Indian real estate sector

The Indian real estate sector is contributing almost 6 per cent in country’s GDP and it also has generated the employment for 76 lakh people. This sector has nourishes the industries like; chemicals, tiles, cement, steel, paints, fixtures and fittings. The growth of Indian economy depends on the growth of its cities and it is the product which real estate developers delivers. The contribution of real estate developers are overshadowed by antipathy against the entire realty sector of country.

On the other side it is true that some of the real estate developers intentionally undertake a slower pace of construction because of slow sale of their apartments. Whereas, in most of the cases the reason for delay is government authorities, who don’t grant timely approvals. Obtaining the 57-odd permissions to begin construction is not cup of tea and it could take as long as two years and it is possible that during this time the cost of acquisition, construction or even holding the land for a project, rises.

The other un-favorable condition for developer can be that he had to rework on specifications of their upcoming as well as ongoing unapproved projects and it can led towards the significant project delays. Apart from an exacerbated cash crunch, developers also had to contend with the ire of buyers. If we consider the unexpected price increases or changes in apartment area after consumers have purchased properties from a real estate developer, these often occur because of changes in the project plans were required by the authorities before issuing an approval. Before two years, revisions were made in the DCR regulations for the MMR (Mumbai Metropolitan Region), which simultaneously road blocked several real estate projects and added to the overall development costs by about 15 per cent.

For real estate industry the fact is simple that there are 20 per cent hikes in construction cost and price increases across most projects in MMR. Whereas due to faulty land acquisition and title disputes the few real estate developer are ready to fly with in the night. It is true for the some cases in the Noida Extension, which has been legally established because of acquisition issues have been the fault of the authorities. However as always the blame is on the part of builders and it’s high time for them as they take a balanced view of the problem

Even as Mumbai city on Monday got it’s first and much-awaited seaplane service with the commercial operations have commencing from the commercial capital to Lonavala after the plane took off from Girgaum chowpatty, Mumbai for Pawan Dham, Lonavala, this event marked more than just the facilitation of transport service. It will also lead to a surge in realty prices in Mumbai’s hill station.

This seaplane service has now enabled the commuter to reach Lonavala in just 26 minutes, whereas via road it takes 2 hrs. It is expected that the new service will soon increase the property prices of Lonavala which is the preferred choice of many Mumbaikars who treat it as their summer capital.

There are many reasons for property prices in Lonavala to go up, not the least being the fact that Lonavala is one of the famous hill station in close proximity to Mumbai city, hence it is Mumbaikar’s favorite weekend destination. Many people have their second homes in Lonavala and visit there on weekends and vacations to relax.

With the start of seaplane service, the reduced travelling time will be very beneficiary for those people and will result in increasing their trips to the hill station. This will also attract more tourism and attract growth and development in the region, resulting to the increase in property rates.

As on today, property prices in Lonavala range from Rs. 4,500-Rs. 3, 000 per sq. ft. and with the commencement of seaplane services, it is expected there will be a significant increase in property rates in a couple of months, as demand for second homes will increase, said an expert property watcher. Environmentally, the construction sprawl in the Lonavala-Khandala belt, a favourite weekend retreat of many Mumbaikars, has been a sore point between the locals and their rich neigbhours from Mumbai. A property boom has led prices to shoot up 15 to 20 times in the past six years. Locals say the construction spree began with the entry of Mumbai builders. According to Lonavala developer Sanjay Devnani, prices were virtually stagnant from 1990 to 2004, increasing barely 5% every year. “The boom began in 2004 and since then, land rates have increased by 20 times.” Now that the sea plane service has been started, there is every possibility of the realty prices shooting up further high”, say developers.