News & Views on Indian Real Estate

Monday, October 20, 2008

Economic slump may hit many segments in State

The crisis in the international economic scene is bound to have its repercussions in the State economy as well. The NRIs, the export and import-based companies and the real estate sector may suffer if the global economic meltdown continues. The NRIs will have to share the burden of measures being implemented by their host countries to ward off the crisis. The result will be a slowdown in the remittances from abroad which is likely to affect a spectrum of activities in the State. The boom in the real estate sector was driven by the money supply in the market.

The soaring prices in the real estate and the rise in construction activity had been supported by the steady arrival of foreign remittances. The real estate sector grew to new heights as cities like Kochi started implementing infrastructure projects like the Vallarpadom transhipment terminal and LNG terminal. It was the NRI segment that sustained this growth. A meltdown in the real estate sector would mean that the sale of the building materials would decline, resulting in a fall in the tax revenues to the government.

The large number of migrant labourers currently employed by the construction sector would become redundant and they would be forced to return to their native States, according to real estate managers. The global crisis might affect the lives of Keralites too, said State Planning Board Vice-Chairman Prabhat Patnaik at a recent meeting in Kochi. The recession could affect the farmers of Wayanad if they do not get remunerative prices. The slowdown in the U.S. economy had hit several financial and IT companies with business links in the State.

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