This is no place for policing

Keep searching for possible reasons and they are many. Why has real estate activity that was in full bloom, suddenly begin to wilt?

The sharp and unprecedented rise in property prices, the unexpected spiral of interest rates on home loans, scarcity of land- are all causes cited as contributing to real estate activity stagnating. There is a strange lull and developers and builders do not hesitate in adding to the cause-list the recent policies of the government, as one more cause.

The recent events that included government orders asking for handing over a slice of property to be developed to the Hyderabad Urban Development Authority (HUDA) and earmarking another bit for housing the economically weaker sections, middle-income and low income groups, were seen as villains that hit the last nail. The industry went up in arms with protests over the proviso.
Altered stipulations

However, the orders were modified few days ago and the government came out with slightly changed stipulations. Interestingly, it makes a mention of ‘having regard to the recent slump in the real estate sector’ for amending the rules. While making it mandatory for a layout development to come on a minimum of four hectares, it seeks 10 per cent open spaces to be set apart for recreation and community purposes.

The new set of GOs make a stipulation on 5 per cent of area to be given to HUDA free of cost and the condition applies only to sites located outside Greater Hyderabad Municipal Corporation limits. And now an option is also appended stating that developer can pay 1.5 times the basic value of such land to the HUDA in lieu of the condition.

On earmarking space for EWS and LIG, the modified orders comes out with an option to the developer to develop the minimum required number of these plots within 5 km radius of the site. This is, if the developer does not find it feasible to provide these spaces within the site itself. Near similar modified provisions have been added to regulations on Group Housing Projects. And servant quarters can be reckoned as EWS housing requirement in the group housing schemes. Incentives to encourage social housing mix in the projects and to augment supply of the EWS and LIG housing, the orders speak of incentives to developers. These include no fees and others charges for the EWS plots or dwelling units, only 25 per cent of them to levied for LIG plots or units and automatic conversion of land use from conservation to residential in case of the developer opting for alternative lands for EWS/LIG housing.
Easing of norms

Will these measures help the real estate industry recover quickly and get booming again? The developers however, are not very sure. While not completely excited at what they describe as ‘little bit of tinkering’ of regulations, the developers and builders want a more relaxed atmosphere to prevail for them to operate in the city and suburbs.

With conditions such as these, investors from outside would be apprehensive in bringing their money here, observed one.

Then, there are issues of construction material shortage and rise in their costs, home loan interests going up and of course the inflation factor.

Ad hoc policies end up creating unease for the industry and precious time that could have propelled it, gets lost, complains another. “Also, for some months, it was a speculation-driven market which has vanished. The real home buyers are there now,” observes Anand Reddy, Executive Director, PBEL.