Uttarakhand builders buoyant on festival season

The heavy slump in the construction business since early 2008 may have failed to recover fully. But builders in Uttarakhand said the market sentiments were likely to improve and spur demand in the festival season.

They are now focusing more on residential business since there is hardly any improvement in the commercial space.

With interest rate cuts by leading banks failing to boost real estate business in the hill state, which has taken a beating in the wake of the global recession and severe liquidity crunch, top banks like State Bank of India (SBI) and ICICI have already launched campaigns to cash in on the festival season.

“We are absolutely positive on the festival season,” said Maheep Kumar, DGM, SBI Dehra Dun, after launching the festival scheme ‘your dream home with SBI loan’.

Experts in the business said that new investments were not pouring in the hill state as far as the real estate business was concerned.

Only selected players have mustered courage to start new residential ventures in Dehra Dun. Commercial activities like five-star hotels continue to languish as a series of such projects are still hanging fire.

Prior to the recession, new amendments in land laws, high stamp duty and circle rates brought by the former B C Khanduri government had virtually put a dampener on the property business in the hill state.

According to official estimates, there has been 27-30 per cent fall in the revenue from stamp duty and registries.

In 2006-07, the revenue had jumped to Rs 342 crore but last year it fell to Rs 231 crore. This year also, there is hardly any recovery.

Due to the slowdown, property rates fell by 5-10 per cent. Despite this, there are no buyers in the market.

Virtually, people are keeping their fingers crossed with the hope that there would be a sharp fall in the property rates.

The slump began last year when the Bharatiya Janata Party (BJP) government brought amendment in land laws that restricted outsiders from buying more than 250 sq mt of land. The move brought the thriving real estate business to a near halt.

Besides the tough land laws, the government also sharply increased stamp duty and circle rates that adversely affected the property business.

But last year, the government implemented the master plan of Dehra Dun and had cut 1 per cent in stamp duty rates in its bid to boost real estate business in the state.

But the move failed to improve the situation. Again this year, new Chief Minister Ramesh Pokhriyal Nishank reduced the stamp duty on agreement to 4 per cent in order to spur growth and announced other sops that would boost the real estate business.