Real estate price down by 20 percent

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Aug. 20, 2010, 5:45 p.m. Published in Magazine Issue: Vol.:4 No.-06 August 20- September 02,2010(Bhadra-04,2067)
Following the stringent rules imposed by the central bank on the banks and financial institutions on their investment in real estate sector, the price of land in Kathmandu Valley has come down by 20 percent. Particularly, the small investors who had obtained bank loans are now selling off the lands even in reduced price in order to pay bank interests. Land price in surrounding areas of the valley such as Imadole, Tikathali, Siddhipur, Lubhu, Lamatar, Godavari, Badikhel, Jharuwarasi, Lele, Dukuchhap, Chhampi, Setidevi, Dharmasthali, Manamaiju, Tokha etc have come down by 10 to 20 percent. After the International Monetary Fund (IMF) pointed out the risks of over exposure of banks’ portfolio towards real estate investments, the central bank introduced the stringent rules. In its recent monetary policy, the Nepal Rastra Bank (NRB) has stipulated that banks’ investment on real estate should not exceed 10 percent of its total loan investments. According to Department of Land Reforms and Management, the government revenue from land sales this year was less by Rs 1 billion compared to last year.

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