--By Sujan Oli

 

The three-year old plan to allow foreigners to buy apartments in Nepal has not materialized yet because of the government’s inability to issue a directive for the same. This has put nearly Rs 28 billion of investment in the housing sector at risk, according to Ichchha Raj Tamang, president of Nepal Land and Housing Developers’ Association (NLHDA). “The lack of the directive has put a huge investment in the realty sector at risk,” Tamang told The Corporate.

 

As a measure to address the woes of the realty sector, the government had announced, through the budget of FY 2010/11, to allow foreigners – both individuals and companies - to purchase flats and apartments in Nepal. However this announcement has not been implemented because of the lack of a directive. According to the announcement, foreigners can purchase flats and apartments costing USD 200,000 or more.

 

“It is because of the lack of the directive that hundreds of foreigners and non-resident Nepalis (NRNs) have been deprived of the opportunity to buy flats and apartments in Nepal,” Tamang explains, “This is the reason why there has not been the expected improvement in the realty sector.”

 

Realty sector entrepreneurs reveal that more that 50 per cent of the apartments and housing units built so far are yet to find buyers. Tamang claims that at least a hundred foreigners will buy apartments and housing units a year once the directive is issued.  

 

According to Bhesh Raj Lohani, NLHDA secretary, there are 6000 housing units in the apartment buildings constructed so far and that nearly 3,500 units are yet to find buyers. The cost of these units ranges fron Rs 5 million to 20 million. If the average cost of one housing unit is considered to be Rs 7 million, then a whopping Rs 42 billion has already been invested in the housing sector. 

 

“Out of this huge investment, housing units worth Rs 28 billion are yet to be sold,” said Tamang, “Even if a hundred foreigners bought apartments and housing units a year, Rs 1.96 billion of foreign money would come to Nepal annually.” He further said that scores of foreigners working in big projects of foreign investment are willing to buy flats and apartments in Nepal. “Many NRNs, too, are keen about purchasing apartments and housing units in Nepal,” he added. 

 

Most of the developed countries in the world have allowed foreigners to buy apartments, according to Tamang.     

 

‘Draft of directive ready’

Meanwhile, Spokesperson for the Ministry of Land Reform and Management, Krishna Raj BC claimed that a draft of the directive is ready. “However, the home, foreign and law ministries have advised us to allow foreigners to buy apartments in Nepal only after formulating a relevant Act,” he said, “We don’t have a situation where such an Act could be enacted immediately.” The government, however, is positive about allowing foreigners to purchase apartments in the country, he added.