New order on buffer zone hits real estate sector

Builders to challenge NGT order on lakes as nearly 80 big projects are stuck

KARNATAKA - BENGALURU - 31/05/2016 : The degradation of Doddagubbi lake, which is spread over more than 100 acres, in Doddagubbi village on the eastern part of Bangalore, under the Doddagubbi gram panchayat, off Hennur Road, in a very bad shape, in Bengaluru on May 31, 2016.  Photo: K. Murali Kumar.

The recent National Green Tribunal (NGT) order has increased the buffer zone around lakes from 30 metres to 75 metres, but landed the real estate sector in a crisis. Several big projects — some of which had soft launches anticipating statutory permissions and some that are awaiting permission — are stuck owing to the approval process coming to a standstill.

While the industry body — Confederation of Real Estate Developers Association of India (CREDAI), Bengaluru — put the figure at over 80 medium and large residential projects, a senior Town Planning Department official in the Bruhat Bengaluru Mahanagara Palike (BBMP), which accords plan sanction, claimed that at least 45 files were awaiting sanction.

Limited clarity

With limited clarity on the order, the civic agency has sought an opinion from the Law Ministry whether or not to sanction plans.

“There are many projects, which have got environment clearance and are in the last stage of getting plans sanctioned from the civic body. They are stuck for no fault of the developers,” said R. Nagaraj Reddy, president, CREDAI, Karnataka. “Some other projects were planned and advertised, but are yet to get to the plan-sanction stage. They too are stuck.”

An industry insider said what had hit the developers hard was that at least some of these projects were opened for pre-launch offers, which some customers had availed of. This was even before they had applied for any clearances. Another builder said many developers were worried not just of projects being stuck, but also about the huge investments on land and loans taken for these projects.

CREDAI had filed an appeal against the NGT order in the Supreme Court. It was dismissed on the grounds that CREDAI was not the affected party.

“The next hearing is on July 12. Builders, whose projects have been stuck owing to the NGT order, will challenge the order,” said Mr. Reddy.

He also said that buffer zone around lakes across the country was far less. In most cities, it was 30 metres. He argued that it was unfair to increase the buffer zone to 75 metres only in Bengaluru.