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685 Housing Projects ‘Under Investigation’ By Karnataka RERA

Rajbir Achoriwala

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Housing Projects Under Investigation By Karnataka RERA

At present Karnataka has approximately Rs 50,000 crore on stake riding on various real estate projects. The Real Estate Regulatory Authority (RERA) Karnataka has raised a question mark on the future of one lakh apartment units and an equal number of investors in the state. This is due to 685 construction projects that are unregistered with RERA Karnataka. Thus the RERA Karnataka have listed them as “under investigation”.

The Karnataka government notified the Centre’s RERA Act, 2016 in July last year. RERA Act is aimed at protecting the investor’s interest by regulating the real estate industry with a host of rules. All projects are to be registered under RERA and will get a clearance certification only after they meet the prescribed norms.

On Monday, RERA Karnataka has listed 685 realty projects in red with an alert: “The public is hereby informed that these projects are not registered with RERA and are under investigation. The public is warned that dealing with these projects is at their own risk.’’

Shrinivas Rao, CEO, Asia Pacific of Vestian Global Workspace Services does the Math. “This (685 projects) would mean at least one lakh units, at an average of Rs 50 lakh per apartment. It is a neat Rs 50,000 crore exposure for builders. A property buyer would have paid 15-30% upward during the time of booking, which means around Rs 15,000 crore has already gone into the market.’’

At least 50 percent of these projects are in Bengaluru. The realty industry is panicking as the stakes are high. There is also the factor of the construction finance exposure to banks. Many nationalized bank’s Non Performing Assets lists have real estate players as their major defaulters. This number of defaulters among them is only likely to go up.

A developer who has already submitted eight projects’ details with RERA and is still under the red list said, “We have submitted the required documents to the Authorities highlighting that these projects have received occupation certificate and hence not required to be registered under Karnataka Real Estate (Regulation and Development) Rules as per rule (4) of sub-rule (iv). We were told by authorities that they will remove our name/projects from the list in 4-5 days.’’

K Ramesh, managing partner of Arna Shelters cautioned home buyers against investing in such projects and said, “Property registrations will not be done without RERA certification and even resale of old properties won’t be easy.’’

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