The realty sector had finally commenced on the path of slow recovery, but the country's political instabili ty is reverting any progress made so far. Until a month ago, the housing industrialists seemed hopeful, especially with dipping interest rates and other factors. However, unfavourable political scenario has once again cast an ominous shadow over the sector, making developers pessimistic about the situation.

Prakash Bajracharya, managing director of Shangrila Housing Pvt Ltd, says, “Realty was gradually turning around and struggling for growth. However, the political scenario -one of the major affecting factors -is threatening to lead the industry back to its dismal state.“ Adding that customers were gradually warming up to invest in property again, Bajracharya says, “People are now more concerned about the fate of the country and security than on enhancing their living standards by buying property. So, the industry has been overcast by dark clouds again.“

According to him, a day's strike results in a loss of Rs 2.5 billion to the country and bandhs have adverse affects on the whole industry, including customers, developers and investors. Due to bandhs, developers face problems like shortage of labours and construction materials, delay in completing the projects on stipulated time, exceeding interest rates, loss of confidence and increased insecurity for further investment.

“Construction work has been obstructed due to lack of imported materials. Once work is halted, the contract date of handover automatically extends. It impacts the whole cycle negatively,“ maintains Bajracharya.

Agreeing with him is Om Raj-bhandary, chairman of Brihat Investment Pvt Lt who says, “Instability and uncertainty has changed the mentality of the public, and they are no more in a situation to think about the quality of their residences.“ Stating that whole national economy has been affected due to strikes and fluctuating government, Rajbhandary adds, “We are promoting 2012-13 as Investment Year, but the political situation has been the major impeding factor in making it a success. Regular strikes, unclear policies and insecurity are obstacles and if the situation continues, we foresee darker days ahead.“

Informing that the situation has invited longand short-term impacts, he says, “There is a high possibility of long-term impact like depression and loss of onfidence in the sector as well as economic crisis. The govern ment needs to think seriously about this and introduce a stable government, besides creating a favourable condition for economical growth.“ According to him, this alone can uplift the present scenario and encourage foreign and local investment in development activities. “If the current situation persists, developers will think twice before starting new projects, which will slow down the development process of the nation, decrease the employment opportunities and deteriorate living standard of Nepalis,“ views Rajbhandhary.

He further says that while there were positive signs in formulating the constitution and peace process, the present condition is leading the country and the economy as a whole towards uncertainty and confusion.

“Many policies that have been tabled are pending. Lack of rules and regulations are hindering entrance of foreign investment into the country,“ says Umang Rana, CEO of Westar Properties Pvt Ltd. Explaining that bandhs and insecure condition have hampered his company, he informs that lives of 200 to 300 labours working in the company's project are also in the doldrums because all work has come to standstill.

source: The Himalayan Times,25 May 2012