In spite of an increase in the cost of raw materials for construction, the boom in the real estate sector in Mangalore continued for a significant period in 2011.

Though the builders are putting up a brave front, stating that the boom continued throughout the year, some people in the real estate sector say that the increases in bank interest rates and inflation made an impact on the real estate sector here as well.

Mr P. M. A. Razak, President of the Mangalore branch of CREDAI (Confederation of Real Estate Developers' Associations of India), told Business Line that there was tremendous growth in the residential segment during 2011. However, growth remained stagnant in the commercial segment.

GOOD YEAR

Terming 2011 as a good year for the real estate sector in Mangalore, Mr Razak said the region didn't face the impact of the slowdown till mid-December.

Allaying apprehensions regarding over-supply in the residential segment, he said the demand and supply situation was fairly balanced in the region during the year. Sales of residential projects have been continuing.

He said that around 5,000 apartments are in various stages of planning and implementation.

The NRI segment, which is one of the major growth factors of the residential segment in the region, is contributing a major share to bookings for residential projects.

Admitting the fact that commercial space development hasn't grown in the region, he said it has remained stagnant.

Mr K. Narasimha Prabhu, former President of Kanara Chamber of Commerce and Industry, said that there was a boom in the real estate sector in Mangalore in the early half of 2011.

Taking advantage of this boom, many projects were launched during that period.

IMPACT OF RECESSION

He noted that the boom started to taper off from August onwards. He attributed this to a slowdown in the economy, increase in interest rates by banks from July onwards, and inflation. However, the cascading effect was felt on real estate only from August. Till June, it was a healthy market, Mr Prabhu said.

In spite of this, builders are putting up a brave front, he said, and added that there could be a slight correction in the days to come.

However, he was quick to add that the big builders mostly aren't affected. It's only the small builders who are feeling the pinch. On being asked the reason for this, he said big builders are able to sell their projects because of the name and locations.

It may be mentioned here that the coastal corridor of Mangalore and Udupi-Manipal witnessed many project launches in 2011. While most of the developers focussed on Mangalore city and Udupi-Manipal for launching their projects, some of the areas on the outskirts of these towns also saw foundation stones for a significant number of projects. The outskirts of Mangalore, such as Kavoor, Kuttar, Farangipet and Deralakatte, saw new project launches during the year.

PROJECT LAUNCHES

Some other towns along the coastal corridor, such as Moodbidri, Padubidri and Karkala, also witnessed some new project launches. Developers preferred to go in for residential-cum-commercial project models in such centres.

The national highway widening from Kundapur in Udupi district to Talapady in Dakshina Kannada district, which gained momentum during the year, served as an incentive for developers to focus on this stretch for real estate development.

Mr Vijay Vishnu Mayya, Chairman of the Mangalore Centre of Association of Consulting Civil Engineers, said that though 2011 was a boom time for the real estate sector in the region, it was a difficult time for construction, as the input costs went up significantly during the year.

Stating that the rates of apartments went up by nearly 30 per cent during 2011, he attributed this to the increase in the rate of construction and to the labour shortage. The costs of cement, steel, sand and land went up, he said, adding that it was a difficult time for the construction industry due to want of skilled people.

2012 OUTLOOK

Stressing the need for the Government to look into this sector, Mr Mayya said as of now there is no proper rule governing the construction industry. In such a situation, it is essential for the Government to regulate the construction sector, he said.

He looked forward to the stabilisation of prices for inputs, especially cement and steel, in 2012.

Mr Prabhu hoped that the demand for the real estate sector would pick up after April 2012. By then, inflation is expected to come down, and a favourable budget might help boost demand for the real estate sector, he added.

Related Topics
comment COMMENT NOW