House prices likely to drop by 10% from September

Bhutan’s most expensive urban land

According to PAVA rates of 2022, land in Thimphu’s Precinct 1 area (those along Norzin Lam) is the most expensive with a decimal valued at Nu 2.7mn.

The rate for land is the highest in Thimphu’s Sub Precinct 1 area, where a decimal of land will cost around Nu 2.7mn, or Nu 6,198.72 per square feet, according to the latest Property and Value Assessment (PAVA) rate of the country. 

It is closely followed by Thimphu’s Sub Precinct 1 A, where the rate is around Nu 2.6mn per decimal or Nu 6,092.76 per square feet. Sub Precinct 2 and Sub Precinct 2A are third with land now valued at around Nu 2.4mn per decimal (Nu 5,668.91 per square feet).

Similarly, in Sub Precinct 2B, Sun Precinct 3, Sub Precinct 4, and Sub Precinct 4A, the rate is Nu 2.35mn per decimal (Nu 5,404.01 per square feet).

These rates have come out in the limelight as the Property Tax Bill of Bhutan 2022 was tabled in the National Assembly, with taxes imposed as per the PAVA rates.

In Phuentsholing, Bhutan’s commercial capital, the land rates are highest in the town’s urban core region, where a square feet of land is valued at around Nu 2.22mn per decimal.

In Paro, one of Bhutan’s fastest developing towns, land within the town center is valued at Nu 609,840 per decimal (Nu 1,400.00 per square feet). Bondey area comes next in line with a decimal of land valued at Nu 359,370 The rates for Lamgong and Shaba are Nu 215,622 and Nu 171,699 per decimal respectively. 

In the east, the rate for land in Mongar’s urban core -1 (UC-1) is Nu 426,888 per decimal and Nu 239,488 per decimal in urban core-2 (UC-2).  It is a little less in Trashigang, where the rate is Nu 302,066 per decimal in areas under urban core 1 and Nu 183,470 per decimal in areas under urban core 2.

The rates in Samdrup Jongkhar, once a bustling town is almost similar to that in Mongar, with land in UC-1 valued at Nu 455,157.48 and for UC-2 Nu 153,091.49 per decimal respectively.  UC -1 areas in Punakha are valued at Nu 313,632.00 per decimal. 

In Gelephu, UC-1 areas are valued at Nu 611,094.53 per decimal and UC -2 areas at Nu 267,243.50 per decimal, and in the industrial town of Samtse, land within UC-1 areas are valued at Nu 283,140.00 per decimal.

While there are different rates for urban and rural areas, including differing rates for areas within the same town, the PAVA rates for specialized economic zones (SEZs) also differ. In Samdrup Jongkhar the rate for areas under service and industrial classification is Nu 173,863.47 per decimal.

Samtse has SE-1 to SE 4, with the rates per decimal beginning from Nu 134,694.85 for SE 1; Nu 119,788.98 for SE 2; Nu 126,835.39 for SE 3 and Nu 153,665.96 for SE 4.

In Gelephu, the rates for the four zones per decimal are Nu 294,430.75, Nu 261,847.87, Nu 277,250.69, and Nu 335,899.87 respectively.

Phuentsholing’s economic zone has been divided into four groups, SE- 2, SE -3, SE-4 (polluting), and SE-4 (non-polluting). The rates per decimal are Nu 598,030.67, Nu 493,221.17, Nu 696,674.90, and Nu 388,411.67 respectively. 

Meanwhile, people who have been in the land transaction business say that though market rates are always way higher than the PAVA rate, the current rate is closer to commercial rates.  “I do not have much knowledge of the former PAVA rates, but what has currently been set as the PAVA rate is closer to the prevailing market rates. However, market rates will increase, too,” one broker said.

He also added that there have not been many lands transaction as people were aware that a new PAVA rate and the property tax are in the line. “Most buyers and sellers have been waiting for the Property Tax to route through the parliament. No one wants to lose in a transaction,” he said, adding that real estate deals, especially buying and selling of land would now begin. 

Coming to urban plots, Dorji, a businessman from the east said the PAVA rates for land in the east were extremely low. “We know that with this revision, we will also need to pay more tax, but I feel that those who have land in commercial areas will benefit in terms of securing loans from the financial institutions (FIs),” he said.

Dorji underlined that FIs provided very less loan as the rates of land was low. “We are hopeful that we can now make use of our lands at least to get some loans,” he said. For others like Neten Dorji, who have been looking for land in Thimphu or Paro to build a house, the matter has become difficult. “Land rates will shoot. I cannot imagine how one would be able to first buy land and then build a house,” he said.

Tshering Pelden from Thimphu