Outstanding investments in AP reality sector in AP plummeted 3% YoY: ASSOCHAM

Hyderabad, Jan 7 : Outstanding investments attracted by the real estate sector in Andhra Pradesh (AP) have dropped from over Rs 1.44 lakh crore as of September 2012 to about Rs 1.39 lakh crore as of September 2013 thereby registering marginal decline of about 3.2 per cent, apex industry body ASSOCHAM said today.

While the outstanding investments attracted by the realty sector across top 20 states of India dipped by about six per cent during the aforesaid period i.e. from over Rs 15.39 lakh crore to about Rs 14.51 lakh crore, it added.

“The real estate sector suffered grave turbulence in 2013 due to plethora of reasons like rampant economic slowdown both globally and domestically, liquidity crunch, unstable currency, high input costs, labour shortage, high interest rates and growing inflation,” according to a comprehensive analysis titled ‘Real Estate Sector: Outlook for 2014’ conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Apart from AP, the states of Jharkhand, Haryana and Madhya Pradesh are top five states that have seen significant decline in investment inflows in realty sector during the year long period between September 2012 and September 2013. While Bihar, Jammu and Kashmir, Assam, Orissa and Uttar Pradesh have recorded a surge in investments attracted by realty sector.

There has been a constant lull in the real estate sector in AP since September 2011 as the outstanding investments attracted by the realty market in the state declined by over two per cent i.e. from over Rs 1.47 lakh crore as of September 2011 to Rs 1.44 lakh crore as of September 2012.

While nationally the outstanding investments in real estate sector had increased marginally by about two per cent from about Rs 15.1 lakh crore as of September 2011 to Rs 15.3 lakh crore as of September 2012, highlighted the ASSOCHAM analysis.

In AP, about 72 per cent of total outstanding investments in realty sector were under implementation as of September 2013 while nationally over 68 per cent of total investments were under implementation.

However, the share of AP in the outstanding investments attracted by real estate sector across top 20 states of India has improved slightly from 9.3 per cent as of September 2012 to about 9.6 per cent as of September 2013.

Maharashtra accounts for highest share of about 20 per cent in outstanding real estate investments followed by Gujarat (13 per cent), Haryana (11.2 per cent), Karnataka (11.1 per cent), Uttar Pradesh (9.8 per cent) and AP (9.6 per cent), as of September 2013.

With a view to perk up the real estate sector, the ASSOCHAM has given various suggestions to the government some of these are – need for a single window clearance system to clear all projects instead of seeking approvals of myriad regulators and authorities thereby saving both time and costs; need to evolve a rational structure vis-à-vis payment of stamp duties on sale and purchase of land and housing properties; revise the limit of interest deduction on housing loan of Rs 1.5 lakh introduced by Finance Act 2001 to Rs five lakh; allow more foreign direct investment (FDI) in real estate firms to strengthen the industry in townships, housing, built-up infrastructure and construction development projects to spur economic activity, create new employment opportunities and simultaneously add to available housing stock and built-up infrastructure.

Some of the other recommendations given by ASSOCHAM to the government to bring the realty sector back on growth trajectory include – repeal highly restrictive and archaic laws of Rent Control Act and Urban Land Ceiling and Regulation Act; the government should act as a facilitator and not as a regulator for real estate projects more so where demand is more than supply; state governments should complete land records process and make them computerized; infrastructure including transportation, logistics, water, power, housing, healthcare, sanitation and others must be taken in tandem to spur real estate development; government should grant industry status to real estate sector to facilitate bank loan and long-term finance for real estate projects and real estate must be classified as infrastructure and priority lending sector should be made available to keep pace with demand-supply scenario. INN