MIN RATNA BAJRACHARYA
In the last five years, Kathmandu's skyline has been transformed dramatically by high-rise apartments and commercial complexes. In a city where until recently you rarely came across buildings higher than five stories, housing developers are now constructing structures with 17 floors and more.
"The population density of the capital rises every year, but the land we have within the valley is limited," explains Umang SJB Rana of Wester Properties. "The only answer to the rise in demand for housing is vertical growth."
The door for organised housing opened after the 1995 Collective Housing Act allowed private ownership of apartment units. The industry experienced an unnatural growth until the central bank suddenly pulled its breaks a few years ago by putting a ceiling on real estate loans. The government also introduced a new provision, calling for real estate buyers to declare their income source for purchase of property worth more than Rs 5 million.
It was the fear that the real estate bubble would burst, rather than an actual collapse, that hit the industry hard in the past six months. "The new policies were introduced without consulting the developers, and they were suddenly left out in the cold," says Deepak Malhotra of Silver Valley Developers. "The buyers then followed the cue and began to look at the real estate sector with scrutiny."
But tightening the policies also helped comb out the bad eggs from the industry who were in just for fast cash, according to Siddharth Gopalan, the architect behind Imperial Apartments. "The genuine long-term developers survived the slump," Gopalan told Nepali Times.
More than Rs 400 billion is now invested in real estate, with developers now venturing further afield outside Ring Road and even to Kavre. Although the interest rates for loans are still high, the banks are opening up towards the real estate sector again. "Real estate is an important industry, and banks, as investment partners, should now make informed decisions while giving out loans and work in cooperation with their clients," says Anil Shah of Mega Bank. The new budget for the first time allows foreigners to purchase apartments worth over US $200,000, and this is expected to boost demand.
All this means cautious optimism has replaced the doom and gloom of last year. Apartments in the market range from economical to luxurious. Developers say apartment living is gaining popularity because there is an increase in young nuclear families seeking homes. Choosing an apartment over building a new home relieves them from the hassle of single-handedly supervising the construction of a house and worrying about utilities and security.
With both spouses working, an apartment lifestyle matches the needs of a modern family better. Retired and older couples with children abroad also prefer flats since upkeep of individual houses is a hassle. "In addition to basic amenities, including uninterrupted power and water supply, apartments offer well maintained gardens, parking spaces, playgrounds, fitness centres and several other facilities," says Amol Chandra Pradhan of Clean Developers. "Buyers are attracted also because of the 24-hour security service."
While prices are steep, developers argue that it in the longer term it is in fact cheaper than building your own home because of economy of scale in purchase of building and furnishing materials. Ujwal Shrestha, Director of Panchakanya Group backs this claim: "Our biggest customers are real estate developers. Simply because of the quantity of iron rods and cement they purchase from us, the rates that we give them are cheaper than those given to individual buyers."
But Devendra Dongol, Senior Planner at the Urban Development Department, KMC, feels that the real estate sector is yet to cater to the middle class home aspirants that are most responsible for the slum-like horizontal growth of the city. Says Dongol: "We now need to move forward to public-private partnerships for building low-cost housing facilities to address the unplanned development of the city."
Falling for flats
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Kathmandu makes an uneasy transition to apartment-living
As horizontal space becomes a premium, housing goes vertical