The Hindu Business Line : Govt levies nailing down activity in Kerala

Property developers in Kerala feel let down by the State Government. At a time when construction costs are spiralling and an appreciating rupee has kept non-resident Keralites (NRKs) thinking twice before investing in properties, a levy of around 30 per cent by the Government as various taxes and duties has worsened the situation, they complain.

Budget flats in favour

Though for long labelled a conservative city holding on to traditional concepts of living, Thiruvananthapuram has been witnessing a rapid change in lifestyle over the last decade with the influx of IT professionals to the Technopark, which, along with the new-found enthusiasm among the NRKs to invest in apartments, has triggered hectic construction activity to cater to the burgeoning demand. As per rough estimates, nearly 5,000 flats have come up in and around the city during the period.

However, there has been a lull in the sector in the last couple of years in the wake of sharp rise in the prices of construction materials such as cement and steel and the increase in Government levies, according to Dr A. R. Babu, Managing Director, Heera Construction Company. These, coupled with high labour charges and an unrelenting increase in land value, have pushed up the cost from Rs 2,000-2,500 per sq.ft to Rs 3,500-4,000, he says.

Of late, the trend has been in favour of budget flats with a price tag of Rs 20-25 lakh, but still packaged with amenities such as swimming pool, shopping mall and club house, says Dr Babu. He is also confident that the sector will pick up the lost momentum in the near future.

Scarcity of land

Mr Srikant, Director, Skyline Foundations and Structures (SFS), notes that people in the city have increasingly been opting for living in apartments for reasons of safety and the feel of being part of a closely-knit community. He cites the instances of many prominent persons who have moved out of good independent houses to live in flats. He feels the major problem faced by the property sector in Kerala is scarcity of land. Kerala being a coastal State, the Coastal Regulations Zone (CRZ) Act has considerably limited the availability of space for property development. The numerous rivers, vast expanse of forests and stringent restrictions on use of agricultural land for other purposes have added to the land scarcity.

He suggests the Government should auction some of the land lying unutilised in its possession for property development as is being done by the authorities in Karnataka and Andhra Pradesh. This will help rein in the escalating prices for living and commercial spaces.

According to Mr Srikant, the dependence on NRKs for sale of apartments is coming down and the fledgling IT sector in the city has opened up new marketing opportunities. Many projects in the pipeline, such as the software parks by Infosys and UST Global, and the much bigger Technocity planned by the State Government, will sustain what was set in motion by the Technopark, he says.

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