NGT buffer-zone directive is going to hurt Builders in Bengaluru. New order passed by the NGT, landed the real estate sector in a crisis. Recent directive has increased the buffer zone around lakes and wet lands from 30 metres to 75 metres.
Property developers will see that the project cost is boost up by around 30% as they will have to redesign projects and also keep paying interest on bank loan. In addition to these, builders and developers have to pay government charges for re-approval of their project plans. The NGT regulation is also expected to push up property costs as builders and developers will be forced to pass on the extra charges to home buyers.
Kamal Sagar- managing director of Total Environment Building Systems say that “Every day the meter is ticking as there are huge costs involved. Many builders would have borrowed money and now they will be forced to pass the extra cost to home buyers.”
In Bengaluru, most of the developers have either bought land or entered into joint development based on current city development plan and its by-laws. Koshy Varghese, managing director at Value Designbuild states that “We are losing 30% of our land in one of our project due to buffer zone directive passed by NGT. There is huge financial implication of the order. A retrospective order will destroy already damaged confidence and the business itself.”
The order passed by National Green Tribunal on May 4th barred the construction activity within the 75 mtrs from the lakes and wet land (periphery of water bodies), 50m from the edge of primary rajakaluves, 35m from secondary rajakaluves and 25m from tertiary rajakaluves. This has made State Environment Impact Assessment Authority put on hold environmental clearance for 10 Major Properties in Bengaluru, big builders’ residential apartments in the city, for alleged encroachment of lakes and Rajakaluves (SWD).
Sterling Developers has recently received a notice from the authority. Kishore K Shetty, senior VP, corporate affairs, Sterling Developers states that they do not have any primary, secondary or tertiary rajakaluves in their project site.
“Prices will go up as development has decreased. We may also see 30-40% of lands in Bengaluru becoming undevelopable as there are rajakaluves in every 200 metres according to old village maps,” said Nesara, BS executive director, Concorde group.
According to the CREDAI (Confederation of Real Estate Developers Association of India) every plan sanction of the project will be undergo through at least 7-8 stages of verification, vetting, and inspections from officers. In most of the cases the process takes almost 2 years or more.
“It is important that the government should own up the sanctions given by them. Giving cognisance to and pulling out ancient century-old maps is only creating confusion and panic among home buyers and the general public and exposes the developers to unnecessary stress,” said JC Sharma, president of the Bengaluru chapter of Confederation of Real Estate Developers’ Associations of India.
Bengaluru, which remains one of the best-performing real estate markets across the country. In the past 4 quarters residential sales in the city drop by as much as 30% due to slow job creation and low salary increases at software organizations. This has resulted in high financial stress on developers who are borrowing heavily from private equity funds and non-banking financial institutions.
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