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Kerala realty sector eyeing NRI deposits

Builders in Kerala have set their eyes on more than Rs1 trillion Non-Resident Indians (NRIs) have parked in banks to lift the sagging real estate sector in the state.
NRIs have been parking their savings in commercial banks after the latter doubled or trebled the interest rates following deregulation of rates by the Reserve Bank of India (RBI) as well as the steep rise in properties in the recent times.
The builders feel that the 0.5 per cent cut in rates being considered by the RBI during the next review will bring the cash-rich NRIs back to the realty sector. Residential property sales in the state had dropped by more than 40 per cent after the NRIs, who accounted for 70 per cent of the demand, slashed their investments.
"Even if five per cent of the deposits in the banks are invested in residential homes, it will give a big boost to the sector," says Raffi Mather, member of the Executive Committee of the Cochin chapter of the Confederation of Real Estate Developers' Associations of India (CREDAI) and joint managing director of Asten Realtors Ltd.
He told Khaleej Times that other factors for the revival of the sector in hotspots like Cochin and Trivandrum have become favourable. The proposed inauguration of the first phase of SmartCity Kochi in December this year, third phase expansion of Infopark and the extension of Cochin Metro to the SmartCity have kindled sentiments in Cochin.
Siraj Mather, Managing Director of the company, said there was a spurt in the inquiries of late. This, he sees, as a definite indication of the change in the trend. Taking this as a positive sign, several builders are planning major projects at Kakkanad, where the SmartCity is coming up.
Asten Realtors itself is developing an integrated township at Kakkanad at an investment of Rs48 billion. The project includes 368 residential apartments in two blocks with an area of 800,000 sq ft, 600,000 sq ft commercial area, a 120-room luxury hotel and two malls.
The announcement of the smart city project by Dubai-based TECOM in 2006 with a job potential of 90,000 had led to a big boom in the realty sector with builders from the state as well as outside coming up with projects to cater to the software professional.
However, the slump in real estate sector set in.
Many apartments and villas built then are lying unsold. The number of unsold apartments is 2,000 and villas 1,000 worth more than Rs20 billion, according to a newspaper report. The unsold inventory was much high earlier. Many were sold out by reducing prices.
With the smart city project poised for commissioning in December and many other mega projects like the international convention centre and new malls under implementation in the city, a new boom is looming.
news@khaleejtimes.com

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