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Like many of Nepal's best highways, the road to NAGARKOT serves mainly strategic, not scenic, purposes: Nagarkot was originally developed as an army post, and tourist facilities came later, with government encouragement. Set on a ridge northeast of Bhaktapur, it commands a classic panorama of the Himalaya from Ganesh Himal to Gauri Shankar, and on a good day you can see from Annapurna South to Everest. Uniquely, you don't have to stay in an expensive hotel here to get a view right out of your window. The best thing about Nagarkot is its wealth of hiking and biking opportunities. Since it's located at a high point and easily reached on a good road, many people choose to get a lift up and then hike or bike down, though Nagarkot can also serve as a stop on a mini-trek or cycle-trek around the Kathmandu Valley rim. At the very least you'll want to spend the night to catch the sunrise over the peaks, either from your hotel or from a view tower further along the ridge.
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