Builders look for a stable government

16 May, 2009

Builders hope that a stable government will be formed at the Centre after the Lok Sabha election results come out on Saturday.

Stability and proactive policies to help the real estate sector are what they expect from the new government.

The recent stock market rally has helped to win back a lot of confidence in the market. The fear of recessionary trends has receded a bit with a small momentum in the real estate sector.

There are a number of expectations from the new government, says M. D. Jairaj, president of the Kerala Builders’ Association. The first is a correction in the cost of materials, which is the only way to create a momentum in the sector. The government has not taken a strong stand in correcting the prices of steel and cement that had spiralled up during the boom time. Now, even more acutely than before, the high prices make a major dent in profits.

The buyers will have a definite edge when material costs, which make up about 25 per cent of the cost, come down. While the labour costs, which are the highest in the State, will not decrease, land prices may see fluctuation. In Kerala, land prices have seen some correction in certain areas, but there are no drastic changes. Unlike elsewhere in the country, land is scarce here, the builders say.

Though the government has undertaken a huge exercise to fix fair price values on land to ensure better revenue from land registration, the task have been pending for the past five months. As land registration has come down in the past eight months or so, a positive approach by the government can help it earn higher revenues.