For the first time buildings in Thimphu are starting to see empty apartments and people believe it to be due to the Australia rush.
There’s been a rapid rise in the number of people leaving the country and attrition has been very high. House owners from Debsi, Babesa, Lanjophakha, Dechencholing and Taba areas share that buildings are being emptied out and there are lesser bookings.
Namgay, a house owner in Babesa shares that the housing situation in the country is not like before, and has changed drastically. “Before, when an apartment was emptied, it would be immediately booked, however, currently, it is not the case. Even though available apartments are advertised in Facebook, we get only a few calls and even fewer bookings.”
When asked why the situation seems so different, he shared that there are not many people now, and that it is likely due to the Australia rush.
Similar to Namgay, Sherub, a house owner in the Lanjophakha area shared that most of the buildings in lower parts of Lanjophakha are empty. “I’m not sure of the reason, but there are not many people. We advertise and we wait for a while before we get booked. There are times where the apartments are left empty for a month or two.”
Tashi, a tenet in Taba shared that new buildings and 3BHK houses are usually empty. “Right now, most in demand houses are usually bachelor’ quarters or 2BHKs and 3BHKs are usually empty. As people leave, the family left behind usually moves into smaller houses which has left the more bigger apartments empty.”
She also added that many of the tenants are usually parents and older people as a lot of the young have left.
Similar to what Tashi shared, another tenant living in Lanjophakha shared that bigger apartments are left empty. “I stay in a bachelor’s quarter and nearby, there are buildings with apartments that are mostly 3BHK in nature which are empty. I recently moved out and as I was searching for my current apartment, I found that usually bachelor quarters are quite popular.”
She also shared that availability of apartments is also due to the fact that many prefer staying nearby, their offices and work stations.
This is hugely different from situation before, where people were plagued with the troubles of not finding houses and booking an apartment even when it was of high rent or was a long way from work.
Another tenant from Taba also shared that the apartment she is currently leaving was offered at a discount rate as it was left empty for about 3-6 months.
A tenant said that while house hunting she found empty apartments in Debsi, Babesa, Lanjophakha, Dechencholing and Taba and in fact in Debsi one building had three vacant apartments.
However, another house owner in Babesa area Karma shares that there is always a market. “It is true that people are leaving the country, however I don’t think there is lack of tenets. When an apartment gets emptied, we advertise and we receive calls for booking. There is always some looking for a house at least in Thimphu, but I’m not sure about other places.”
However, situation seem to have changed over the years, as people share that they get options to choose apartments which was not the trend before. Some share that rent and location plays a factor in choosing a place to live in.
Few other owners shared that lack of tenets could be not only due to the Australia rush but because of availability of houses and apartments as there are many new buildings that have come into the market.
With many new buildings and as more people leave, house owners may have a hard time paying back their loans. According to Royal Monetary Authority’s Annual Report, the housing sector recorded the highest sectoral loans at 26.2% or Nu 48.68 bn in the financial year 2021 to 2022. The total credit at the same time was Nu 185.90 bn.
With not many tenants, Namgay shares that he is concerned over the repayment of his housing loan. “With a lack of number of tenants, I’m worried that I won’t be able to pay back the loans. We don’t get exemptions from banks because we don’t have tenets, and I’m worried whether I’d be able to pay the Equated Monthly Installments (EMI) every month.”
Similar concerns were also shared by other house owners.
RMA has already reported that moving forward the financial sector’s exposure to credit risk is likely to remain elevated due to escalating uncertainties emerging from geopolitical issues, disruptions in global supply chain, rising inflation and rapid deprecation of the global currencies against the USD.
If the current trend continues and if the house owners are unable to repay back the loans, there will be a huge onset of non-performing loans (NPL) which can put the financial institutions at risk.
This would be a very dangerous double whammy as the tourism sector is already in trouble with limited tourists. In the financial year 2021 to 2022 the Services and Tourism loans was the second highest sectoral loan at Nu 47.886 bn and already has the highest NPL.