Builders look at the price position
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The developers are excited about the market mood and have varying views on property prices
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Good times ahead: Work on apartment projects have taken off in several places in the State.
Are real property prices in Kerala in for an upward revision in the short term? The launch of a few new projects and depleting stocks of flats and villas, combined with the scarcity of some key construction materials, point to a possible rise in prices, say sources in the building sector here.
M.D. Jayaraj, president of the Kerala Builders’ Association (KBA), says that the enquiry levels in the market have increased considerably over the past three months and the signs are good for real estate developers.
However, he says, there is a possibility that the builders will be forced to raise prices in the face of the developments such as the 20-day strike by tipper lorry owners that slowed down the entire sector in Kerala.
There is also the prospect of the building industry as a whole facing an acute shortage of river sand given the current circumstances.
Sand price
Dr. Jayaraj says the price of river sand has more than doubled in the recent past — from around Rs.35-40 to Rs.85-90 a cubic feet. In the absence of alternatives, the price rise will hit the industry hard.
However, he does not feel that the price rise will be quite sharp as in some of the metros in the country, which further led to a slump in enquiries there.
Najeeb Zackeria of the Confederation of Real Estate Developers’ Association of India (Credai), Kochi chapter, says the signs are positive for the real estate industry in Kerala.
Though the real estate business in the State remains insulated from the global recession, there has been some impact in a few quarters.
For instance, the slowdown in the Gulf market had affected the business here.
However, the past three months have been good. With the fast depletion of stocks, Kerala market is again on the revival path and the price correction has helped the market to stabilise, Dr. Zackeria says.
He points to the recent launch of a few new projects as a sign that the market is back on track. He feels that once again the end users are in the market looking for property.
He, however, rules out the possibility of any price spiral, though he concedes that in the short term, a slight increase in prices may be expected. One of the reasons for this, he says, is that the labour cost in Kerala has gone up by 10-15 per cent despite the slump in the industry for some time.
A member of Credai says that there is no more stock left in the Kochi city area. In the entire State, the stock left will not be more than 15 per cent of what was available in the market about 18 months ago.
Dr. Jayaraj says that the government should promote the use of alternatives to river sand and create awareness of the use of manufactured sand.
The government, he says, should do away with the 12.5 per cent value-added tax on m-sand to encourage people to use it in place of river sand. Even a ban on use of river sand will be welcome provided an alternative material is available to the building industry, he adds.
K.A. MARTIN
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