Owning homes, without housing loans

Real Estate Development: While construction of private buildings in the capital has slowed down, because of restrictions on housing loans, home ownership is still happening through real estate developers.

Last month, the national pension and provident fund (NPPF) and Yangphel real estate opened up applications for people interested in buying homes at Kabisa, Thimphu, where it is building 116 flats on a public-private partnership model. 

To enable pension members to buy the flats, NPPF is providing a 75 percent loan at ten percent interest.  Special discounts are also on offer, based on the amount a buyer can pay upfront.  Those that pay a 30 percent advance can get a six percent discount.  It is eight percent for advances between 30 percent to 60 percent, and 12 percent for a 60 percent advance and beyond. 

Yangphel real estate’s chief executive, Karma Lotay, said discounted prices would be in effect only until the end of this year.  After that, it would be at the discretion of Yangphel to revise prices. 

“Most probably prices would go up, because of increasing demand,” the CEO said. “There are many applicants today.”

So far, around 25 flats have been sold. 

The overall cost of the project is Nu 300M, with the pension fund providing up to Nu 180M for its construction.  Targeting higher and middle-income groups, the housing complex will have a sports ground, gymnasium, jogging sites, cinema halls, shopping complex and saloons. 

There are four categories of flats available in the complex - studio, standard, deluxe and luxury flats.  Prices range from Nu 1.9M, Nu 2.8M, Nu 3.8 M and Nu 7.7M.  

“We’ll actually be handing over the keys to buyers by June next year,” Karma Lotay said.

Some of the interested buyers interviewed said that the only concern was the condition of road, and the distance from the city.  The housing complex is located around 11km from the core city. 

The chief executive officer of NPPF, Dupthob Wangchug, said the project was to encourage home ownership. “This will be a pilot project and, based on its success, we’ll explore possibilities of other projects in the dzongkhags,” Dupthob Wangchug said. “There is no more land in Thimphu.”

Lack of land is not the problem for Gyelsa-tewa real estate developers (GRED), the other real estate developer. “We have land we acquired before, but our projects that we planned for the next few years can’t start because the banks have refused to give loans,” GRED’s CEO Tshering Tobgay said. “But our present projects aren’t affected.”

GRED, which was the first one to enter the real estate market in the first decade of the new millennium, started its ongoing project to build more than 200 flats in different parts of the city almost two years ago. 

The project is building about 100 two-bedroom apartments, which have been completed and almost three-fourth sold off, and another 100 three-bedroom apartments in the Mothithang area.  The apartments are priced at Nu 2M to Nu 3.5M.  It had another project of building apartments in the outskirts of the city, but this has been slowed down because of a lack of demand, according to Tshering Tobgay.  GRED is also building some duplex apartments, half of which have already been booked and sold. 

Tshering Tobgay said that GRED has a similar tie up with the banks, like Yangphel has with NPPF. “For the ongoing projects, the banks are giving the loans and, when someone buys, we basically transfer the loan to the buyer,” he explained.  Most of GRED’s buyers are people in the private sector. 

GRED’s apartments will also be ready by June 2013. “But future projects are totally affected unless the banks start lending again,” he said. 

By Nidup Gyeltshen Additional reporting by Phuntsho Wangdi