BHUBANESWAR: Recent developments in land and chit fund scams have worsened miseries of the real estate industry in the city.
After it came to light that government records had been manipulated in the hub of real estate activities at Chandaka, investors will be wary about putting their money in the city, feel developers. The Ponzi scam money trail into realty has already hit the market.
Villages such as Shampur, Gothaptana, Daspur and Andharua are sought-after destinations for real estate projects. However, after the government discovered collusion of revenue department officials in manipulating department records and creating patta (record of rights) for buyers illegally last month and the arrest of some officials earlier this month, the real estate sector is shaken.
"There may be a handful of dubious players, but the sector has suffered a major trust deficit in the city. If people can't go by government records, they have reason to be suspicious," said Pradipta Biswasroy, president of Real Estate Developers Association of Odisha (Reda).
Biswasroy said the majority of the players would remain unscathed, but it will take years to regain investors' confidence, he said.
The government has begun verification of a complaint by residents of Gothapatna, Ghangapatna and Malipada that some known developers grabbed government land, grazing grounds and communal land amounting to more than 50 acres and built apartments without approval from the Bhubaneswar Development Authority (BDA).
Change of lease-hold property to free hold and their conversion from agricultural to homestead land has come under the government scanner in various localities.
The timing of this development could not have been worse as the real estate sector has been going through a phase of slowdown for the past three to four years. "Of late, very few new projects have been floated because of the uncertainty. Most developers have been striving hard over the past couple of years to complete the ongoing projects," said D S Tripathy, joint secretary of the Confederation of Real Estate Developers' Association of India (Credai).
Tripathy said the Modi government's relaxed norms for foreign direct investment (FDI) in the real estate sector, announced in Budget 2014-15, were expected to give huge push to housing projects in tier II cities like Bhubaneswar in the forthcoming festive season when non-resident Indians come calling. However, the ongoing situation may dash the city's real estate market's hopes to invite FDI, he said.
The Centre eased criteria for FDI by reducing minimum size of project from 50,000 square metres to 20,000 square metre and investment amount from at least US$ 10 million in a project to US$ 5 million.
Notably, High-Tech Group, Seashore, Artha Tatwa and Sarala Realcon, all having real estate interests in the city, have come under the scanner for dubious money circulation business.
Umesh Patnaik, president of Association for Odisha Real Estate Developers(AFORD), said the market was going through a delicate phase. It would be, however, difficult to assess or blame any single factor for this.