Real Estate

Demand for waterfront projects sluggish after floods, SC ruling in Maradu flats case, say Kerala realtors

V Sajeev Kumar Kochi | Updated on October 06, 2019

A view of the Alfa Serene Apartments at Maradu built on the coastal zone in Kochi . The Supreme Curt has ordered the demolition of these flats   -  -

But over the longer term, the prospects for growth are promising, says ex-Credai chairman

Last year’s devastating floods and the Supreme Court verdict ordering demolition of four residential apartment projects in Kochi on CRZ violations seem to have dampened the prospects of waterfront properties in the State.

Of late, the demand for waterfront projects has been sluggish and the customer sentiment has been waning especially after the deluge. The subsequent Supreme Court ruling to demolish four projects in Maradu has further worsened the situation. These developments are said to have impacted investors’ confidence, increasing the mental stress and agony among house owners, besides tarnishing the reputation of builders. There are reports of cancellations, especially from NRI customers who do not wish to court trouble while investing their money, sources in the real estate sector told BusinessLine.

All these developments have created a situation where customers have become very cautious while making investments on waterfront apartments or villas or even purchasing land near backwaters in view of the CRZ rules, says Najeeb Zackeria, past chairman, Credai Kerala.

However, he went on to add that such negative perceptions are temporary and are likely to have only a short-term impact. Viewed over the longer term, the prospects for growth are promising as housing is an inevitable need of growing families and future generations.

Ramesh Nair, CEO & Country Head, Jones Lang La Salle Property Consultants, Mumbai, said the Supreme Court order would benefit the sector in the long term, making developers more compliant for future projects. But the supply will be affected in the short to medium term even as the Kerala market has sustainable demand for residential apartments with significant interest from NRIs.

To a question, he said: “We do not foresee any price correction as such while there may be a muted price growth.” Kerala has a healthy mix of residential apartments developed on the land side as well as on the coast and water front is always a preferred factor commanding 25-30 per cent premium in pricing. Kerala, he said, has a total stock of about 70,000 apartment units comprising projects developed by both Credai members and non-members. The market witnesses sales of about 4,600 units a year and 3-BHK units constitute majority of demand of close to two third of the inventory. The present supply overhang is estimated to be about 36-42 months.

L Gopakumar, Vice-Chairman, Indian Institute of Architects — Kerala, said the sale and value of waterfront plots has come down drastically. The uncertainty and ambiguity of rules and government apathy are the main reasons for the current slump. Even with the current legal entanglements, waterfront properties are still sought after. Only the demand has come down. It is only a matter of time before demand surges, and no law can prevent man’s inherent urge to live in close proximity with the bounty of nature, especially so near the waters.

Distress sale problem

The risk holders of the industry should find a way out and get the State to lay down proper rules so that the demand is sustainable. Unfortunately, customers holding such lands are paranoid, and may sell in distress. It is an opportunity for long time investors to indulge in, he added.

Published on October 06, 2019

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