Prices soar as booming Bhubaneswar runs out of apartments

City lacks development masterplan & supply of new apartment was as low as 200 units per year till recently. Keeping in tune with the sudden surge in real estate prices in Bhubaneswar and its surroundings, real estate giants from the country's metros are now making way into this city.
The realty majors who have made a beeline are the Kolkata-based South City group and the Delhi-based Assotec group. Realty major DLF has already made its entry into the city.
Bhubaneswar's realty sector seems upbeat at the recent developments as they feel with the passage country-famed big realtors like the Rahejas, Ambujas, Surekas, Ansals, Unitech, Hiranandani, Parasnath and Mantri would also be coming into the city in future.
City-based realty majors point out that a demand-supply gap has resulted in the recent surge in prices. Real estate prices have almost trebled from Rs 1000 per square feet to Rs 2800 per square feet on an average in parts of the city. Demand is strong and has led to derisking of the real estate sector, sources said, adding that realty majors would definitely feel comfortable in walking into the city.
The Naveen Patnaik government in the state recently was also planning policy changes to tempt real estate developers. The state would be encouraging them to build high rises of upto 20 storeys multi-storied on the northern part of the city, now that the southern part was almost fully developed and was saturated with no free-holdings and no surplus government land.
A large area encompassing 5000 acres starting from the city heart Kalpana Square to Dhauli has also been identified as the Ekamra Heritage Zone where buildings are not allowed to scale the stipulated 10 metre norm which is at a G+2 level. The city-based real estate sector estimates, Bhubaneswar and its surroundings comprise around 30 square kilometres and is divided into half by the National Highway 5 to the North and South. Till date, only 20 per cent of the entire city has been taken up for real estate purposes, the major being on the South and now with a natural swing towards north. Demand so far exceeds supply in the city that real estate prices have risen even in remotes like Patia, almost 13 to 14 kilometres away from the city hub. Expectations, however, are that the real estate sector in Bhubaneswar would command a business of Rs 1000 crore in the coming days but for the moment has to remain satiated with Rs 200- Rs 300 crore.
The Kolkata-based South City group is scouting for land in different parts of the city as a first step towards creating a land bank for future development. Recently, the group procured 10 acres of land at Raghunathpur almost 3 kilometre from Nandan Kanan for development. Observers and players directly attached to the real estate sector of city have the information that the Kolkata-based group has initially lined up an investment to the tune of Rs 50 crore for future growth. The Delhi-based Assotec group is in collaboration with a city-based realtor for residential flats near Khandagiri-Doomdoma. City-based realtors said the price quoted is around Rs 1700 per square feet in and around that area. The big groups are presently eyeing residential complexes depending on the availability of land as they have already come to know big agricultural lands converted to homesteads for further commercial developments and complexes are not easily to come by.
According to Anup Mohapatra of the city-based Versatile Construction, "Real estate prices would continue to go up and mega groups like the South City would definitely come in because of a lop-sided and uneven growth in this sector. It is only after the coming of the big groups that things are likely to look up in future". Mohapatra, who is also the president of the city's Real Estate Development Association (REDA) and a director in the South City group, blames the planning by the Bhubaneswar Development Authority (BDA) for leading to current problems. "The city lacks infrastructure, a proper disposal and sewerage system and a garbage disposal mechanism. People in most parts of the city still rely on the septic tank concept as there is no waste water disposal mechanism," he said.
Real estate sources point out, of late, the government has changed its approach towards BDA and has decided to shift the majority of building approval powers to Bhubaneswar Municipal Commission (BMC) and specially appointed Building Approval Committee (BAC). A central assistance of Rs 1400 crore was in the pipeline for the development of the city with matching grants from the state. The city's real estate scenario has its history in 1983 when the Orissa Development Authority Act was initiated and in 1990 the real estate and apartment development started in the city. The subsequent formulations of the Planning and Building Standards Regulation had also not been able to cut much ice and it was again amended in 2001 for a smooth development of the real estate sector.
In reality, things changed little then and Bhubaneswar did not see a boom in real estate till now. The city till date does not have a Master Plan. Efforts, however, were taken up almost two years ago with the handing over of making the city's Master Plan christened as the Comprehensive Zonal Development Plan (CDP) to IIT Kharagpur for a urban circuit comprising Chowdwar, Cuttack, Bhubaneswar and Khurdah. The institute is yet to submit a preliminary model. Mohapatra says, "We have lost all hope as it now seems that IIT Kharagpur will not be able to work out the Master CDP for the city and identify spots for development". To make up for the lost time, Interim Development Plans (IDPs) are being worked out by IIT experts in consultation with the government at East Koakhai and Nandankanan.
Real estate sector sources said Bhubaneswar had a paltry supply of only 200 new flats a year against annual demand of 1000 flats. The city's big real estate players comprise Z Engineers, Jagannath Builders, Versatile, Kalinga, Utkal Builders and Arya Palli.


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Bhubaneswar March 13, 2007