The price cuts and other offers that land and housing developers announced in a bid to inject some life into the realty market-- which has remained sluggish for more than two years now -- has finally started to pay off.

Developers said they have managed to pull relatively greater number of buyers over the last two months. Officials at the five land revenue offices (LROs) in Kathmandu Valley also said their offices, which previously wore a deserted look, have started to see some bustle again.

Department of Land Reform and Management (DoLRM) officials said LROs in the Valley are registering an average of 75 fresh deals every day since late July, when the new fiscal year started.

This is a significant rise compared to the daily figures for 2011 and the first six months of 2012.

“The crowds and volume of transactions at the LROs are still nowhere near what they used to be two years ago. Nonetheless, the new trend has made us optimistic,” said Raju Basnet, a DoLRM official who keeps track of the realty market.

Thanks to increased sales, the five LROs posted a 70 percent rise in revenue in the first two months of this fiscal year, compared to last year.

According to data at the LROs, they together collected a total of Rs 606.55 million in revenue from fresh transactions over the first two months of 2012/13. The collections had stood at Rs 356.6 million in the same period last year.

“The market has shown some signs of revival. And we expect it to gain more vibrancy during this festive month also as developers have unveiled numerous packages to lure buyers,” said Basnet.

“Only concern is whether this trend will be sustained over the second and later quarters of the fiscal year,” he told Republica.

Developers said the market picked up mainly after some of the players, reeling under the pressure of loan repayment deadlines, started offering special discounts, slashing prices by as much as 30 percent.

Such discounts have not been across the board, however. “Only developers reeling under the crisis are offering the discounts and they are making the offers only in personalized negotiations,” said a developer, requesting not to be named.

Transactions up outside Valley
The market has shown movement not just in the Valley. Officials keeping track of price movements and the market said that transactions in major cities outside the Valley have also gone up in recent months.

Reports from LROs outside the Valley suggest that land and house sales have picked up mainly in Morang, Rupandehi, Kaski, Sunsari and Chitwan. As a result, the volume of revenue collected by the LROs in those districts has soared significantly, said Tulasi Ram Vaidya, an official at DoLRM.

According to data provided by the department, the LRO in Morang collected Rs 20 million in revenue from fresh transactions in the second month (mid-August to mid-October) of this fiscal year, which is more than double what it collected in the same month last year.

LROs in Rupandehi and Kaski mobilized revenue of Rs 17.5 million and Rs 16.6 million respectively during the month, while LROs in Sunsari and Chitwan collected Rs 15.3 million and Rs 14.5 million. During the slowdown their collections had dropped to less than Rs 10 million.

“The market has shown some movement in districts like Dang, Jhapa and Dhanusa as well,” said Vaidya.

Officials have linked the rise in transactions outside the Valley to the recent cut in prices and increase in property sales in Kathmandu. “Property prices in the districts have not dropped to the extent seen in the Valley. So our hunch is, with prices going down in the Valley, people outside could be selling their property in order to buy in the Valley,” said Vaidya.

The realty market, which became overheated in 2009, subsequently slowed down and stagnated after Nepal Rastra Bank (NRB) imposed a cap on realty loans in December of that year, citing the hefty exposure of banks and financial institutions to speculative buying.

In recent months, however, the central bank has relaxed some of its provisions on home loans.

source: republica,13 Oct 2012