A recovery in apartment sales remains tepid as developers blame a host of factors for the slump in business.
The realty ecosystem seems struggling to come out of its woes even in a commercial hub like Ernakulam owing to factors like the downturn in economy, a flawed GST and the Maradu episode in which the Supreme Court ordered demolition of four apartment complexes for violation of CRZ norms, say builders.
“Sales are down by about 40% in Ernakulam owing to the general economic slowdown. The Maradu controversy has diluted investor confidence by another 10 to 15%,” said Ravi Jacob, chairman of the Confederation of Real Estate Developers Associations of India (CREDAI), Kochi.
Stating that only genuine buyers were coming forward, Mr. Jacob said the situation in Ernakulam was better when compared to other districts in the State. “People still prefer to settle here after buying an apartment. However, the number of people owning an apartment as an investment seems to have come down considerably,” he said.
Mr. Jacob said that builders were staying away from announcing new projects fearing that it may backfire owing to the dip in demand. “Customers continue to enquire about the inventory, but they are not closing the deal at a pace that we had seen in good times. There is also a dip in apartment booking by Non-Resident Keralites in GCC countries,” he said.
S. Irudaya Rajan, Professor at the Centre for Development Studies, Thiruvananthapuram, said that many people were coming back from the Gulf following the impact of the global crisis. “Salaries have also come down there leaving them with no option but to put on hold their plans to buy an apartment or land back home. Instead, they may be investing in gold as land is no longer an attractive investment option. For people who would like to sell their property, they may not now get the expected returns,” he said.
Prof. Rajan said the Maradu case had also eroded the confidence of investors in buying apartments as they fear about facing legal or administrative complications in the future. “The floods that hit the State may also have impacted sale of property. Many people, whose homes were damaged, would have already spent money in rehabilitating it,” he said.
New building rules
The industry remains equally worried about the provisions in the Kerala Municipal Building Rule 2019. “Several provisions in the new rules will hit the government intention to encourage low-cost homes as there will be only limited area available as usable space. A land area that had accommodated 100 flats earlier can have just 70 flats as per the amended rules,” said Lalichan Zacharias, joint-secretary of the Indian Institute of Architects.
Mr. Zacharias said the cost of apartments would increase if the Government would not withdraw the new rules. “We hope Chief Minister Pinarayi Vijayan will review the amendments considering the fact that hundreds of jobs will be lost in the construction and realty sectors in view of the new rules,” he said.
