The demolition of apartment complexes in Kochi’s Maradu municipality that have violated Coastal Regulation Zone (CRZ Act) norms, is set to begin on October 11. The raging issue that has perhaps no parallel in the history of the entire country, has hit the real estate industry in the state.
The entire industry has just been recovering from the 2-year slowdown caused by demonetisation and the recession that was prevalent in the Indian economy.
According to industry players, it would take six months for buyer and investor sentiment to pick up.
“Definitely there's a slowdown, people who are going to invest as well as those who have are planning to buy homes have apprehensions. That’s normal, when there's a confusion in the market. They have become too conscious that their money will be lost,” SN Raghuchandran Nair, managing director of SI Properties, tells TNM.
He further says that people would be reluctant if there is any kind of problem with the related industry and would start thinking if they should go for this kind of investment.
"Those who have already made up their mind for investing will also start thinking twice — they would again make calculations on the particular investment and also would rethink on the remaining payment. That will affect the flow of money to the builders which in turn would affect the progress of the construction. The buyers would also become more specific by asking the builders about the building plans — these three things have already begun to happen. Ripples are going to be felt across the country particularly in states with vast coastal areas like Maharashtra and Goa. And this is a buyers' market,” he says.
Raguchandran Nair is also General Council member and former vice president of the Confederation of Real Estate Developers Association of India's (CREDAI) Kerala chapter.
The real estate market had hit rock bottom ever since demonetisation two years ago, which resulted in a slowdown of 20-30%. Prior to that, there had been steady growth in the industry.
He adds, "Now that the prices had corrected, it was the right time to buy or invest. This was the right time to invest in real estate also because the stock market is falling and the price of gold is really high. The market was slowing climbing up, but the Maradu issue has pulled it down."
According to industry people, a lot of ongoing waterfront projects are there in the state– like those on Marine Drive in Kochi and in Aluva.
“Projects near water bodies are something that everybody can sell in Kerala irrespective of which city they are in. There are projects near Ashtamudi lake in Kollam. A lot of rich people have bought houses near the lake. If the criteria for Maradu apartments is followed, it may necessitate a situation where some of the other buildings near water bodies would also be demolished," a source said.
"The bottomline is that the real estate business should not be affected. There may be a temporary lull, a kind of shock, that would be revived. The government should come out with some major announcement like speedy approvals for building permission and occupancy certificate as there is a trust deficit now," S Krishna Kumar, chairman of CREDAI, Kerala chapter tells TNM.
However, they all remain optimistic that confidence among buyers will build up and the market would be back to normal in six months.
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