BHUBANESWAR: In a worrying trend for realtors, housing prices in the city has stagnated at pre 2009-2010 level. Several factors, including supply exceeding demand and eroding people's trust on developers due to series of scams are to blame, industry watchers said.
Flats in Patia area were sold at Rs 2,700 to 2,900 per square feet in 2009-10. The prices remain the same now. Properties, which are nearing completion and have less than three-month waiting period in the locality are available for Rs 2,700 per square feet. Costs remain unchanged in most other localities, enquiries of market prices reveal.
Only in the core area of Saheednagar-Satyanagar-Kalpana, property prices have appreciated marginally from Rs 4,500 to Rs 5,000 per square feet to Rs 4,500 to Rs 5,500. In the same period, cost of building material has shot up by around 10% and labour cost by around 30%.
While several ready-to-possess houses are waiting to be sold, many builders are struggling to arrange funds of their ongoing projects because of poor bookings, sources said.
Industry insiders blame several reasons for the situation. Pradipta Kumar Biswasroy, the president of Real Estate Developers of Odisha , said during the 2007-10 period, a big inventory of high-end properties were created, which far exceeded the demand.
"While there are lower and middle income buyers looking for affordable houses, the stock is of high-end properties. The category mismatch has led to reduced sale," he said.
Biswasroy said there is a slowdown in the real estate market across the globe, which also has an impact here, he added.
Some developers feel series of scams involving real estate developers has shaken the faith of people on the market. "Illegalities involving many real estate groups in the recent months have made customers apprehensive. Many illegal money circulation companies also had interest in real estate. These factors were discouraging buyers," said D S Tripathy, the national joint secretary of Credai.
Notably, High-Tech Group, Tirupati Panigrahi, Seashore Group, Prashant Dash, Artha Tatwa Pradeep Sethy, Sarala Realcon, Gayadhar Jena were arrested on various charges. All these groups have stakes in the realty sector.
Experts feel the downturn in the mining sector following the alleged mining scam is also a factor behind the fall in real estate sector's growth. "Odisha's real estate boom was linked to its mining boom. Slowdown in the scam-ridden mining sector also affected fund flow into real estate sector," said Prashant Patnaik, a retired director of town planning.