Realty transactions in the Kathmandu Valley were down 48.82 percent in the first quarter compared to the same period the previous fiscal, maintaining a downtrend that began a year ago. The slump is reflected in the reduced revenue collected by the five Land Revenue Offices (LRO) in the valley. According to the Department of Land Reform and Management, collection dipped to Rs. 417.6 million in the first quarter of 2010-11 from Rs. 814.99 million in the same period in 2009-10. Govinda Prasad Sapkota, director of the Department of Land Reform, said that real estate transactions had been facing a continuous downturn due to the directives of Nepal Rastra Bank. “The slump in realty transactions is likely to continue if the government doesn’t come up with policy intervention,” he added.
The Dilli Bazaar LRO, which handles the major portion of transactions in the city core in particular, saw revenue collection drop by 42.97 percent in the first quarter of 2010-11. The LRO took in Rs. 272 million in revenue in the first quarter of 2009-10 while collection was down to Rs. 155.93 million in Q1 this fiscal. Similarly, the Chabahil LRO received Rs. 94.7 million, down from Rs. 182.54 million in the previous fiscal year. The Kalanki LRO saw a decline of 52.26 percent in revenue collection to Rs. 58.36 million from Rs. 122.27 million, the Lalitpur LRO was down 57.71 percent to Rs. 61.18 million from Rs. 144.67 million, and the Bhaktapur LRO posted revenue of Rs. 46.87 million, down from Rs. 93.11 million. The Bhaktapur and Kalanki LROs saw a rise in revenue collection in the last two months, i.e., Bhadra and Asoj. However, officials stated that it was too early to say whether the realty business was on a rebound. Department officials said that the central bank’s cap on bank lending to the realty sector and subsequent drop in available finance mainly affected commercial land deals. Commercial deals used to make up the largest chunk of realty transactions in the valley amid soaring prices and high returns. The government’s imposition of capital gains tax and the requirement to disclose the income source also affected business. The central bank has recently eased the lending criteria for the housing sector but credit to the realty sector is still restricted. source:The Kathmandu Post: