about because land routes are obstructed frequently. We have three planes for remote areas and one for more accessible places. We are currently serving in Lukla, Jomsom and Tumlingtar, Biratnagar and Pokhara.