The Karnataka government has proposed to ban the construction of new apartments in Bangalore for five years. The reasons? Haphazard over-construction and negligence to implement proper water management. While these were undoubtedly preventable reasons, let us examine this in the light of possible implementation.
At the onset, the government needs to give more clarity on whether the ban applies to new projects or also includes those under construction. Assuming that the ban would apply to new developments within the city, this move could hurt the real estate market as the housing demand for in Bangalore is massive.
With reduced new supply, property prices can increase unrealistically. Currently, the city’s residential market, backed by realistic property prices, is leading in real estate revival across the country. But such a move will only dampen its future real estate prospects.
Also, with limited new supply entering the market, demand for ready properties will go up significantly. Builders sitting on ready inventory will immediately increase the property prices of these homes by at least 10-15%. This will keep inflating over the years of the ban.
Also Read: Bangalore Real Estate Shows Promise, but Can the City Deliver on the Promise?
However, property owners looking to sell their properties can finally expect some price appreciation.
Additionally, builders sitting on ample land banks – or even those who were waiting to launch their projects in future and were almost ready with all their project planning and designing – would face issues with this move. The cost incurred on project designing and planning and seeking necessary approvals will all go in vain.
Subsequently, the ban on construction activity would also lead to severe job losses for lakhs of construction workers. With the city witnessing massive construction activity in the past and present, lakhs of construction labourers came in from states like Uttar Pradesh, Bihar, West Bengal, etc. This move will not only hit them but also further aggravate the job crisis in the country.
Besides, if we assume that the ban is implemented, it is implausible that the city’s water woes will subside any further unless there is sound water storage or water management system in place.
Instead of opting for such an extreme move to quell the water crisis, the government should take adequate alternate measures to conserve water and manage its sources. Further, rainwater harvesting should be strictly imbibed by housing societies and builders. It can also work to rejuvenate hundreds of lakes in the city.
As another probable step, the government must penalise builders (of both existing and new projects) for not implementing water-conserving techniques, including rainwater harvesting.
This article is contributed by Anuj Puri, Chairman, ANAROCK Property Consultants.
(The views expressed here are solely those of the author and do not necessarily represent or reflect the views of RoofandFloor)
