Bhutan’s Gelephu Mindfulness City (GMC) adopts Singapore’s Property Tax Act 1960 to build GMC to harmonise economic growth with well-being and to reshape land pricing. The Act establishes a transparent framework, calculating the annual value (AV) through potential rental income (Section 2(1)), and aligning taxes with market realities. This market-driven approach ensures fairness, eliminating arbitrary assessments. GMC may appoint a Chief Assessor to maintain a public Valuation List (Section 10), detailing properties and assessed values, fostering trust. Ensuring the taxation in verifiable data means, the Act establishes stability, enabling confident transactions for buyers and sellers with clear, legally anchored rights and obligations.
Anchoring taxation to annual value (AV)—5% of a property’s market value—may pressure efficient land use in GMC. Vacant plots in high-potential zones (e.g., near planned infrastructure or commercial corridors) incur steep tax burdens, incentivizing owners to develop or sell to avoid rising costs. Investors may target prime parcels, betting on appreciation, while sellers of undeveloped land face discounted offers due to tax risks. This dynamic accelerates GMC’s rapid growth and land prices.
The PTA’s progressive tax rates for residential properties, which climb to 36% for non-owner-occupied homes, may further influence private transactions. The middle-income buyers seeking owner-occupied homes could benefit from lower tax rates and stable pricing, particularly in neighbourhoods earmarked for affordable housing for those working there. Families or individuals purchasing land for primary residences may find opportunities around the GMC where the SAZ may offer tax incentives for community-centric projects, such as cooperative housing or eco-villages. However, sellers in these areas might initially struggle to command premium prices until infrastructure and amenities materialize, creating a bifurcated market where patience becomes a strategic asset.
Exemptions for public-benefit uses in Gelephu, inspired by Singapore, may include mindfulness centres and green spaces. Land near these exempted sites could increase in value due to enhanced liveability. Private sellers might capitalize on the “serene city” branding to sell plots at premiums, especially to those seeking wellness amenities. However, the Special Administrative Zone’s focus on balancing profit with purpose could limit speculative gains by resisting rezoning requests that prioritize commercial gain over community well-being. This approach ensures that economic development aligns with the city’s mindfulness and sustainability goals.
Foreign investment in GMC’s emerging market is shaped by unique PTA dynamics. Singapore-style taxes on non-residents, like higher stamp duties, may reduce residential demand, steering overseas capital toward commercial or hospitality projects. For example, Bhutanese families selling farmland near eco-resorts could attract foreign developers seeking tax-efficient, sustainable ventures. SAZ restrictions on non-Bhutanese freehold ownership, aimed at preserving culture and environment, may appeal to eco-conscious investors through leaseholds or joint ventures, aligning economic growth with national priorities.
Property Tax Act’s “highest and best use” principle will profoundly shape GMC’s land market, compelling buyers and sellers to align their strategies with zoning realities. Plots rezoned for mixed-use or commercial purposes could see values surge overnight, rewarding landowners who hold strategically positioned parcels. Conversely, areas reserved for low-density, mindfulness-centric development may attract niche buyers with good returns. For GMC, the principle’s market-driven logic presents a good opportunity- it accelerates value creation in high-potential zones. However, the success will hinge on balancing profit with purpose, ensuring zoning decisions honour mindfulness without stifling vitality. The land prices will reflect not just economic potential, but the GMC’s resolve to pioneer a new paradigm of ethical urbanism.
Sonam Tshering Lawyer, Thimphu
Disclaimer: The views expressed in this article are author’s own