Land prices

By far, the most popular mode of investment in Bhutan is buying that piece of dream land or plot and either building on it or waiting for it to go up in value.

One of the predictions when COVID-19 hit in 2020 was that it would negatively impact land prices and so everybody waited for the big crash.

However, the opposite happened as the real estate market in Bhutan followed a global trend where people staying in lockdown suddenly realized the value of land and space and so there was a psychological rush for land.

Apart from this, the freezing of a lot of economic activities meant that a lot of people had cash lying around which could not be invested elsewhere.

To add to this the loan deferment came as a huge relief and so people suddenly not only had a lot of liquidity, but they did not have to worry about loans and so there was no requirement to sell land to pay loans.

This was further enhanced as people could not travel and so even more cash was saved up.

The signs of excess cash are visible in excess liquidity in the banks in the form of deposits.

To add fuel to fire is a limited supply of land in urban areas against the growing demand.

All of the above lead to a huge increase in land prices in urban areas and especially Thimphu as people rushed for every property on the market.

However, things have been changing in the last month or so as the real estate market is cooling with people expecting land prices to come down soon or by next year.

The realization is that there is very little fresh money coming in but it is mostly people selling one plot to buy another or a building.

Some others even predict an unsustainable land bubble.

The rate of return on buying expensive land and building on it is already very low.  For land investors it is better to wait until the coming year to get a complete picture.

“A Fool And His Money Are Soon Parted”
Thomas Tusser

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