Rs. 800 million, 17-Story Tower will be the tallest building in Nepal

The JSB Financial Tower to be tallest building in Capital
TKP, 3-Nov-10

The JSB Financial Tower in Kamaladi will be the tallest building in Kathmandu when completed. Developed by Krishi Premura Properties, the 17-storey commercial complex will have a total area of 170,000 sq ft.

The building is situated at Kamaladi, one of the capital’s prime commercial locations, and is divided into three blocks—retail outlets, commercial spaces and penthouses.

The first three floors of the tower will house retail outlets, nine floors will be set aside for offices of banks, financial institutions and multi-nationals. The top five floors will contain penthouse apartments.

“The retail outlets will feature high-end brands,” said Pravin Naulakha, manager of the JSB Financial Tower.

The JSB Financial Tower stands apart for two reasons—location and design. It is coming up in a leading commercial location containing banks and financial institutions. With the Kamaladi-Durbar Marg area turning into a financial hub of the capital, the tower has targeted banks and financial institutions as its prospective tenants.

Designed by architect Debesh Raj Bhattarai, the tower will provide the entire range of financial services under one roof. “It will be an eye-opener for Nepal,” said Bhattarai. “It’s a contemporary design which we see abroad.” Emphasis has been given to green energy in the building, he added.

All the five penthouses have been designed with spacious living and dining rooms, common bathrooms, spacious bedrooms with attached changing rooms, attached bathrooms in each bedroom and a Jacuzzi in the master bedroom.

The tower, according to architect Bhattarai, will have three-layer basement parking space which can accommodate more than 200 vehicles. The tower is equipped with high-speed wireless and optical fibre connection ideal for video conferencing and high data transmission. There will be four passenger elevators in the tower.

Formal bookings for the tower will start within a month, said Naulakha. The tower is expected to be completed within two years from the start of construction. According to Naulakha, Rasuwa Construction Co. is the main contractor of the Rs 800 million project.

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To put things in perspective, here is the "History of the Tallest Buildings" in the world.

The world’s tallest building opens in Dubai

Economist, 4-Jan-2010

AT 828 metres (2,717 feet), the Burj Khalifa, which opened on Monday January 4th, dwarfs Taipei 101, which was previously the tallest tower anywhere, by 320 metres. The tower has more than 160 floors and cost some $1.5 billion. It is in danger, however, of being seen as the height of folly. Construction began in 2004, when the economy of the United Arab Emirates was growing at 9.7%. It is forecast to grow by just 2.4% this year and probably shrank by 0.2% in 2009. This is not the first tower to be planned in the good times and then opened in a slump. Countries home to many of the world's highest buildings (when they opened) saw their economies slump in the years between the start of construction and the official opening. Our chart compares economic growth of the relevant country when a tower was opened, with the respective annual growth rate enjoyed half a decade earlier.

NRB imposes 25 pc cap on realty loans

NRB imposes 25 pc cap on realty loans
myrepublica, 18-Dec-09
MILAN MANI SHARMA

In a bid to correct the overheated realty market, Nepal Rastra Bank (NRB) on Thursday imposed a cap on the exposure of banks and financial institutions to housing and real estate loans, asking them to limit such exposure to 25 percent of their total investment portfolio by the end of fiscal year 2012/13.

The NRB directive has also instructed banks to limit housing and real estate loan exposure as a share of their total loan portfolio to 40 percent within this fiscal year and to bring it down to 30 percent by the end of next fiscal year.

The new directive requires the banks not to issue loans of more than 60 percent of fair market value of the collateral/project.

As for the real estate sector (which does not include the housing sector) the central bank has asked the lending banks to reduce exposure to 15 percent of total loan portfolio by the end of next fiscal year and to 10 percent by the end of fiscal year 2012/13.

In case banks and financial institutions fail to comply, the central bank has said they will need to provision for the excess amount (above the cap), calculating it on the basis of 150 percent risk weightage.

"This policy measure will not only slow down the realty sector but it could trigger desperate selling, sending the prices downward," Min Man Shrestha, general secretary of Nepal Land and Housing Developers´ Association, told Republica.

Developers said that the change in lending rate policy that the central bank announced on Tuesday has already sparked a rise in housing and real estate loans by at least 2 percentage points. "That has already made housing loans unaffordable to the general consumer," said Shrestha.

Imposition of a cap and compelling the banks and financial institutions to down-size their investment in the sector is certain, on the other hand, to put pressure on land and housing dealers operating with bank loans to repay their loans as soon as possible.

"The central bank´s measure will not only dampen new demand but also intensify pressure to sell. It will drag land prices down," said another developer.

Shrestha also echoed this statement, adding that the new policy measure will mainly hurt small developers and petty investors operating on bank loans with the sole motive of profit-making.

"Since this segment accounts for 45 percent of total land deals and is mainly responsible for the present unnatural price rise, its caving in would force the market to correct," he said. Developers even noted that the impact could be seen as early as within a month.

Banking on real estate

Banking on real estate
NepaliTimes, Issue #46 (10-Apr-09 to 16-Apr-09)

When the real estate bubble bursts, it shouldn't take banks down with it

Banks in Nepal seem to be thriving. According to Nepal Rastra Bank, Nepali commercial banks hold close to Rs 470 billion in deposits, but for banks to be profitable they have to put this deposit to work.

Given the poor business climate and soaring property prices, it is a fair guess? this cash is feeding the real estate bubble. Such a bubble driven by excess credit fueled liquidity is exactly what brought many US banks to their knees, and there is a good lesson there for us.

As property prices went up, banks in the US found increasing their real estate loan portfolio an easy way to boost earnings. They not only kept loans in their own balance sheet, but packaged them into securities which were sold to investors worldwide, further increasing the demand for mortgage loans. Borrowers were approved for loans they were not capable of paying and many jumped on the bandwagon assuming that real estate prices could only go up.

What initially started as a problem in the subprime loans or loans made to risky borrowers, has spread to prime loans as decreasing real estate prices and increasing unemployment rate are putting even credit worthy borrowers at risk. As a result, banks are now stuck with hundreds of billions of dollars in real estate loans, some of which are practically worthless, and are thus forced to book billions of dollars in losses. The massive loans are threatening the solvency of some US banks. The FDIC has seized more than 21 failing banks so far in 2009 alone.

We are inside a real estate bubble in Nepal, and this bubble could burst. Among other things, the excess cash available to drive prices higher may not be there in the future. The global economic slowdown is already impacting on the remittance flow into Nepal which will reduce the liquidity in the banking sector and the money chasing real
estate assets.

When the bubble bursts, not only will many Nepalis feel much poorer from reduced property prices, but their deposits in banks could also be at risk if banks that are overexposed to real estate lending face defaults, threatening their ability to meet obligations to depositors. The margin of error for Nepali financial institutions, and the public, is very small. Unlike most other countries, there is no established deposit insurance program in Nepal and it is questionable that Nepal Rastra Bank has the ability to manage a run on the banks.

Outstanding loans of commercial banks to the real estate sector grew at a staggering rate to Rs 17.9 billion in February from Rs 6.6 billion just a year earlier. The questions to ask the banks are: what percentage of outstanding loans is real estate related, including both direct and indirect loans where real estate asset is kept as collateral? How will the real estate price reduction affect the performance and recovery of these loans? Have the banks done a sensitivity test for the worst case scenario and are they adequately capitalised if that scenario materialises?

The government and Nepal Rastra Bank should also look into the feasibility of instituting a deposit insurance program up to a certain threshold. Such a program can be funded from the premium paid by the deposit-taking institutions and the premium should be based on the risk assessment of each participating institution.

It is not too late for Nepal, but it is time to ask tough questions to the banks and the regulator and focus on risk management so that when this real estate bubble ultimately bursts, it doesn't take the banking sector down with it.

Raju Sitaula is a banking professional based in New York.

Boom in the unreal estate

NepaliTimes, Issue #443 (13-Mar-09 to 19-Mar-09)
Suresh Neupane

The housing bubble is intricately linked to the credit market

Despite the downturn in the economy, there is one sector that is booming: real estate and construction.

With more than $1.5 billion coming into the country from remittances, people have nowhere to invest but in land and housing. The last year has seen a continued boom in construction with house and land prices sky rocketing.

As the competition to buy houses and apartments get hotter by the day, banks are racing each other to offer loans to prospective buyers. Anyone able to pay Rs10,000-12,000 a month as EMI can easily obtain a housing loan. This trend is catching on even in the Karnali. "Every day 20-30 people come to inquire about home loans," says Susan Lal Shrestha of Bank of Kathmandu, "if they have all the papers right we give the loan within a week."

The commercial banks are more ready to hand out private loans than they are to invest in industry and development projects because they consider it less risky and they can get better overall returns. Nepal Rastra Bank says that in the last six months of 2008, commercial banks granted housing loans worth Rs29.5 billion, offering loans even for interior decoration and furtniture.

Abhishesh Dhakal, manager at Everest Bank says, "The emphasis is not just on the house but on the environment as well. The appeal of home loans has increased not just in the capital but in other districts such as Ittahari, Biratnagar, Butwal and Dhangadi." Dhakal says that 80 per cent of Everest Bank's consumer banking is based on home loans.

While some are highly critical of this booming investment in housing an official at the central bank says this is good for the economy because of the downstream effect on creating employment in the brick, cement, iron, paint and furnishings industries.

But if remittances from those working overseas continues to decline, middle class consumers will have difficulty re- paying their loans. Bhupendra Pandey, head of corporate banking in Rastra Banijya Bank says: "Families use the money to buy land and houses in the districts. Some come into the capital and turn to the banking sector for additional financing. With remittances seeing a slowdown, the housing sector will surely be affected." The fall in remittances will also decrease the loan capacity of the banks as deposits drop.

Some believe the banking sector is sound and will not be buffeted by a potential bursting of the property bubble. In the 1990s the buyer had to put down a 20 per cent cash deposit before getting an 80 per cent loan. Now buyers have to put down a 60 per cent deposit. But Himalayan Bank's Thamel branch manager, Rabindra Pradhan concedes: "The whole financial sector is after the housing business and so the risk is increasing."

It is not just the private and new banks that have turned their attention to the housing sector, the country's oldest Nepal Bank and Rastra Banijya Bank are also investing in this area. Binod Atreya, CEO of Nepal Bank says, "Although the sector is an attractive investment option, we have to investigate thoroughly before making any decision." Nepal Bank has granted home loans of over Rs1 billion to more than 900 customers.

Home loans are the chief focus at Nabil Bank as well. Raveena Joshi of Nabil says: "A few years ago our focus was on car loans, now it has shifted to housing." Nabil offers an interest rate of 10 -10.5 per cent for a period of five to 20 years. Everest bank, which was probably the first bank to introduce home loans, has helped over 2,800 homeowners. It offers 8.5 per cent interest for five years and at 10 per cent for 20 years.

With such high interest rates, it is not surprising that commercial banks are inclined towards home loans.

Forty per cent of the total loans by newly opened banks are for home loans.

With government spending on development low and the financial sector channeling all its investment in one area, bankers admit that this is like putting all our eggs in one basket.

Is Kathmandu Real Estate in a Bubble?

Realty boom continues, revenue grows 147 pc
MyRepublica.com, 24-Feb-09
MILAN MANI SHARMA

Realty transactions and subsequent revenue collections by the government has more than doubled over the past one year, as more speculative buyers rush to invest in land and houses.

Figures at the Department of Land Reforms and Management (DoLRM) show that land transactions in the cities and urban centers almost doubled over the first seven months of 2008/09 compared to same period last year. It generated for the government revenue of Rs 3.85 billion, which was up by some 150 percent compared to the collections made in the same period last year.

“The collection made during the period is already about 20 percent more than the target, which itself was 45 percent more that the target set for the last fiscal year,” said Raju Basnet, planning officer at the Department.

Though many staff at the Department say that they were initially worried about meeting the huge revenue target set by the Ministry of Finance, but given the tendency of the land transactions, they appear confident about meeting the target easily. “We are confident now of exceeding this year’s revenue target of Rs 4.80 easily,” Basnet said.

Officials at the Land Revenue Offices in three districts -- Kathmandu, Lalitpur and Bhaktapur -- attribute the rapid rise in land transactions to profit-taking and say land prices have more than doubled over the period. “Increased transactions along with upward revision of land prices contributed to the sharp rise in revenue collections,” they said.

In some parts of Bhaktapur and Lalitpur, the government had increased the official valuation of land by as much as 100 percent. In Kathmandu, official valuation in the outskirts was increased by up to 25 percent.

Rush at the five LROs in the Kathmandu Valley suggests that people’s desire to hold land has continued to grow, irrespective of the imposition of income disclosure policy on land and house transactions exceeding Rs 3 million and Rs 5 million respectively.

“The rush for holding land is so high that we are registering as much as 450 transactions every day,” said Krishna Prasad Niraula, under secretary at Chabahil LRO. He said that the office would deal with about 150 transactions per day in the past.

A report by LROs to DoLRM says that only about 25 percent of the transactions now are done for building private residences. The rest (75 percent) is done for reselling purpose, it says.

“Land price more than doubles in a year, so who would invest on gold or shares or other securities,” said Radhika Aryal, a resident of Babarmahal.

Radhika, who bought 5 annas of land at Gothatar in Kathmandu three years ago at Rs 1.4 million (Rs 280,000 per anna), is planning to pocket Rs 4.5 million from its sale now (at Rs 900,000 per anna) soon. The money, she said would go on to buying a larger stretch of land for reselling purpose.

The case of Radhika is just an indicative of how the city residents are responding to the present boom and capital gain opportunity it has created, noted LRO officials.

“Four anna land pieces are most preferred for residential purpose and fetch a good resell value as well,” said Tej Prasad Dahal, official at Kalanki LRO.

Contrary to the past, LROs reported that the transactions backed by commercial banks have dropped over the past one month, particularly as the central bank has directed them not to bet their money on the bubble created in the sector.

“However, finance companies and cooperatives have rapidly filled the gap and have moved aggressively to finance land deals,” said Dahal.

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.

Nepali property expo in US draws diaspora

Nepali property expo in US draws diaspora
ArthaExpress, 5-Jan-09

Nepali housing companies and builders were successful in selling flats here to the Nepali diaspora in the US.

“People there were mainly interested in investing in real estate,” Rajan Karmacharya, managing director of First Kathmandu Pvt Ltd and organiser of the Nepal Property Expo 2008, said adding, “As cash transactions were not allowed, we had good bookings of flats and apartments of around Rs 2,500 million.

The expo concluded in New York on a grandly successful note. “There were around 2,000 visitors who were very interested in buying flats, apartments and investing in real estate,” he said adding,”We are planning an expo in Australia.”

Twelve companies, Civil Homes Pvt Ltd, Guna Colony, Oriental Builders Pvt Ltd, Varun Developers Pvt Ltd, Kohinoor Hill Housing Pvt Ltd, Stupa Housing Pvt Ltd, Echo Housing Pvt Ltd, Maharjan Builders Pvt Ltd, Silver Valley, Karmacharya Awas Company Pvt Ltd, Guna Cooperative Ltd and America’s Chettri and Association Incorporate were the participants in the expo.

According to the organisers, houses with a value of Rs 25 lakh to flats costing Rs 16.5 million were kept in the exhibition for sale. The bookings were beyond expectations and the esponse was overwhelming.

The expo — from December 27 to 28 — was organised with the joint effort of Himalayan Herbal Garden Inc, America and Guna Colony.

NRB tightens monetary policy

NRB tightens monetary policy
Hopes to prevent high risk investment in real estate
ekantipur, 25-Nov-08
Prithvi Man Shrestha

Nepal Rastra Bank (NRB), the country's central bank, is tightening the country's monetary policy to discourage financial institutions from further investing in real estate without considering the risks.

The International Monetary Fund (IMF) had said Sunday that the loose monetary policy adopted by NRB had, to some extent, contributed to boost real estate prices.

IMF had also warned that decline in real estate prices would have a negative impact on banks and their output growth.

Talking to the Post, NRB Acting Governor Krishna Bahadur Manandhar said the central bank had increased 'risk weight' provisioning to 150 percent in the real estate sector against 100 percent in other portfolios.

He informed that NRB had also increased cash reserve ratio (CRR), the minimum reserves a bank must hold to deposits, to 5.5 percent from five percent to discourage banks and financial institutions from investing in high risk ventures.

NRB said 13 percent of Nepali banks' investment was in the real estate sector, which could not be termed 'massive'.

However, Manandhar said that some banks had invested up to 40 percent in the retail sector. “Especially new banks as well as some old ones have high investment in the retail sector,” he said.

President of Nepal Banker's Association Radhesh Pant was of the view that banks should be more cautious in investing in real estate and NRB should monitor the banks closely.

Banks should make correct valuation of the collateral given that real estate had been witnessing a bubble for the last few years, Pant said.

Pant, who also heads Bank of Kathmandu, stressed the need to diversify investment among various portfolios to minimise risk.

It should be noted that the current global financial crisis started from the real estate sector after financial institutions investing heavily in sub-prime and other high risk mortgages were hit by high rate of defaults after housing prices in the U.S. dropped significantly.

Another concern of IMF was the growing number of financial institutions licensed by NRB, which, it said, was putting NRB's supervisory soundness under strain.

Manandhar said NRB could not prevent any bank from coming into the market if it fulfilled the set criteria.

He said that NRB had increased capital adequacy to Rs. 2 billion for commercial banks just to start their operation from the earlier requirement of Rs. 1 billion in order to discourage the launch of new banks.

“We have also provisioned for disclosure of income sources of new investors in banks,” he said. “And yet, we have failed to stop new banks from coming into the market.”

Three new national level commercial banks and 32 other financial institutions are currently awaiting the central bank's approval, according to NRB. There are 25 national level commercial banks already in operation.

Manadhar was also confident that inflation would decline to a single digit although IMF had predicted it would hover at around 11 percent.

“Inflation has already reached its highest level. It cannot grow at the same level this year,” he said.

“Given the global economic slowdown and the nosedive in petroleum prices, inflation is certain to go down,” he added.

Real Estate Rate May Cause Banking to Abate, Warns IMF

Real Estate Rate May Cause Banking to Abate, Warns IMF
ArthaExpress, 24-Nov-08

Nepal is over-banked and agressive lending as well as large exposure of the financial sector to real estate could harm the financial health of the country, warned a visiting International Monetary Fund (IMF) team.

"With some 160 licenced deposit-taking institutions, Nepal is over-banked," said Braian J Aitken, Deputy Division Chief of Asia and Pacific department of IMF.

"Aggressive lending practices of many of the financial institutions expose their depositors to excessive risk. This underscores the urgency of significantly ramping up Nepal Rastra Bank´s (NRB) regulatory enforcement," IMF team leader Aitken said adding that the central bank might find it difficult to supervise the increasing number of financial institutions. "Thus, the central bank´s supervisory capacity has to be increased," he added.
IMF has also shown serious concern over the rapidly growing real estate price. "The biggest short-run concern is rapidly growing real estate price. Given the large exposure of the financial sector to real estate, a decline in real estate prices would have negative effects on banks and ultimately on output growth," said the IMF team.

The IMF blames the loose monetary policy for this development in the real estate market. "Development in the real estate market has been fuelled in part by a loose monetary policy," IMF said. "However, NRB recognises the risks and has recently taken some modest steps to tighten monetary policy but more tightening may be needed."

The central bank has announced a cautious Monetary Policy - that was a regular Seventh Policy - for the fiscal year 2008-09 on September 29. NRB has claimed that it has brought a rigid Monetary Policy that has increased the cash reserve ratio (CRR) by half a percentage point to 5.5 per cent. The CRR has been five per cent since 2004.

The IMF team´s visit is focused on the recently approved budget and current financial and macro-economic conditions. The team held marathon discussions with Finance Minister Dr Baburam Bhattarai, finance ministry officials and the acting governor of the central bank over the last two weeks. "Nepal´s macro-economic situation is good but subject to risks. Its outlook broadly remains stable, but the average inflation could increase to around 11 per cent," according to IMF.

This year´s Monetary Policy has also been designed largely to maintain macro-economic stability and price rise control. But it has not been able to crack the whip on rising inflation. "Inflation in Nepal is largely catalysed by conditions in India," said Aitken, adding that Nepal´s inflation could well be called imported.

The IMF also termed the recently approved budget as ambitious. "Revenue is budgeted to increase by 1.75 per cent of the GDP in part based on improved tax administration," the IMF team said. "Higher revenue forecast accomodates a sizable rise in budgeted recurrent spending. The government has taken impressive steps in an effort to achieve its revenue target. Revenue remains buoyant at this stage, but there is still the risk that if planned revenue fails to materialise the sustainability of the budget could be threatened," summed the IMF team that visits Nepal twice a year to access the country´s fiscal and monetary policies.

Govt proposes income source info for property buys

Govt proposes income source info for property buys
ekantipur, 5-Nov-08
PRABHAKAR GHIMIRE

If the Cabinet approves what Finance Minister Dr. Baburam Bhattarai proposed Wednesday, people buying land and buildings worth Rs. 5 million or more will soon have to disclose their income sources.

Those spending Rs. 2.5 million or more to own a house and Rs. 1.5 million or more on a vehicle purchase will also need to disclose their income sources.

The spending ceiling, consumption beyond which will have to go through the government's income screening, will come into effect as soon as the Cabinet endorses the proposal, said Dr. Bhattarai, unveiling the proposal for the first time Wednesday.

He had incorporated a policy of screening people's incomes while procuring expensive land, houses and vehicles in the budget for the current fiscal year. The policy had drawn criticism from the business community.

Dr. Bhattarai, however, defended it as a move to discourage tax evasion and to maintain transparency in property dealings. "Our aim is to establish fairness in the operation of the property market and check tax evasion," he told the press.

The finance minister further disclosed that the Ministry of Finance (MoF) has already prepared guidelines for regulating transactions in property.

He further said that MoF has drafted a manual to give legal identity to the Voluntary Disclosure of Income Scheme (VDIS) -- a programme announced in the budget for the current fiscal year -- in order to encourage tax payers to declare their income sources on their own.

A separate legal provision on VDIS is being formulated on the back of bad experience of a few years back when the Commission for Investigation of Abuse of Authority (CIAA) -- the government's anti-graft body -- refused to recognise incomes that taxpayers disclosed.

Under the scheme, the government had collected about Rs 1 billion in revenue, which was 10 percent of the total property that taxpayers disclosed voluntarily.

''Taxpayers’ voluntary declaration of income will not face any hassle now. We are formulating a law to give them recognition,'' Dr. Bhattarai stated. ''I also assure you that no action will be taken against taxpayers who declare their incomes voluntarily,'' he added.

Responding to experts' scepticism about the government is ability to mobilize the targeted volume of revenue, Dr. Bhattarai said that revenue collection has shot up by 24.3 percent to Rs. 26.24 billion during the first three and half months of the current fiscal year. The government has set a revenue target of Rs. 141 billion in 2008/09.

The ministry has also prepared a manual for implementing budgetary programmes like waiver of loans and interests on loans as announced in the budget.

A real state developer - Comfort Care

A real state developer - Comfort Care
Comfort Housing shows the way in managing urbanisation and creating jobs
NepaliTimes, Issue #380 (2007-12-28 - 2008-01-03)
MIN RATNA BAJRACHARYA

If there is one sector of the economy that is truly booming in Nepal today, it is the housing industry.

Construction can’t keep up with demand fuelled by remittance and urbanisation. Needless to say, most of this growth is haphazard and malignant.

Yet, there was one group of engineers and investors who felt there was a need for a paradigm shift: provide quality housing at affordable prices while at the same time steer city’s living spaces towards planned growth and create jobs. Om Rajbhandhary and his friends got together in 2001 to start Comfort Housing with this vision and launched a 76-unit development in Sitapaila.

“A developer is a contractor, consultant and client all rolled into one,” replies Rajbhandhary when asked to describe his job. As the CEO of Comfort Housing, he has to deal with everyone. The biggest challenge was to overcome the Nepali tradition of building one’s own house.

“We don’t want to live in a house made by others because we don’t trust builders,” says Rajbhandhary. But Comfort has managed to build trust. People took well to the idea of living together because it reminded them of their ancestral bahals and choks in the old city. And because of the hassles of finding cement, steel rods, getting the water and electricity supply, builders realised it was much more convenient to let someone else worry about all that.

After Sitapaila, Rajbhandhary launched the even more ambitious Comfort Housing estates in Budhanilkantha, Sitapaila and Dharan. Rajbhandhary says he’d be challenged by developing more housing areas outside Kathmandu to ease the pressure on the capital, but most clients want to buy in Kathmandu.

Comfort Housing recently ventured into a vertical living project with The Comfort Housing Tower II at Lazimpat. It was so successful that the company is building three more apartment complexes in Bijeswori, Panipokhari and Sitapaila. It was inevitable; as Kathmandu runs out of space, there is nowhere to go but up.

We ask Rajbhandhary the secret behind the success of his projects besides having the right idea at the right time. “It is the trust from our customers about our product,” he replies with conviction. “Most Nepalis save their entire lives to build a house in Kathmandu, which is why they are so attached to the property. I am lucky that people trust me to build their homes for them.”

Unlike many developers who take short cuts to make a fast buck, Rajbhandhary says he owes his success entirely to customer satisfaction. What he hopes is that other developers also take his approach of customer-first, because if they are satisfied, it also helps the community and the nation.

As he surveys the Kathmandu skyline with us from a vantage point in the city, Rajbhandhary is proud to point out his projects and how they are inducing other developers to follow the model.

“One of the areas with huge untapped potential is budget housing because that’s where most customers are,” says Rajbhandhary, “there’s urgent need for new entrepreneurs and investors.”

Living in the complex he built in Sitapalia, Rajbhandhary has observed changes in the sociological aspects of Nepali family life. He says those who were not into sports are getting into it, and many are fitter and healthier. Children and adults who could not swim have learnt to, the community gets together during festivals and celebrations.

“There is a new sense of community, and I feel proud to be a part of that revival,” says Rajbhandhary. He says there is enough profit in the housing business and plenty of land still left in Kathmandu for planned development.

The government benefits from housing business because it gets revenue during land procurement, and ownership transfer. Seventy-five percent of construction materials are locally made which pumps the money into the domestic economy through employment and taxes. A project worth Rs 400 million takes three years to build and the downstream benefits are spread out over time as well.

Rajbhandhary’s only gripe is that for all its potential and contribution to the economy, the government hasn’t yet given the housing industry the importance it deserves; for example allowing foreign investment in construction and housing.

“Nepalis won’t have to go abroad in search of work, the construction boom will provide enough employment here at home,” says Rajbhandhary. For that to happen, the government has to treat housing as a national priority, he adds, which is not possible unless the political leadership understands its importance.

Building costs double in 3 yrs

Building costs double in 3 yrs
Construction materials hit ceiling
eKantipur, 28-Apr-08
By Milan Mani Sharma

Prices of construction materials have hit the ceiling. Over a span of two weeks, the prices of cement and steel rods, which together take up 60 percent of building construction budgets, increased by 35 percent and 18 percent respectively.

Price records at the Nepal Construction Materials Dealers Association (NCMDA) show that cement is currently being sold at an average of Rs 750 per 50 kg sack and steel rod at about Rs 95 per kg.

Even bricks, which generally cost less during the production season, have increased to Rs 3,800 per 1,000 pieces, said Roshan Dahal, president of the association.

Cement was priced at Rs 440 per sack, rod at 42 per kg and brick at Rs 3,500 per 1,000 in mid-July 2007. Builders further stated that the cost of building a house in Kathmandu Valley has nearly doubled over the last three years. The price of materials has been on the rise from September 2007, when growing demand for steel and rising coal prices pushed up the international price of iron and billets.

The rise in cement, however, has been dramatic. It was triggered by the Indian government's decision to restrict exports of cement and raw materials two weeks ago.

As Nepal meets some 70 percent of its national cement requirements of 2 million tons a year through the import of cement and raw clinker from India, the restriction has hit consumers hard.

"There is no shortage of the product, but consumers are already panicking. Dealers have taken advantage of the situation and raised prices far in excess of ex-factory prices," said a local producer. He tagged the current prices uncalled for and flayed market inspectors and revenue officials for turning a blind eye to the black market.

India may lift export ban

Commerce Secretary Purushottam Ojha said that India could soon lift the restriction on exports to Nepal of cement and clinker, the main raw material for cement factories.

"India has responded positively to our request to lift the ban on cement and clinker exports," Ojha told the Post. He stated that India was holding inter-ministerial consultations on the issue, and a decision to lift the ban was expected in the next few days.

Pashupati Murarka, member of Nepal Cement Producers Association, said that local producers and importers have enough stocks to meet a month's demand. "If India lifted the ban soon, supply will not be affected and prices will ease as well," he said.

A real state developer: Comfort Housing shows the way in managing urbanisation and creating jobs

A real state developer: Comfort Housing shows the way in managing urbanisation and creating jobs
NepaliTimes, Issue #380 (28 December 07 - 03 January 08)
Min Ratna Bajracharya

If there is one sector of the economy that is truly booming in Nepal today, it is the housing industry.

Construction can’t keep up with demand fuelled by remittance and urbanisation. Needless to say, most of this growth is haphazard and malignant.

Yet, there was one group of engineers and investors who felt there was a need for a paradigm shift: provide quality housing at affordable prices while at the same time steer city’s living spaces towards planned growth and create jobs. Om Rajbhanary and his friends got together in 2001 to start Comfort Housing with this vision and launched a 76-unit development in Sitapaila.

“A developer is a contractor, consultant and client all rolled into one,” replies Rajbhanary when asked to describe his job. As the CEO of Comfort Housing, he has to deal with everyone. The biggest challenge was to overcome the Nepali tradition of building one’s own house.

“We don’t want to live in a house made by others because we don’t trust builders,” says Rajbhanary. But Comfort has managed to build trust. People took well to the idea of living together because it reminded them of their ancestral bahals and choks in the old city. And because of the hassles of finding cement, steel rods, getting the water and electricity supply, builders realised it was much more convenient to let someone else worry about all that.

After Sitapaila, Rajbhanary launched the even more ambitious Comfort Housing estates in Budhanilkantha, Sitapaila and Dharan. Rajbhanary says he’d be challenged by developing more housing areas outside Kathmandu to ease the pressure on the capital, but most clients want to buy in Kathmandu.

Comfort Housing recently ventured into a vertical living project with The Comfort Housing Tower II at Lazimpat. It was so successful that the company is building three more apartment complexes in Bijeswori, Panipokhari and Sitapaila. It was inevitable; as Kathmandu runs out of space, there is nowhere to go but up.

We ask Rajbhanary the secret behind the success of his projects besides having the right idea at the right time. “It is the trust from our customers about our product,” he replies with conviction. “Most Nepalis save their entire lives to build a house in Kathmandu, which is why they are so attached to the property. I am lucky that people trust me to build their homes for them.”

Unlike many developers who take short cuts to make a fast buck, Rajbhanary says he owes his success entirely to customer satisfaction. What he hopes is that other developers also take his approach of customer-first, because if they are satisfied, it also helps the community and the nation.

As he surveys the Kathmandu skyline with us from a vantage point in the city, Rajbhanary is proud to point out his projects and how they are inducing other developers to follow the model.

“One of the areas with huge untapped potential is budget housing because that’s where most customers are,” says Rajbhanary, “there’s urgent need for new entrepreneurs and investors.”

Living in the complex he built in Sitapalia, Rajbhanary has observed changes in the sociological aspects of Nepali family life. He says those who were not into sports are getting into it, and many are fitter and healthier. Children and adults who could not swim have learnt to, the community gets together during festivals and celebrations.

“There is a new sense of community, and I feel proud to be a part of that revival,” says Rajbhanary. He says there is enough profit in the housing business and plenty of land still left in Kathmandu for planned development.

The government benefits from housing business because it gets revenue during land procurement, and ownership transfer. Seventy-five percent of construction materials are locally made which pumps the money into the domestic economy through employment and taxes. A project worth Rs 400 million takes three years to build and the downstream benefits are spread out over time as well.

Rajbhanary’s only gripe is that for all its potential and contribution to the economy, the government hasn’t yet given the housing industry the importance it deserves; for example allowing foreign investment in construction and housing.

“Nepalis won’t have to go abroad in search of work, the construction boom will provide enough employment here at home,” says Rajbhanary. For that to happen, the government has to treat housing as a national priority, he adds, which is not possible unless the political leadership understands its importance.

Profile-Valley Homes (P) Ltd.

Profile-Valley Homes (P) Ltd.
New Business Age, September 2007

With the mushrooming growth of housing companies and colonies over the last some years, the recent trend among the developers is to go for higher end of the market. Valley Homes (P) Ltd. is one such company. But the promoters say, right now they are more in developing the company and its brand than in making immediate financial gain. The strategy adopted is to let the customers choose the interior of the house so that the houses are customized to the needs of the individual buyer that is unlike in case of other colonies where the buyer has to buy what the builder has developed.

Spread over 76 ropanis of land located at Sunakothi village, about three kilometers drive from Satdobato of Lalitpur, the new colony developed by Valley Homes is of international standard targeted to the high income families, says Suraj Narayan Joshi, Chief Executive Officer of the company.

The first phase of the project is now complete and all 28 homes built in this phase using up some 25 ropanis of land are already sold, he says and informs that all the new owners will move in over the next couple of months.

According to Joshi, upon completion, the project will have about 80 or 90 homes with the entire necessary infrastructure, which, according to the plan, include a club house, grocery store and a recreation centre in addition to the drainage, water supply system, power supply system and the like.

Being targeted to high end buyers, the Valley Home houses are priced high. “But that is commensurate with the quality,” says Joshi. By quality he means not only the construction standard and material used, but also the environment. “It is the whole package that we are selling. The customer buys not only the dwelling unit, but the entire atmosphere. For which he is always ready to pays the extra.”

Having already sold 28 units, the business idea of the company has proved itself. As Joshi admits, the idea was initially like a hypothesis, not based on any research on the target customer base of the company. “It was based on the observation of similar high-end housing colonies at Gurgaon and NOIDA near New Delhi of India. We had concluded that if something sells in India, it will sell also in Nepal. And that gamble has paid off,” he adds.

The strategy adopted by the company is to build the skeleton of the colony according to the company’s design but let the buyers of the house select the lay out for the interior. “One customer may need a Puja Kotha whereas the other one may need bigger room for the children. We build their houses accordingly,” says Joshi.

In the course of the development, Joshi has made a number of interesting findings related to housing business in Nepal. The most important finding, according to him, is the fact that the Nepali buyers of houses in colonies are not ready to make the buying decision until some infrastructure is ready or the construction of the house is completed to a certain level. “I think it is the reflection of their mistrust on the developers,” he says. That was precisely the reason why the Valley Homes are being developed in phases. Now that the first phase is developed and 28 houses are already sold, the interested buyers of the homes in the next phase have something they can see and evaluate the developer.

In the second phase, Valley Homes is developing a grocery shop and children’s park as well in addition to planned batch of 30 additional houses. The work is already in advanced stage of development and bookings are to start soon. And Joshi says, also the work on the third phase is to start soon.

The second finding of the company is that since a lot of women are now in high income earning jobs, they are ready to pay something extra for their new house if the environment is good. Similarly, the company has also concluded that the Nepali people too don’t mind commuting 15-30 minutes to work as long as they are sure that the homes are in good environment. Both of these findings are very much similar to the experience in Delhi’s satellite towns Gurgaon and NOIDA.

And Joshi is happy that the location of present colony has given his company the opportunity to create such environment. The location is pristine village away from the busy city centre. While the residential colonies developed in the past in the city centres are now gradually turning into commercial centres, this is not likely to the case in Valley Homes’ colony. The expansive area owned by the company gives it enough space to separate the dwelling units from the disturbances that may be there when the locality outside the colony develops into a commercial area.

Though Joshi complains that his company had to make a very high investment to develop the water supply system, he is happy that the water that is now available in his colony is of very high standard. For that purpose, the company has to deep bore and install its own filtration system. But as the surrounding area is free from any industrial activities and urban waste, the underground water is free of any contamination. “The water that comes on the house taps is totally safe for drinking,” he claims.

After the Valley Homes, the company is considering to go for developing some entertainment facility. For this purpose, some land is already acquired in Godavari area, informs Joshi. Then on the cards is a commercial complex nearer to the city.