Herald: Real estate market struggling under mining ban

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Real estate market struggling under mining ban

17 Feb 2019 05:33am IST
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17 Feb 2019 05:33am IST

Team Herald 

MARGAO: After more than 6 years of Goa’s Mining Ban, the lack of free flow of cash in the Real estate market has taken its toll on the construction companies in Margao. While three major constructions companies have virtually shut down, others are struggling with finding buyers for their inventory. Lower end employees such are drivers who were working for the last ten years have been the pink slip. In South Goa, an industry observer and raw material supplier said there are around 800 to 900 new flats up for sale but there are no customers. Some companies dropped their prices from Rs 56,000 per sq mt to Rs 45,000 per sq mt.

Speaking to Herald, a real estate consultant informed that builders are skeptical of investing in properties. “There are builders who invested money in the market during the mining. With the economy collapsing after mining was shut down, demonetisation and GST, their investment got blocked. People bought lands at the rate of Rs 24,000 a sq mt which were worth Rs 18,000 a sq mt. Today they are forced to sell it for more than 30,000 but no one wants to buy,” he said.

He explained that there is a 650 sq mts settlement zone property in Fatorda where the owner is quoting Rs 33,000 a sq mt. “At 100% floor area ratio, the builder gets to construct just 650 sq mts of built up area. The builder has to invest a minimum of Rs 15,000 per sq mt in construction cost. The cost of each flat jumps to Rs 50,000 per sq mt. There is no demand for such expensive flats,” he said.

But the builder does have the option of increasing the built-up area by changing the zone. “If the builder wants to change the zone to commercial in the ODP, he has to wait for months if not years after applying.  If someone challenges the ODP, then his investment in the land is wasted,” he said

The consultant informed that during the mining boom, people wanted to invest in premium apartments with swimming pools. “Today no builder wants to install a swimming pool because people don’t want to purchase flats with high maintenance cost. Some builders have moved over to construct budget apartments worth Rs 35,000,” he said.

But the slowdown is not limited to just the construction companies. Other businesses who deal with electrical equipments, plumbing, painting, furniture and consumer electronics have all taken a hit. One retailer from Margao said that the market has gone back to the old days when most of the business used to come from people working abroad.

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