Monday, November 24, 2008

Builders change strategy; land mafia's plans go awry


THERE is a slowdown on the real estate front in Kerala in the wake of the global financial meltdown and the construction industry has initiated measures to limit the damage.

Under the impact of the massive inflow of remittances from abroad, the State had been witnessing a construction boom for some years.

This attracted big real estate operators from outside the State, who promoted the concept of luxury apartments in and around the major cities.

Simultaneously, a land mafia with high political connections, especially with the Communist Party of India-Marxist (CPI-M), which currently heads the State government, appeared.

It started grabbing land and offering it to builders and industrialists.

The stock market collapse has curtailed the worth of the construction companies.

The general expectation is that the impact of the financial meltdown will be softened by the official efforts to usher in a low interest regime.

The builders appear to have evolved a two-pronged strategy to tide over the looming crisis.

Those with projects in advanced stages of construction have launched high pressure campaigns to sell all expensive flats before things get worse.

Those with projects in early stages are switching to construction of budget accommodation, sensing a drop in the demand for luxury apartments.

The land mafia, which scored spectacular early successes, appears to have run into trouble in recent days in circumstances that are far from clear.

The cancellation of two government notifications which were beneficial to it bears testimony to this.

One of these is the notification issued in September for the acquisition of 1,088 hectares of land in six panchayats of Thiruvananthapuram district, ostensibly for the Vizhinjam harbour project and allied activities.

The notification came as a bolt from the blue to the people as the State government, while promoting the ambitious project, had said there was no need to acquire any land for the proposed deep-sea harbour.

It claimed that only 200 hectares of land was needed for the project and this would be reclaimed from the sea.

The people living in the notified area suspected that the government was trying to take away their land, not for the construction of the harbour, but for "allied activities," which is a euphemism for commercial projects like hotels.

They rose in protest against the eviction move. They vowed not to surrender their land and asked the government to withdraw the notification.

At first, the government made a valiant effort to ride through the storm of protest. Law Minister M. Vijayakumar, who, as one of Thiruvananthapuram's legislators, has been an active promoter of the project, attributed the protest to machinations by a foreign lobby which feared that the Vizhinjam port would cut into the revenues of their own ports.

Last week, he was forced to change tack. He conceded that the government had erred in issuing the acquisition notification. The confession coincided with the government's decision to cancel the notification.

The handling of the Vizhinjam land issue is typical of the way the State administration tackles development projects.

In the absence of a detailed project report, there is no reliable estimate of the land required. In fact, so far there is no clear picture of even the contours of the project. The State government projects it as a major undertaking but the Union government does not endorse this view.

The State government also talks of having a ship-building unit at Vizhinjam, besides the harbour, where big vessels can berth.

A project of the size envisioned by the State government will certainly require more land than the 200 hectares it hopes to reclaim from the sea.

Vizhinjam and neighbouring panchayats are heavily populated, and several thousand families may have to be evicted.

The government is inviting trouble by trying to proceed in a surreptitious manner.
It must adopt a transparent approach. After working out the precise requirements, it must hold extensive consultations with people to work out a scheme which is acceptable to them also.

The other notification that the government felt compelled to withdraw had fixed 'fair' price for land at various places.

Registration authorities were required not to register any land sale at prices lower than what was indicated in it for the area.

The notification invited criticism on the ground that it had fixed very high rates for areas where there was less demand for land and very low rates for areas where there was more demand. This, it was alleged, was done to help the land mafia.

Revenue Minister KP Rajendran, who ordered withdrawal of the notification, has initiated steps to fix new rates.--Gulf Today, November 24, 2008.

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