The real estate sector in the city, especially the residential segment which was hit by the economic downturn that began from the second half of 2008-09, is set to regain its growth momentum in 2009-10.
With about 6,000 new residential units involving an investment of Rs 150-200 crore scheduled for commissioning by the end of 2009-10 and the cost of the housing projects poised to fall further, the real estate players are bullish on the growth of the residential segment.
However, the realtors are not betting big on the commercial real estate projects which they feel would continue to post a slow growth for the next couple of years due to lack of a robust demand for such projects in the city. Moreover, they feel that the realty market in the city had not matured enough to boost the fast growth of commercial real estate projects.
“The outlook for residential projects in and around the city appears positive with about 6,000 residential units which have already received the approval of the Bhubaneswar Development Authority (BDA) are set to be commissioned by the end of 2009-10. In the past five years, only 2,500 residential units were built in the city which created a huge demand supply mismatch”, said DS Tripathy, secretary, Orissa chapter of Confederation of Real Estate Developers Association of India (Credai).
The customers had got a breather after Credai-Orissa had announced a price cut of about 10 per cent for the new residential projects in the wake of the wake of the economic downturn which had caused a slowdown in demand. The cost of residential projects were now available in the range of Rs 1,600-2,500 per sq ft compared to the earlier range of Rs 1,800-3,000 per sq ft.
Credai-Orissa expects the cost of housing projects to fall further by Rs 100-200 per sq ft even as the fluctuating prices of steel and cement continue to be a cause of concern for the builders.
Anup Mohapatra, president, Real Estate Developers Association (REDA), Orissa said, “The price correction of housing projects in the city which was the result of falling raw material prices and easing of interest rates for home loans has helped revive the demand. Earlier, there was a huge demand supply mismatch for the housing projects in the city which had escalated prices but with the supply side showing improvement, the market is set to stabilise now.”
Mohapatra pointed out that the stage was not set for the mega real estate projects in the city adding, real estate majors like Unitech and South City Projects which had announced their projects in the city were now going slow as their cash position was not comfortable.
He pointed out that there is a good scope for affordable housing projects in the city and felt that for promoting such projects, the state government needs to play the role of a facilitator and provide land for the projects.
“The state government can generate demand for affordable housing projects by providing land and external infrastructure. The builders are keen to develop residential projects in the range of Rs 15-25 lakh where there is huge potential as the projects in this range bring affordability for the customers”, said Tripathy.
Earlier, Credai-Orissa had presented a proposal to BDA to earmark an area of around 2,000 acres for the Special Residential Zone (SRZ) in the draft comprehensive development plan (CDP) for the city.
Credai felt that allocating an area of 2,000 acres for SRZ in the CDP would help to accommodate nearly six people belonging to economically weaker sections by 2030.
Tripathy pointed out that the housing projects in the SRZ could be developed in the range of Rs 5-12 lakh as the projects developed in the zone would enjoy exemption from sales tax and value added tax.
