Despite a visible slowdown in Nepal’s real estate sector, land revenue collection rose by nearly 14 percent in the first seven months of the current fiscal year, government data shows.
While property transactions have declined—dragging down sectoral turnover and straining government revenue—figures from the Department of Land Management and Archive (DoLMA) reveal a moderate year-on-year increase in collections.
In Magh (mid-January to mid-February), land revenue stood at Rs 3.872 billion, a slight drop from Rs 4.25 billion in Poush (mid-December to mid-January), and almost identical to Rs 3.874 billion collected in Mangsir (mid-November to mid-December). However, the cumulative land revenue for the first seven months of FY 2023/24 reached Rs 24.71 billion, up from Rs 21.65 billion during the same period last year.
Policy Inaction Blamed for Market Instability
According to Bishnu Prasad Ghimire, Chairman of the Nepal Land and Housing Developers’ Association (NLHAD), government inaction has played a major role in the stagnation of the real estate sector.
He cited the halt in the land demarcation process as a primary factor contributing to market instability, noting that many municipalities have yet to implement proper land classification. “Uncertainty continues to grip the sector,” he said.
Ghimire also criticized banks and financial institutions for unjustifiably raising interest rates on real estate loans, adding to the pressure on developers and buyers. “The Nepal Rastra Bank has not revised its policies to support the real estate sector,” he said, lamenting that quarterly monetary policy updates often ignore the sector’s concerns.
Bureaucratic and Political Roadblocks
He pointed to the Kathmandu Valley Development Authority (KVDA) for blocking land transactions under the long-stalled Smart City Project, freezing large tracts of land for over a decade without building the promised infrastructure. “Local communities have been stuck in limbo for 12 to 14 years,” he said.
Ghimire also discussed the government’s land-related ordinance, which had the potential to provide relief through clear guidelines—such as the 25-ropani ceiling for land development in the Kathmandu Valley and the 11-bigha limit for demarcation in the Terai. However, political disagreements rendered the ordinance ineffective.
“While not perfect, the ordinance provided some clarity. Unfortunately, it became a political football,” Ghimire said, adding that broader provisions for urban expansion were blocked due to opposition party resistance.
Untapped Potential of Land Bank
Ghimire expressed support for the government’s land bank initiative, which aims to identify and utilize unused land for productive use. “It’s a promising idea, but the government has been slow to act. Proper use of barren land through land banking could help boost national productivity,” he noted.
Call for Policy Stability and Public Confidence
To rejuvenate the sluggish real estate sector, Ghimire stressed the need for policy stability, effective implementation, and public trust. “Banks have ample liquidity, but people lack the confidence to borrow. Restoring that trust is key to reviving real estate,” he concluded.
