Some twelve years ago, I was escorting an economist and an Actuary working for World Bank who were assigned to carry out studies on pension scheme in Bhutan. During one of our casual discussions, they commented that Thimphu was facing “Big City” symptom where high rise buildings were built to meet immediate demand. However, in the long run, as basic economic principle suggests, supply always equal demand. When supply is more, adjustments are bound to happen. And that adjustment time seems to have come now. Today, if we look at the classified column of Kuensel, we can see that there are vacant houses only in Thimphu and nowhere else.
A drive along expressway, Hejo and Taba suggests that more than 300 buildings are nearing completion during the next few months. A simple calculation shows that an average building would have about 10 units. In total, there would be about 3000 flats (300 multiplied by 10) within a year for Thimphu residents to choose from. For a population base of little over 90,000 people in Thimphu, movement of 3000 families would be a massive shift or adjustment process. Most middle income families would prefer moving to cheaper flats and as such, market rates which at the moment are hovering around Nu. 7000-8000 may fall down or stabilize. However, for those building owners who have bought expensive cars by speculating on the price of land and building costs, the stories may come out very different. We may have to wait and watch their reactions to the market forces.
Most people I talked to think that population growth would offset the gap soon. On close scrutiny of demographic pattern, we notice that population growth actually is not happening much in Bhutan. Consider a simple example. It was normal for our parents to have eight or nine siblings. Our time, it was normal to have five or six siblings. Today, most parents opt to have either one or two children only or at the maximum of three children. If you have more than three children, then they are considered very fertile. Majority of our children may prefer not to have any children at all given the current trend. At the moment, there is a huge migration into urban areas but with mega projects coming up in other parts of the country, large chunks of population would move there for job for looking for business opportunities and thereby bringing in new adjustment problems and opportunities. However, it may be time for many policy makers to look beyond soaring land prices and defaulting bank loans. If banks fail, small economy like ours may have to limp through another generation.