BJP JD(U) split hits sentiment in realty sector in Bihar
The Centre's new taxation policy, in force from June 1, has affected realty sector in the country. But in Bihar, the 'circle rate' or minimum value rate (MVR) of urban land has been increasing for the last six years
Jun 18, 2013
Source : The Economic Times

PATNA: The Sunday split in NDA hit the market sentiments, particularly in the real estate sector. But, the prices of available unoccupied flats in multistoreyed apartments in Patna and other cities are not expected to plummet.

As of now, the building construction sector in Bihar has adopted a 'wait and watch' stance, reconciled as they are with the investment they have made so far. The pressure on them is to find the need-based buyers to sell the unoccupied flats. It is because the brute majority CM Nitish Kumar enjoyed as the NDA government would only have a wafer thin majority. Private investment in the realty sector is unlikely to get reactivated before the 2014 parliamentary elections.

The market fears that the new government would be subject to various pulls and pressures and populism, which would act as constraints on CM in taking bold decisions. Incidentally, their 'faith in Nitish's skill and his capability to steer the government and also manoeuvre it of arresting situations' was still intact.

"The change to a new government having very thin majority in the House has adversely affected the market sentiments in the realty sector. Investment in all other sectors, including industry, would be hit in general, but the realty sector is the first to experience it. The scope of long-term investment has been affected. Both the local and outside investors would now wait," said Narendra Kumar, director of a building construction company and president of Bihar chapter of Confederation of Real Estate Developers' Association (CREDA).

Similar was the sentiment in the industry circles. "The economy of the state would be affected, as any new investment would not be forthcoming. I have been in touch with prospective investors based in Mumbai and elsewhere for the last four days. The outsiders have adopted wait and watch policy. We hope law and order situation does not deteriorate," said BIA president K P S Keshri.

Keshri also said that the realty sector would be hit the most, but construction business dependent on public investment in roads, buildings, bridges and housing board's new plan to build thousands of housing facility would continue to sustain.

"The Centre's new taxation policy, in force from June 1, has affected realty sector in the country. But in Bihar, the 'circle rate' or minimum value rate (MVR) of urban land has been increasing for the last six years. It has increased property price. But Bihar has need-based buyers. The prices, therefore, will not fall," Keshri added.



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