Land has always been highly priced in Thimphu, and prices seem to be now reaching record levels.
On one hand, increasing land rates in Thimphu is one of the best indicators that the Bhutanese economy is doing well, as most of the buyers are from the business community.
Land prices in Thimphu crashed in the wake of the 2012 to 2013 economic crisis, as people sold of their most important asset to get finance.
On the other hand, the big question is now how will the vast majority of Thimphu residents ever own a roof over their heads with land rates being this high.
The answer- in the long term, is buying apartments as land prices will continue to spike.
Here, given that the vast majority of Thimphu’s residents only hope of home is an apartment, various measures need to be taken.
In terms of finance the RMA, government and financial institutions need to bring in lower interest loans for home or apartment ownership.
Currently there are trust, quality and regulation issues in the apartment market as buyers have been cheated in the past, both financially and in terms of the quality of apartments.
There needs to be rules created, quality standards and stronger regulation to protect apartment buyers.
The government and Thimphu Thromde will also have to recognize that home ownership in Thimphu will increasingly mean apartment owners, and so its urban policies, construction projects and budgets must fit that bill.
One troubling aspect of high land prices is that the low return that same land gives when one tries to make rental income of it. This in a way shows that while owning and selling land is profitable, it is not a good investment for someone wanting to do something with the land.
The Bhutanese economy and financial market, in that sense, needs to diversify and offer better investment avenues and products for investors, otherwise a large chunk of private Bhutanese capital will remain buried in Thimphu’s lands- pushing up prices even higher.
The Thromde also needs to speed up its Local Area Plans in the outskirts to open up more developed land banks, so that prices can stabilize.
Bhutan’s population is becoming increasingly urban and the 12th plan needs to recognize this and make provisions.
High land prices are here to stay, but the right policies and regulations can still ensure home ownership and stability in the land market.
“If a man owns land, the land owns him.”