October 20: The real estate business has slumped by 70 percent in the country. A month between mid-September to mid-October saw 25,000 transactions related to real estate properties. The figure is almost 10,000 less than the transactions in mid-August to mid-September and 25,000 less than normal times.

As the real estate business is going down each day, dozens of professions and businesses directly and indirectly connected with the real estate business are facing dire situation. An example of this is the engineers who evaluate the land. Just a few days ago, police arrested a valuator on the charge of overvaluation of the land in Jhapa when its value had slumped. The Nepal Valuers’ Association strongly opposed it and demanded an unconditional release of the valuator.

Mukti Pandey, secretary general of Nepal Valuers’ Association said that due to government policy and economic recession, the price of real estate has decreased by 20 to 25 percent.

“At present, the price has decreased by 20 to 25 percent. If this situation continues for another six months, it is certain that the price of land will decrease by additional 20 to 25 percent,” said Pandey.

The government has instructed concerned bodies to demarcate agricultural and non-agricultural lands in order to implement the land use policy. In Pandey's experience, the valuation of land that is or has been in the agricultural sector has decreased sharply. However, the value of land classified as non-agricultural sector did not increase as expected due to recession. On top of that, Nepal Rastra Bank has instructed that the valuation of real estate should not increase by more than two-thirds of the previous valuation.

As the slump in real estate business, which has been declining for a long time, continued till mid-October as well, the businessmen engaged in this profession have given up all hope.

The Department of Land Management and Records said that the real estate business was affected to some extent by the Dashain holidays in October. But as per the officials, the biggest impact was due to the effects of the global economic recession on Nepal's economy.

Around 34,700 real estate properties were bought and sold throughout mid-August to mid-September and 33,000 from mid-July to mid-August. Businessmen were expecting that the decline in business rate would stop after the number of transactions increased a little. But after the number of transactions decreased again by mid-October to 25,800, a businessman said that it is not possible to predict how much the transaction will go down.

When the real estate business was at its peak, up to 88,000 real estate properties were bought and sold per month, while in normal times, 50,000 to 60,000 were transacted. In contrast, the transactions in mid-September to mid-October has been 50 percent lower than normal times and 70 percent lower than the peak period.

By mid-July, the revenue was only Rs 2.73 billion, which reached Rs 3.5 billion by mid-August. But by mid-October again, only registration fees worth Rs 1.36 billion were collected. Apart from land revenue offices of Kalanki, Chabhil and Lalitpur, the registration fee of any other office could not even reach Rs 10 million.

When the real estate business was high, revenue of Rs 10 billion used to be collected in one month. Revenue of Rs 6 billion to Rs 7 billion used to be collected even during normal times. With the slowdown in real estate business, the monthly revenue collection dropped to around Rs 3 to 4 billion. It further  declined to Rs 2.5 billion by mid-October.