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In fiscal year 2021/22, the government mobilized Rs 58.34bn in revenue from real estate transactions. However, the impacts of the second wave of Covid-19 brought the economy to a virtual standstill, hitting real estate transactions hard.

Although most of the sectors of the economy have recovered since then, the struggling real estate sector has yet to regain momentum. The government lifted a ban on land plotting to boost real estate transactions. However, it failed to make much impact as revenue from real estate transactions stood at Rs 46.54bn in 2022/23.

Real estate entrepreneurs say although there have been some improvements in the current fiscal year which began in mid-July, the sector has been unable to gain momentum due to various policy and practical difficulties. A recent study report submitted to the government has also suggested policy reforms to boost real estate transactions. The report has pointed out several factors impeding the real estate sector like lack of clear legal provisions for building integration, an overly complicated planning approval process, dominance of middlemen, unnaturally high prices, ineffective regulation, and difficulties due to land ownership limits.

Slow recovery

The real estate sector has been unable to recover since Covid-19. Annual revenue collection from this sector, which used to reach around Rs 70bn, has now fallen to Rs 46bn. While real estate transactions are increasing, they have not returned to pre-covid levels, according to Bed Prasad Aryal, the spokesperson for the Department of Land Management and Archive.

According to department statistics, the government raised Rs 46.54bn from real estate transactions in 2023/24. During Covid-19, annual revenue from real estate transactions had dropped to as low as Rs 25bn. Aryal said the sector is now gradually recovering from its vulnerable state. He added that land and housing transactions have increased more in the eastern Terai region compared to the Kathmandu Valley.

Low transaction value to avoid taxes

The actual annual real estate transactions amount to approximately Rs 2trn. However, government statistics only show transactions worth Rs 1trn. Bhesh Raj Lohani, chairperson of the Nepal Land and Housing Development Federation, said the sector has been deteriorating due to a lack of transparency in buying and selling. He explained that the difference between market value and government valuation creates this discrepancy.

“Purchases and sales happen at one price, while government valuations are much lower. If the state made the system transparent, the value would be at least Rs 2trn annually. Due to non-transparent transactions, the government is losing revenue from different headings like registration fees, capital gains tax and income tax,” said Lohani.

To support real estate transactions, both the government and Nepal Rastra Bank (NRB) have relaxed various policies. According to the central bank statistics, approximately Rs 224bn has been invested in real estate loans by the end of mid-November of the current fiscal year, up from Rs 211bn in the same period of the previous fiscal year. Despite a 6.65 percent increase in loan investment, real estate transactions have not grown as expected.

Meanwhile, a task force formed by the government to study the problems and challenges of the real estate sector has submitted its report to the government. The committee submitted its report to Deputy Prime Minister and Minister for Urban Development Minister Prakash Man Singh on Friday.

The committee has highlighted the need to revise most laws, procedures, and standards, as well as create new laws to address problems and challenges in real estate transactions.

Similarly, it has recommended issuing the 2007 Construction Standards for municipalities and urbanizing VDCs within Kathmandu Valley and the 2015 Basic Standards for Settlement Development, Urban Planning, and Building Construction as umbrella standards, and revising and implementing the 2005 Standards for Joint, Collective and Planned Housing.

Likewise, the task force has suggested that the government implement the 2020 Environmental Protection Regulations as per federal principles, and facilitate finance and tax-related matters.

The Ministry of Foreign Affairs has issued a travel advisory cautioning Nepali citizens about fraudulent job offers promising attractive salaries in the IT sector in Thailand, Myanmar, Cambodia and Laos. Criminal networks have been luring individuals through social media advertisements and agents, transporting them to Bangkok or Yangon International Airport, and then coercing them into illegal activities in Myanmar's Kayin Province (Myawaddy) and other regions. 

Victims face exploitation such as passport confiscation, long working hours, non-payment of wages and even physical abuse. Recent incidents have seen a significant rise in rescue requests to Nepal's embassies in Yangon and Bangkok. 

The ministry warns that engaging in or facilitating such illegal activities is punishable under Nepali law and urges citizens to avoid falling for these scams. It has advised against traveling on visit visas for employment and recommended verifying foreign employers through Nepal's embassies.

Nepali citizens can contact the embassies in Yangon or Bangkok for assistance or further information.

Humla has witnessed snowfall. Although the weather was clear till Monday afternoon, snowfall started occurring last night.

Chief District Officer Narayan Pandey informed that the snowfall occurred in Simkot, the district headquarters. Up to two inches of snow has accumulated here, while there was up to one foot of snow in the higher reaches including north Namkha rural municipality.

The cold has increased with snowfall in the district. He said dipping temperature with snowfall has also created complications in the movement.

Snowfall has affected normal life in Limi, Yari, Halji, Til and Hilsa Chala villages of Namkha of the district, it is reported.

The temperature has now reached minus in Simkot. Rainfall is taking place in the southern part of the district.

Chief District Officer Pandey has urged the elderly and children to stay safe during the snowfall and also cautioned the people of the surrounding settlement of possible avalanches.

The government has issued a travel advisory to the Nepali citizens preparing to travel to Myanmar, Thailand, Cambodia and Laos.

Issuing a travel advisory today, the Ministry of Foreign Affairs has asked the Nepali citizens not to travel in visit visa for the purpose of foreign employment in these countries and also to take stock of the business firms, companies and employers from Nepal's diplomatic missions there or to check the websites of those firms, companies and employers.

The Ministry's travel advisory has come at a time when the Nepali citizens are trafficked to Cambodia, Laos and Myanmar, and are forced for illegal jobs after the seizure of their passport from the employees. It is said that Nepalis are forced to work for as long as 13 hours and are tortured and have faced the issues of wage theft too. 

The Ministry also said that its attention was drawn to the increasing number of Nepalis submitting their applications at Nepal's embassies in Yangon and Bangkok for rescue.

Similarly, the Ministry has asked all to remain cautious to the acts of luring of foreign jobs and offering any sorts of other temptations and other illegal actions.

Likewise, the Ministry has cautioned not to fall in temptations of online casino, call center frauds, crypto currency and other job offers in Bangkok from the suspicious IT firms.