Nima | Gelephu
Land prices in Gelephu, a future commercial hub of the country, are on the rise with a decimal of land in the core town currently priced at over half a million Nu. The land prices approximately five years ago were around Nu 60,000 to Nu 80,000 per decimal.
The prices have reached their highest point in the past two years, with many Bhutanese abroad and land brokers inflating the prices, according to the residents.
A resident from Gelephu said that the price of a decimal of land in the core town was around Nu 60,000 to Nu 50,000 half a decade ago. Today, the price of land close to the extended thromde area at Zomlingthang in Gelephu gewog costs Nu 150,000 to 160,000 per decimal.
Zomlingthang falls under Gelephu gewog and it’s over five kilometres away from the Gelephu town.
The rates get changed within four to five months. The land price in Lap II and III ranges between Nu 380,000 to Nu 390,000, an increase from Nu 180,000 and Nu 130,000, respectively, in the past five years, according to the locals.
A landowner from Gelephu said that the land prices were not that high before the pandemic.
“More brokers came and the Bhutanese abroad started buying land, as the pandemic forced them to leave for home. That raised competition for land. Brokers were doubling the price too,” he said.
He added that there was a sudden increase in land prices within one year. “The risk is that the land will be in the hands of only a few financially stable people. Financially unstable people have started selling land, because it fetches a good price. They might run out of land a few years down the line,” he said.
While there are no official records, locals in Gelephu say that one could buy a plot in the core town areas at Nu 3,000 and Nu 5,000 per decimal back in 2000.
Sources say that land prices were hiked because of unregulated brokerage of land; some brokers increased the price by 200 percent; the cost of land sold at Nu 100,000 per decimal to a broker is sold at Nu 200,000 to buyers.
Over 130 land transactions were made in Gelephu this year and 94 are under process, according to the records with Gelephu thromde; 155 and 251 land transactions were made in 2020 and 2019 respectively.
A broker, Ngawang Dorji, said there were many brokers involved in the land business. “Owners are also aware of the hiked prices and the prices are high from the owners themselves. We work on a commission basis but there are many other unlicensed brokers inflating the price,” he said.
He added that the land price increases within four to five months. “It has become difficult to do land transactions. One who is more familiar with the town planning will have the upper hand in this business,” said Ngawang Dorji.
Gelephu Thrompon, Tshering Norbu: “The market force leads to rising prices. There is more demand for the land here, maybe because the land in Thimphu and other towns are exhausted. Gelephu has become the centre of attention now,” he said.
He added that it was also because of the future prospects of the town, its location, and development planning. “People were not able to come here physically because of the pandemic. They involve relatives and friends for land transactions. This way, we feel that there are more brokers here.”
The Thrompon said that it was worrying to see the drastic rise in the land price but there is no mechanism in place to regulate and employ checks and balances in such situations.
“The involvement of middlemen, of course, has hiked the land prices. And people also don’t mind investing in land because of the future prospects. Land transactions were not that significant before,” he said.
Escaping the sales tax
A broker involved in land business prepares two agreements, one between the buyer and seller, and the other one to change the ownership of the land. The price mentioned in the agreement for ownership is mostly halved, according to a source.
An official from Gelephu said that causes a loss of government revenue. “If a piece of land is sold at Nu 3,000,000 per decimal, only Nu 150,000 might be reflected on the duplicate agreement,” he said.
A broker from Gelephu said that some don’t even opt for ownership change and sell the land directly to buyers using an authorisation letter.
“The buyer pays the sales tax on the land. The broker is exempted from the sale tax while he earns a major chunk of profit from the sale. The revenue loss is huge when the transaction is done in millions,” he said.
Impact on Gelephu gewog
The land price in places like Lekithang, Pelrithang, and Zomlingthang in Gelephu gewog has also increased over the years. A decimal of land is sold at Nu 100, 000 and Nu 150,000 on an average.
Gelephu gup, Ugyen Wangchuk, said the lands bought were kept fallow and left uncleared for years.
“They become habitats for elephants, rabbits, and wild boars. They damage crops at night. Those close to uncultivated land feel discouraged,” he said.
The gup added that it should be made mandatory to have empty and uncultivated plots cleared before paying land tax. “The threat from the wildlife could become life-threatening. It should be regulated well. Plots left empty should be fined.”
Edited by Jigme Wangchuk