But the impact on the real estate sector has been less severe in Mysore, where interest in independent housing units is increasing.
Experts tracking the property market say the situation may vary from region to region, but the larger industry is undergoing adjustments and needs government support in terms of clarity in regulations and less regulatory pressure.
According to DB Mehta, CMD, Allegro Ventures India in Mangaluru, major events ranging from demonetisation, GST rollout and economic slowdown to pandemic, have led the industry to adapt continuously over the last five years. The last year, 2020-21, has been particularly difficult: housing demand fell by 50 percent and prices by 10 to 15 percent.
“The supply side has been badly hit. The prices of sand, aggregates and concrete blocks have risen sharply and only 50 per cent of the migrant construction workers have returned from their villages,” he said. Low economic activity in the Gulf countries also affected the market in the coastal districts, especially Dakshina Kannada. NRIs make up a large group of property investors.
Naveen Cardoza, MD, Marion Projects Pvt Ltd said that new projects are likely to be costly as developers will have to take into account GST, higher material cost and increase in statutory charges. The cost of land and construction has increased by Rs 400-500 per sq ft in the last 18 months.
In Dharwad, property sales have slowed across sectors – low, middle and high income groups and the luxury category. Builder Ravi N Deshpande claimed that new projects were not being announced because of height restrictions for high-rise buildings by the government and delayed clearances by real estate regulator RERA. “Those who want financing do not get it from banks for RERA registration,” he said.
Another builder in Dharwad said there should be a single window for getting the approval. “At present, we have to approach 17 departments to get clearances for skyscrapers. We are paying high fees and heavy fines for small violations. Even after everything is fine, the completion certificate takes at least six months.
Things are a bit better in Mysore. Though the prices of sites and apartments have been stagnant for the past one year and the pace of construction is slow, various infrastructure and investment proposals have kept developers optimistic. Nagesh ML, CEO, Amacs India, said the trend is shifting from just investing money in real estate to owning ready-to-construction sites.
“The fare has increased by 10 per cent. “The best option is to build your own house,” said Rajasekhar Ubi, a resident of Mysuru. Builders say the biggest challenge is getting skilled labor. Developer Diwakar SP said, “Many skilled workers who had left the city have not returned yet.”
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