Posted by: newStudent February 17, 2011
Buying land in kathmandu
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Guys,
You all are so optimistic. I hope you guys are buyers of lands, and not sellers trying to create some noises and find some gullible dude with 1 karod in his pocket:) A few notes:

1. Finance's primal mantra: never try to catch a falling knife. If price is falling, the best strategy is to let it fall until it starts bouncing back. So, I won't advise anyone to purchase unless there are clear signs that the market has recovered and prices are going up. If I want to make a significant investment, I want it to be on a rising assets, not on falling assets.

2. Yes, land price is a nice investment. 20 years down the road, the land in New Road will remain valuable. The answer is how to maximize your assets? So, if I have 4 karod rupees now, should I put it in the bank, let it grow 15% per year and see it be 8 karod in five years, or purchase land, live in fear of whether it will be 3 karod or 5 karod next year.  If I have 1 karod rupees, I would rather let it be in bank, and use the interest I earn from it to sleep in Soaltee Hotel when I am in KTM, rather than buy a lousy house in Dhumbarahi and fight with student renters for rent every month.

3. Third, and this is the key, house price and house rent have moved together. No one will buy a house for 1 karod, if the rent he gets from it is less than 20 thousand per month. Either interest rate has to go down for houses to look attractive again, or rent has to go up.

People in the past bought a house in KTM not merely because it accords some sort of status symbol to the owner. May be ,but status symbol also came from the fact that it was a good investment. Five years ago, you could buy a house for 30 lakh, and it could give you rent that would be about what the bank would give you. So,  people felt it was a good investment. Several out of KTM people have bought houses in KTM that they had no interest in living in. Most of our neighbors in Kalanki are actually never there.

4. Who knows about the true demand/supply situation in five years? It seems to me most of the KTM people have their kids in the states or UK or Australia now. May be they want to sell these houses and settle abroad. May be Lahures will say fu(k off to the godforshaken, loadshedding laden land [:)] and move to UK. May be the Maoists come to power, and decide in a whim to move the capital to Chitwan. I have heard big jagga dalas of Chitwan are Maoists, and so they stand to gain a lot even if they merely attempt it. May be govt invests 50 billion rupees in constructing express highways from Pokhara, Narayanghat to KTM and a lot of people feel they can commute from Dhading or other regions to KTM and don't need to live in the capital. May be big land holders of KTM just can't hold it anymore and want to sell it and the market is flooded with land. May be land around char bhanjyang is developed and a steady supply of land is assured as the city grows horizontally. May be housing market is given a push and city grows verticially and people prefer to buy cheap apartments only. May be people think KTM is becoming a sick city, with its dust and what not. May be people's preference change. May be the govt decides to shift some of its major ministries to Pokhara and Dhulikhel. May be universities and colleges inside KTM want to sell their property and relocated somewhere outside.There are many unforeseen reasons that can cause supply of houses/land to surpass its demand and drive the house prices down.

Last edited: 17-Feb-11 05:51 PM
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