Mangalore not hit much

At a time when the real-estate industry in general is facing problems due to the economic slowdown, Mangalore city does not appear to be affected all that much. Two factors are cited — the compactness of the city (it has an area of around 133 sq.km) and the ban on construction of high-rise buildings in the past two years.

In spite of claims of marginal impact, though, the raw material suppliers are seeing a decline in demand for cement and steel.

However, the general impression is that the recession has helped bring down the ‘fancy rates’ quoted during the boom.

To get a clear picture of the current scenario, Business Line spoke to people associated with the sector in Mangalore city.

Mr P.M.A. Razak, President of Kanara Builders’ Association, said Mangalore realty is not much affected by the recession compared to other cities in India.

“There is a gap between demand and supply. In the last two-and-a-half years we did not have approvals for high-rise structures. Therefore there is a short supply of quality homes.” Whatever major construction that was taking place began prior to the ban, he said.

Mr Srinivasa S. Kamath, President of Kanara Chamber of Commerce and Industry, said there was no land availability, in the first place. Mangalore is a small place because of its topographic condition. There is limitation for land available in the city compared to the growth taking place. The major construction activities, which began two-and-a-half years ago, are being completed now.

Another reason he cites for marginal impact of recession is the type of investors in the real-estate sector. Mr Kamath said that most of the investors are not local people. People who stay outside Mangalore — in Mumbai or abroad — hoping for an increase in price have invested in Mangalore. “I think they mature investors who can hold on,” he said.

Mr Girish N.G., an advocate, who offers guidance to real-estate clients, said not much sale or purchase is happening, as buyers are waiting for a fall in prices and sellers are not ready to sell at a lower price. He said there was a fall in the number of property registrations compared to the past.

Cement, steel prices
Raw material suppliers to the construction industry have started seeing decline in sales. Mr B. Purushotham Shenoy, a cement dealer in Mangalore, said demand for cement had come down by around 30 per cent now compared to the previous year. He said that old projects, started two-three years ago, were getting completed now. There is decline in the sale of steel, he said.

All agree that the ‘fancy rates’ quoted a few months ago are coming down.

Even those in the peripheral areas were then demanding big prices. But now rates were getting more realistic, said Mr Kamath. Only those in a hurry to buy then would have got affected. Mr Shenoy said that during the boom fancy prices were quoted in some areas. These prices were much more than what a local economy could bear. The slowdown would help bring down such rates, he said.

Mr Girish said prices of flats have come down by Rs 200-300 per sq.ft in some areas.

A senior banker, who did not wish to be named, said the global slowdown had not made much impact on the Mangalore real-estate scenario. Stating that his bank had quite a good exposure to the sector, he said he did not see any adverse developments.

Asked whether there is demand for home loans after the recent initiatives by the Government, he said buyers were waiting for prices to fall further. Asked about the outlook for the next one year, Mr Razak said: “We may foresee demand slowing down due to unknown fear.”

Mr Kamath felt prices would stabilise in a year’s time. “Unless you see developments, there won’t be further increase,” he said.

Source : http://www.thehindubusinessline.com/iw/2009/01/04/stories/2009010450521500.htm