Real estate sector, which is called one of the life line of the country’s, is feeling the heat of the Prime Minister Narendra Modi’s demonetization decision as the top builders in city says that the property rates have fallen down by nearly 40-50 percent.
Though, for the first time real estate sector is feeling the most damage done to it, still feels that despite the market being down by almost 50 per cent but the dream home for the buyer will still be far away. Apartment rates may come down but it does not mean that every salaried person will be able to buy the flat as it may not have lot of difference in the prices, said one of the prominent builder.
According to the realtor’s apex body Confederation of Real Estate Association of India’s (Credai), earlier this year, the number of unsold residential inventory in Bengaluru was about 2.2 per cent of the total new launches done in the city in the last six years. In the past five years, between 2010 and 2015, the Bengaluru city had unsold inventory of 82,357 in completed projects.
Speaking to media Nayeem Noor, director of Prestige Group said that the demonetization has hit the real estate industry. “This is really a bad time for the sector. There are more than 25,000 apartments in city are built and waiting to get occupied but the situation is that the buyers who had booked the flats are now backing off. Though the big time player in the industry might not feel much heat but it is like a dead situation for the smaller players,” he added.
Construction activity stopped
The more fear for the construction industry is that the contractors have stopped the construction work. Though the builders are paying contractors in cheque manner but the contractors are not able to mobilize cash in huge quantity, affecting directly on the labourers.
One of the contractors said: “I have money in my bank account but due to withdrawal limit I am not able to pay my labours properly. Though the payments are made on weekly basis, I am not able to fulfill their demands as I have limit of liquid money in my hand. Labours are sitting quite without work.” Most of the labour class in Bengaluru city is outsourced from Bihar, Orissa, Bengal and other states.
In present situation the construction cost of the commercial property is around 3,500 per sq ft while residential property is around 2,500 per sq ft. Suppose a property’s construction cost at Raj Bhavan road is around 30,000 sq ft then no builder is daring to bring down its cost, at least on papers. But the builder lobby is ready to wait for some time, atleast till the market recovers.
Another builder said: “Buyers backing from their earlier booking is also that they (salaried) fear about their jobs. People don’t know what could be the affect of the demonetization. Suppose, if they lose jobs then they need money with them and for that they wants to save it. This is also one of the reasons for cancelling booking.”
Credits Bangalore Mirror