After a decade of ambitious plans that saw the skyline of the city radically change, the construction sector may be slowing down.
So far in 2017, 124 applications have been received at the State-level Environment Impact Assessment Authority (SEIAA), which has to give a critical nod after scrutinising the potential environmental effects of projects that exceed 20,000 sq. m in built-up area — which includes large commercial or residential complexes.
This is a seven-year low for the sector (with just a month remaining in 2017, the number is going only to marginally go up). More than 90% of the applications are for projects in and around Bengaluru. “There is definitely a dip in applications,” said an SEIAA official. Even though the authority was shut down for nearly four months, until the reconstitution of the committee after the tenure of the previous committee ended, the number of pending files still remains low, said the official. “Last year, we were looking at pendency of more than 200 applications. This year, even though the new authority took over only in August, the pendency is only around 60 files,” said the official.
It is the combination of demonetisation, Goods and Service Tax, and the Real Estate Regulatory Authority (RERA) that has seen work in the sector come to a halt, said R. Ramesh, property consultant and developer. “Small players were washed out by demonetisation and RERA. For big players, their modus operandi of pre-launch offers to collect advances from home-buyers and then construct has come to a halt after RERA,” he said.
With liquidity crunch hitting builders, he expects the slowdown to continue for the next two years at least.
However, Suresh Hari, vice-president of the real estate group CREDAI, said the figures reflect a general “wait and watch” strategy to see the outcome of their challenge to the National Green Tribunal’s April 2016 order to set a 75 m buffer zone around lakes, 50 m from primary storm-water drains, 35 m from secondary SWD, and 25 m from tertiary SWDs.
“Builders are just waiting for clarity on this, and are not launching new projects. The moment the NGT order is set aside, you can expect double the applications and launches in development,” he said, and added that demonetisation, GST or RERA did not affect launches.
