KATHMANDU, JULY 19
The introduction of the Land Use Regulation 2022, coupled with a liquidity crunch, has resulted in a significant downturn in Nepal's real estate market, with the number of property transactions plummeting by approximately 56 per cent in the fiscal year 2022-23.
According to records of the Department of Land Management and Archive (DoLMA), the total number of properties sold in the previous fiscal year stood at 418,837, marking a sharp drop compared to the 745,119 properties sold in fiscal year 2021-22, painting a bleak picture for the country's property business.
Real estate entrepreneurs are saying that the trade has been severely affected after the Ministry of Land Management, Cooperatives, and Poverty Alleviation (MoLMCPA) introduced new regulations that are unfavourable to the realty sector.
Bidhur Dhamala, acting president of Nepal Land and Housing Developers' Association (NLHDA), alleges that the government lacks any specific plan to implement regulations that are infeasible for a country like Nepal. "The govern-ment's new rules regarding land utilisation have exacerbated the challenges facing the realty sector, which was already struggling due to a liquidity crunch in commercial banks and high-interest rates," he said.
As per this regulation, land has to be categorised into agricultural, residential, commercial, industrial, area of mines and minerals, forest, public use, area of cultural and archaeological importance, and others based on topographical features, efficiency and utility of land, its existing use and necessity.
The entire supply chain of the economy has been affected by this Land Use Regulation, leading the government to consider amendments.
In the current fiscal year, the government has announced plans to simplify plotting via the annual budget.
Meanwhile, revenue generated from the real estate business decelerated in the last fiscal year.
The department reported that the government collected revenue worth Rs 41.15 billion from real estate transactions in the review period, representing a decline of Rs 16 billion compared to 2021-22 when revenue worth Rs 57.66 billion had been generated from real estate business.
A version of this article appears in the print on July 20, 2023, of The Himalayan Times.
