SURAT: Realty sector in the city that had been growing at an average of 10-14 per cent for the past five years has suddenly shown a reverse trend. The decrease in terms of new projects has been as steep as 40 per cent during Navratri and Diwali months. Surat Municipal Corporation (SMC) on an average has sanctioned around 353 projects every year since 2007.
The National Development Bank (NDB), a subsidiary of Reserve Bank of India (RBI), had hailed Surat's realty market for its fast growth till March 2012.
"We have a situation where the diamond market is no more bullish and the textile sector is facing recession.
Nearly 25 per cent of the investors have moved out," said Velji Sheta, president, Surat Builders Association (SBA).
Developers, who gave the schemes for investors in their own projects in the past two years, have either not earned enough or have suffered losses. This has given rise to a negative atmosphere. Thus, major developers have not come forward with new projects during Navratri and Diwali this year.
"The developers are more concerned with completing existing projects. More and more development is taking place in the city's periphery," said Niraj Tomar, Gujarat in-charge of Jones Lang LaSalle (JLL )
Tarun Rawal, vice president, CREDAI, Gujarat, attributes this slump to increased land cost . "As the land cost in SMC area has gone up drastically, many developers have moved out towards Navsari. Only those who hold land at old rates dare to put up projects in the city."
Satyakam Joshi, associate professor, Centre for Social Studies, VNSGU, said: "There is no cash flow at all. The globalization has led to increase in disparity and majority of the society don't have buying capacity. This has resulted in a huge slump in the realty market ."