Apartment market sluggish after earthquake

Kathmandu, June 30: A recent study on the housing market of the Kathmandu Valley has concluded that the average price of a house or apartment unit is more than Rs. 15 million.

A study on 'Outlook of Housing Market of Kathmandu 2018/19' by Brihat Property Solutions Pvt. Ltd. has found that the valley has 1,090 housing units - 541 individual houses and 549 apartments - on sale.

More than 40 per cent of such housing units are priced at Rs. 11 million to Rs. 15.5 million.

It has indicated towards the opportunity for more housing projects in the valley.

"About 3.1 per cent housing units are sold every month on average. So, if new housing projects are not announced, the remaining units will fulfill the demand for about six to seven months," the report said.

The report has included 43 housing and apartment projects as samples – 23 of them launched prior to the Gorkha Earthquake 2015 and 20 post-quake.

About Rs. 8.28 billion has been invested in the housing sector in the Kathmandu Valley by those 43 companies so far to construct 5,419 units of houses and apartments.

The study found that the investment on housing and apartment has about 12.5 per cent return per annum, which includes 3.2 per cent rental income and 9.5 per cent increment in the price of the property.

It said that individual houses were more expensive than the apartments and their price appreciation was also higher. However, the apartment market has been slowed down after the earthquake.

Housing expert from Thailand Dr. Sopon Pornchokchai said that most of the housing projects in the valley were targeted at the upper-middle and upper class people, and there were very few projects suitable for the middle and lower-middle class people.

He was the leader of the study team.

He suggested promoting low cost turn-key housing projects, wave off taxes on high-rise buildings, and charge higher tax on vacant land in the urban areas.

The study was conducted in March this year. Brihat had conducted such studies in 2012 and 2015.

The size of the housing market in the valley has reached Rs. 300 billion.

According to Nepal Housing and Land Developers' Association, about 82 housing and 117 apartment projects have been executed in the valley so far, which created 4,900 individual houses and about 14,500 apartments.

Published in The Rising Nepal daily on 1 July 2018.