KOCHI: Real estate prices in the Munnar area have crashed in the wake of the extensive eviction of land-grabbers and the general suspicion that a substantial number of the new villa projects and apartment buildings could actually be standing on encroached land.

Already, in just a few days after the land-grab scam surfaced, prices of un-built-up commercial land and agricultural land meant for future construction on the outskirts of Munnar town have fallen by a quarter, according to real estate sources in Munnar, Kochi and Adimali. The prices of villas and flats, which peaked in the past few months, have fallen by a tenth. The land-grab scam has poured water on the overheated real estate sector in the entire Idukki district.

"It's not just a question of price fall alone," a senior official in a Kochi real estate company, which is building houses in the High Range region, said. "The problem is that there is hardly any demand now." He hoped the prices would look up once the confusion about encroachments and the suspicion about fake pattayams ended.

However, another real estate source said the situation was going to worsen. He argued that the Government's plan to freeze land transactions and construction activities for at least three months in Munnar and nearby region would lead to fall in prices. Brokers in Munnar and Adimali said the ripple effects of the Munnar price crash were fast spreading to other areas in Idukki district, where land-grab has been a way of life.

A broker in Adimali said that scores of plots along the 30-km stretch from Adimali to Munnar had come up on the market in the past year. These plots ranged from 10 cents to 10 acres and their owners had hoped to cash in on the shooting real estate prices in the wake of the `resort boom.'

"Builders and resort investors were ready to pay any price quoted by the owners," the broker said. "The deals were closed in as brief a time as one week." Now, the prices of these plots have nose-dived.

The real estate prices in Munnar had been overheated before the revelation of large-scale land-grab in the hill station and the quick eviction that followed. Prices had skyrocketed and brokers say that the prices at times equalled those in Kochi city. Land sharks, mainly from the Kochi region, had invested hundreds of crores of rupees. Of course, the actual land prices never got reflected in the land registration documents.

One source said that majority of the resorts, new villa projects and apartment buildings in the Munnar region were standing on encroached land, but their owners had secured fake pattayams. This could come to the open during the ongoing scrutiny of land documents.

`Second homes'

Land prices had been steadily increasing in Munnar from late 1980s because of the tourism potential of the hill station. But the `resort boom,' which began in the 1990s, picked up momentum in the past four or five years and has sent land prices to dizzying heights. Along with the resort boom, another phenomenon also emerged. People with extra money— like the new educated business class; the emerging upper-middle class of professionals like doctors, lawyers, etc.; and, the NRIs— bought up vast stretches of land in the high range region. This was for two reasons: one, as a form of investment; two, as a new lifestyle. In the second case, professionals and business people built farmhouses and `second homes' which they and their families used as a place to get away from the fast urban life and busy work schedules.

But, when the land prices went up in Munnar and other areas such as Vagamon, farmhouses were no longer affordable.

To fill in this need, arrived the villas and apartments with fancy names that played on Munnar's mist and cool. Many of these villas and apartments, built by Kochi builders, were advertised as "a second home in the misty mountains."

How many of these farmhouses and villas stand on encroached land or had fake pattayams would be revealed in the verification of documents.

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