“Transactions at all land tax offices (LTOs) in Kathmandu district dipped by half as compared with transactions a couple of months ago,” said Raju Basnet, official at Department of Land Reforms and Management. [break]
Deals in Bhaktapur and Lalitpur, too, declined over the last two months, but at lower rates of 25 percent and 20 percent, respectively.
Officials at all five LTOs in the Valley said crowds of people at their offices have gone down dramatically as compared with the past.
“Owing to the cap and banks issuing fewer loans in the sector, commercial land deals have hit rock bottom,” said Hari Krishna Timilsina, under secretary at Dillibazar LTO. Amid soaring prices and high returns, commercial deals used to make the largest chunk of realty transactions in the Valley.
Timilsina informed myrepublica.com that transactions at Dillibazar LTO, which records ownership transfers of land in the city core and north-western parts of the Valley, have dropped to half.
“We are registering not even 100 ownership transfers a day,” he said. Till two months ago, the LTO was registering some 200 land deals a day.
As a result, the LTO collected a mere Rs 77.2 million revenue in mid-January to mid-February, down from over Rs 100 million in mid-December to mid-January and Rs 120 million in mid-November to mid-December 2009.
If the situation at Dillibazar LTO is dismal, then situation at Kalanki and Chabahil LTOs are still worse, suggest statistics.
Records show that transactions at Chabahil LTO in mid-February dipped by almost two-third of what it registered just two months ago.
“This suggests that stringent lending policy and rise in lending rates have hit mostly the land dealers of eastern and northern part of the Valley,” said Raju Basnet, official at Department of Land Reforms and Management (DoLRM).
Transactions in Kalanki LTO, which records realty deals of western and northern parts of Kathmandu, too dipped by more than half.
Given the situation, realty dealers said they fear that the prices will go down as well.
“If the situation continued to deteriorate over the next one month, dealers reeling under higher interest rates will start disposing land at cost prices,” said a developer. If that happened, officials said it will kick off distressed selling -- something which will strongly correct the overheated realty market.
Amid rise in income, easy bank finances and instability in other parts of the country, realty market in the Kathmandu Valley had boomed over the last three years. But soaring demand and sharp rise in prices had soon started building a real estate bubble, threatening financial stability.
To correct the situation, the government in December 2009 had intervened in the market through the central bank.
Apart from land transactions, the new policies have also dampened businesses of standalone houses and apartments, according to Nepal Land and Housing Developers´ Association.
milan@myrepublica.com
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