THIRUVANANTHAPURAM: Covid, which has taken its toll on every segment of Kerala economy, has not spared the once-bustling real estate sector as well. Realty firms have been facing a big crisis with a rising number of stocks remaining unsold since the first wave of the pandemic. As a staggering 55% of the 38,000-odd units registered with the Kerala Real Estate Regulatory Authority (K-RERA) remain unsold, developers call for government intervention to help the sector stay afloat.
Among the different categories, villas and one BHK units are the worst-performing segments, according to the data with the K-RERA. Only 24.35% of the 2,481 villa units have been sold until February first week. The sales figure was 33% for one BHK units. Units in the ‘4 BHK and above’ category recorded the highest sales, 56.41%, followed by 3 BHK, 49.41%, and two BHK, 46.22%.
Sales of commercial units too declined. Only 23.96% of office space units succeeded in getting buyers. Developers have been hit by the double whammy of Covid-induced drop in demand and steep rise in material cost, says M A Mehaboob, chairman of the Kerala chapter of Confederation of Real Estate Developers Associations of India (CREDAI Kerala). “The price rise has drastically reduced the profit margin of ongoing projects. Hence, developers can’t opt for discounts to sell off stock,” he said.
The CREDAI Kerala has already approached the government for a cut in stamp duty as announced by Maharashtra and Karnataka to tide over the Covid crisis. “It helped in reviving the sector in those states. The cut, even if for a limited period, will have a big impact on the construction sector and about 30 allied industries,” he said.
‘Stamp duty cut will do wonders’
“At present, the government levies a total of 10% as stamp duty and registration fees. A 5% cut would do wonders for the sector,” Mehaboob said. Covid has driven the real estate sector into the abyss of devastation, confirms the data with the government’s Economics and Statistics Department. The realty sector recorded the decade’s lowest year-on-year growth rate, -5.10%, in 2020-21 when the state faced the first wave of the pandemic.
The growth rates were 7.98% in 2019-20 and 15.11% in 2018-19. The construction sector in general showed a negative growth rate for two consecutive fiscals — -2.04% in 2018- 19 and -5.27% in 2019-2020. And that was a steep fall from the decade’s highest growth rate of 11.80% recorded in 2017-18. “There is a slump in the realty sector across the country.
The stamp duty cuts announced by Maharashtra and Karnataka had a positive impact in those states. The rebate may lower the revenue of the registration department even as a part of it will be compensated through the increase in sales volume. The most important benefit would be the revival of the sector,” says P H Kurian, chairman of K-RERA.
(Data since formation of K-RERA in 2019)
K-RERA registration is mandatory for real estate projects which fit to the definition stated in the Real Estate (Regulation and Development) Act , 2016.