NRB checks won't slowdown realty business: Developers

Land and housing developers have said that central bank's restrictive measure on realty loan would not affect the ongoing housing and real state projects but curtail new mega projects. In view of commercial banks increasing loan exposure on real estate and housing sector, Nepal Rastra Bank (NRB) on Thursday had issued a directive to the banks and financial institutions to limit their lending in these sectors to 25 percent.

"Even after NRB imposed limit to 25 percent on realty loan, there will be around Rs. 400 billion available for investment in this sector," said Iccha Raj Tamang, President of Nepal Land and Housing Developers' Association (NLHDA). "For genuine developers, there is nothing to about as only Rs. 100-150 billion have been invested so far." But the new directive would discourage investment in the mega projects like satellite cities, maintained developers. The association has planned to establish 10 satellite modern cities - two each in five development reasons.

NLHDA General Secretary Min Man Shrestha said that the new directives should have come into practice only after consulting the concerned stakeholders. "The directive will mainly affect those small and short-term investors who were putting their money for quick profit," said Shrestha. Real estate developers say central bank's initiative to curb the loan exposure will not slowdown the realty sector. "Our sector won't face any slowdown as long as we keep on receiving the remittance," said Shreshta.

"This initiative by the NRB to divert the investment is but good," said Om Raj Bhandari, another developer, questioning, "Without any other avenues for investment, what will we do with emittances?" Developers also expressed fear that the current NRB restriction could rather prompt capital fight. "We are ready to put the money in hydropower but the government should come up with some policy to guarantee our investment," said Tamang. He said that NLHDA will soon make a request to the government to make the directives investor-friendly soon.

Tamang, however, ruled out the possibility of land and housing price going down. He but accepted constructions of new projects will slow down. According to NLHDA, despite the annual demand of 43,000 units of house and apartments, it is not even able to construct 10,000 units per year.
Source:eKantipur