Investment in realty dangerous: Experts

The investment of banks and finance companies in the real estatesector carries the risk of collapse, economists and bankers said. Hugeinvestment can create havoc, they said in an interaction here today.The global economic crisis of 2008 started with the fall in realestate business in the US.Nepali banks and finance companies have invested billions of rupees, approximately Rs 50 billion in the real estate sector. Half a dozenbanks and a dozen finance companies have invested 30 per cent in thesector. "It is not a safe investment," said Dr Binod Atreya, chiefexecutive officer of Nepal Bank Ltd. "Large investment in a sector isnot good."However, economist Prof Dr Madan Dahal differed. "I don't think theproblem is near," he said, "Banks are taking risk for maximumbenefit." Real estate business in Kathmandu Valley and the Terai hasboomed by 200 per cent since 2007.Nepal Rastra Bank executive director Trilochan Pangeni refused totake action against the finance companies for investing large amountsin the real estate sector. "We cannot stop the investment because itis as per existing laws," he said, According to Pangeni, the fate ofNepali financial sector has already gone into the hands of real estatebusiness. "If real estate collapses, bank and finance companies willbe in crisis," he said. But he did not feel the fall would bankruptthe financial sector. Very few will be affected, he added.