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Politics and development
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The lack of momentum in economic growth as a result of political changes and uncertainties has affected real estate in Bangalore, says K. SUKUMARAN
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Development pangs: Construction activity has taken a hit in Bangalore
The BDA’s plans for formation of five new layouts are in limbo, lamented a media report a few days ago. When real estate activity is not politics but mere infrastructure development, why should the acquisition of land, fixing of compensation and allotment of guidelines wait for political decisions? Though these are mere administrative actions, fresh approaches to these issues are the prerogative of the elected representatives, as such activities are always for the be
nefit of people as a whole. “This is why the new layout plans are in hibernation” explains a senior bureaucrat.
There are many examples of delays and even abandonment of programmes designed to promote growth in the real estate sector in and around Bangalore. For example, it was first the change in leadership from one Chief Minister to another after the last Assembly elections in the year 2004 which affected the city’s plans for progress.
The policies of the Bangalore Agenda Task Force (BATF), which was the vehicle for coordinating Bangalore’s infrastructural build-up, were abandoned under the guise of election reverses in rural areas because of the city-oriented development policies of the previous government!
Later, it was the change in government under a coalition between the JD(S) and the BJP which opened up controversies in certain projects such as the Bangalore-Mysore Infrastructure Corridor. And then, the short-lived BJP-JD(S) remarriage, which did not really start functioning!
Administrative machinery
Many of us believe that the administration of the State is in the hands of the executives. If it is so, why should a change in government affect the implementation of ongoing projects? One can understand that new legislation and policy changes require parliamentary or legislative stamp, meaning that execution of rules and regulations only falls within the domain of the administrator.
Real estate growth in Bangalore received a shot in the arm after the city got the ‘Silicon Valley’ tag. Demand for residential accommodation increased mainly from the IT sector employees.
The direct employment in this sector has been around 5 lakh over the last 5-10 years and the number is likely to go up to one million by 2010. Initially, almost all IT employees sought to purchase a flat instead of occupying a rented place and this enhanced the demand for residential accommodation.
“There is definitely a lull in the sale of plots and apartments at the moment” has been the cryptic comment of a realty dealer. Is this really true? If so, what are the reasons? When will the momentum pick up?
Is it necessary to wait for the next Assembly elections and establishment of a stable government for realty growth?
First, let us dwell on the demand-supply position and the reasons for cooling off of demand. “Demand is still there, especially for quality houses”, says a realty agent. Then, what is required to be done to translate the demand into real transaction?
Twin factors
Two things have dampened the buying spree: the infrastructural bottlenecks such as bad roads and traffic snarls; and the increasing interest rates on home loans. Increasing prices due to inflation and enhanced guidance value pushing up the stamp duty and registration charges are also reasons for increase in cost. Restrictions on land conversion and registration of sale deeds in the erstwhile CMCs/ TMCs slackened the pace of development and constructions. Further, the tendency of IT employees to look for stay in newly developed townships on the outskirts reduced the demand for houses within the city proper. The reluctance of the developers to reduce prices of apartments also softened the demand.
Controversy
The feud over the Bangalore-Mysore Infrastructure Corridor project between the State Government and the Nandi Infrastructure Corridor Enterprise has been a thorn in the ever increasing traffic on the periphery of Bangalore city. Dragging the matter to the courts by both sides in the name of changes in the plans, release of surplus land and the like have prolonged the completion of the project.
The court rulings regarding land acquisitions for Arkavathy layout had to be implemented before taking up layout development and this too entailed delay. New policy for land acquisition and compensation had to be put in place before proceeding with its implementation.
The latest in the infrastructure controversy is the laying of the super highway to connect the Devanahalli airport and the city/ Electronic City. No one in the Government is talking about the plans required to expedite laying of the highway, which requires co-ordination among BBMP, BDA, Devanahalli taluk authorities and the Bangalore International Airports Ltd. There are still objections to the route plan from the land owners. Meanwhile, the airport CEO is firm about stopping all flights from the HAL airport after April, 2008, when the Devanahalli airport will be ready.
The new airport has propelled real estate activity in and around the area. Hotels are planned, ancillary services for the airport are being finalised, and layouts/townships are coming up in full swing.
Political scene
The State is now under Presidential rule. Major plans and projects may not materialise. Elections to the BBMP may or may not take place. Even the Comprehensive Development Plan-2015 may be implemented only to the limited extent of meeting the immediate requirements.
In this scenario, one is tempted to believe that the real estate plans for Bangalore may drag on for at least some time. Politics is, therefore, an integral part of economics in our time!
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