Kerala’s real estate sector is booming. Overcoming the gloom imposed by the global meltdown, builders of apartments and villas are going ahead with mega projects once again.
The state began witnessing intense construction activity three decades ago, fuelled by massive inflow of funds from migrant citizens working abroad, mostly in the Gulf countries. Builders soon stepped in with offers of modern bungalows, villas and flats.
As foreign remittances grew, the demand for luxurious abodes rose. Some big players then entered the scene to cater to the high-end market. Real estate operators started grabbing property, pushing up land prices.
When the financial markets crashed, expecting a fall in the demand for costly homes, many builders switched to construction of budget flats. The appearance of advertisements offering “world-class villas and apartments” indicates that the real estate business is again on the upswing.
According to industry sources, the quick turnaround was made possible by the improved liquidity resulting from steps taken by the central government and the Reserve Bank of India to tide over the economic crisis.
They claim that speculators, who were very active before the economic downturn, have withdrawn from the field. The middlemen have also disappeared. As a result, they now deal only with genuine buyers.
Banks have helped in the recovery process by holding interest on housing loans at low levels, especially for small, short-term borrowings. The State Bank of India group, for instance, has been charging an interest of only eight per cent in the first year. In the second and third years a higher rate of 9 per cent will apply on loans of up to Rs3 million and of 9.5 per cent on loans exceeding Rs3 million. The borrower has the option to stay on 8 per cent interest for two more years, and then move to floating rates.
In Thiruvananthapuram and Kochi, apartment builders, with their eyes on high-earning professionals, have gone in for projects close to information technology parks and hospitals.
The big builders, who were only operating in the cities and their immediate vicinity earlier, have now started moving into smaller towns which are flush with money like Kottayam, Thiruvalla, Kannur and Thalasseri.
The industry has begun aggressive promotional activity abroad. Last month the state’s builders organised a Property Expo in Abu Dhabi, where they sought to put across to non-resident Keralites the message that high living does not cost the earth and that the right time to buy property is now.
Much of the construction activity in the recent past has been along the waterfront. Apart from apartment buildings, many tourist resorts have also come up close to the water bodies which give Kerala its distinct identity as a must-see destination. Environmentalists have voiced concern over the impact of large-scale construction on the region’s fragile ecology.
The Indian Green Building Council, which has been promoting environmental awareness in the industry, has set up a centre in Kochi. Some builders are already claiming that their projects are in tune with the “green” philosophy.
While there is no reliable data on the size of the real estate sector, claims by builders indicate it is huge. A three-year-old firm, which has won this year’s national Emerging Developer of the Year Award, says it has completed 15 mega projects so far and has 11 on hand.
At the lower end, builders are offering “affordable homes” for Rs1 million to Rs2.5 million. At the higher end there are “super-premium condos” of 2,500 to 5,000 square feet in the price range of Rs100 million to Rs250 million.
Several builders are said to be planning to mobilise additional capital from the open market to be able to expand their operations while the boom lasts.
The housing scene testifies to the alarming growth of disparity in Kerala society. Real estate agents are grabbing farmlands and islands with the tacit support of the political establishment to build apartment complexes even as thousands of landless families, mostly Adivasis and Dalits, are clamouring for land to cultivate.
According to official statistics, more than 705,000 families in the state are homeless. Of them, about 333,000 are both landless and homeless. More than 372,000 have land but not homes.
In 2008 the state government launched the EMS housing scheme with the proclaimed objective of providing houses to all by 2011. Families below the poverty line were to get houses with a plinth area of 25 to 40 square feet. Financial constraints have impeded the progress of the scheme. – Gulf Today, Sharjah, June 14, 2010