Notebandi, GST, RERA Trio Crippled Realty Sector: Unchiyarda

Demonetization and GST have already paralyzed the real estate industry while bringing to the knees the job market associated with it, says Karan Singh Unchiyarda, founder of Ashapurna Buildcon Ltd. One of the pioneers of the industry who started the journey in establishing Ashapurna Buildcon in 1996. Unchiyarda says the Real estate Regulatory Authority has added fire to the fuel and is in need of revamping some draconian clauses which can a potentially kill the industry.

“The engineers who were getting Rs 2 lakh per month are ready to work for Rs 50,000 per month now. Earlier, we had to run after the contractors and now many of the contractors are out of jobs as orders have disappeared. This is a very disturbing trend. More importantly, the lakhs of workers who came from various parts of the country like West Bengal and Bihar to work for real estate projects have gone back to their homes. The real estate industry is in serious disrepair. Demonetization, GST and RERA have taken the wind out of the sector,” says Unchiyarda in an interview to Business Rankers.

Real estate industry was already depressed before the government announced Demonetization in November 2016. The builders’ community was desperate to see a bounce after years of demand despondency. An event like demonetization was never thought in the wildest of the dreams. As it happened in November 8th, people were slow to realize the impact of the blow. In the succeeding months, registrations were dropped by up to 70%. And after that there is no hope for revival as liquidity dried up in the market. Investors vanished and under-construction projects remained stuck.

Unchiyarda says it is not the demonetization alone. The industry was pushed against the wall from three sides: Demonetization, GST and RERA. People are selling houses at whatever price the buyers would like to pay.

It’s a buyers’ market not a sellers’ market. “The builders were prohibited from buying goods and services from vendors who fall below Rs 20 lakh slab. The Centre recently provided relief only till April 30. It was a move keeping the Gujarat elections in mind. Such mindless decisions are roiling the industry,” says Unchiyarda.

While demonetization dried up the demand and created large scale unemployment, GST has ensured that builders appoint more accounting staff to meet the rising compliance burden. “If there are any jobs that are being created in the real estate industry, then it is accounting staff. The compliance burden has increased manifold after the rollout of GST.

So, instead of engineers or architects, we are appoints accountants,” adds Unchiyarda. The last nail in the coffin was real estate regulatory authority.

Even though the industry hails the intentions behind the regulation, there are provisions that create serious hurdles for the builders.

“If we want to use money form a particular project account, we need have approvals from the engineers, chartered accountant and the architect. The business environment has become stifling and people are struggling to do their routine business,” says Unchiyarda who has completed about 32 projects and there are six ongoing projects.

Unchiyarda says that the business community voted Narendra Modi to power hoping that he will ensure rapid industrial growth and raise the GDP of the country but the mindless decisions have seriously damaged the economy and various segments of the industry.

Karan Singh Unchiyarda’s businesses span over real estate, hospitality and renewable energy. The group has a property in the name of Hotel Residency Palace in Jodhpur. He is also into wind power have two units of three megawatt each.