WHEN SLOWDOWN hits the market, every sector is affected badly. Kerala, Gods Own Country, witnessed a boom in the real estate sector recently. This was the first of its kind in the tail-end state of the country. Land-broking had become a lucrative business for hundreds across the state. The hike in land and property prices made life simple for land owners and there were some who skipped their dreams of owning a home. Some became immensely rich and some lost all hopes. Bankers showered loans against properties, new houses started coming up everywhere, along the state of coconuts. (There were sayings that grooms never worried about the gold they get but were concerned only about the land owned by their fathers-in-law). Work of fictions came one after another based on the booming trend in real estate sector. Many resigned from their jobs and became land- brokers. They even bought land to sell at a higher price within a few days. This speculation led to skyrocketing of the prices.
But change, as always, happened rapidly. This time it was in the form of global economic slowdown. After the collapse of Lehmann Brothers in the US things were not like how it had been. Everything changed in line with the meltdown in share markets. Indian share market witnessed its all-time peak in January, 2008 but it took only nine months to wipe out more than 60 per cent of index points. On a global basis realty indices nosedived. In India also realty indices witnessed a downward trend. These indices witnessed 5-10 per cent slide on a daily basis. Indian real estate companies witnessed a huge sell off by investors including FIIs.
In line with the current financial crisis and liquidity crunch Keralas real estate sector also witnessed a slowdown. Slowdown in terms of demand was visible at first but when the crisis deepened the magnitude of the crisis also increased. Recession was the word heard loud (sometimes louder) among the people and across all business segments. In Kerala, shadow of the slowdown fell on the real estate sector at first. When recession came the real estate sector in Kerala was already in a dull stage. According to brokers this was due to some government policies. Some of the policies of the government (LDF Govt headed by VS Achutanadan) were not encouraging for the real estate sector of the state. Recently, Kerala govt issued a price list for places across the state but later it was removed after it was found that the prices were wrong. There were complaints about the difference between the actual price and prices furnished in the list. The Left governments Munnar operation was the main reason for the slowdown in the real estate sector. (Munnar operation aimed at taking back revenue land from private encroachers. It failed badly because encroachers included various political parties).
More : merinews.com
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