Saudi Nitaqat sends tremors in local realty sector

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MANGALORE: The desert storm in the form of Nitaqat, a restrictive labour law of Saudi Arabia designed to localize jobs, has affected the construction industry in DakshinaKannada which is currently implementing projects that is far in excess of demand. However, as a counter balance, the rupee depreciation may offer some relief to the industry as investment in real estate has become lucrative for NRIs.

The Nitaqat law has not only been giving jitters to expatriates, but also the construction industry in the coastal city as expatriates from the Middle East are its largest clientele, be it investment or buying.

DB Mehta, vice president, Mangalore chapter of Confederation of Real Estate Developers’ Associations of India (Credai) and MD, Allegro Ventures says, “Majority of expatriates from Saudi are buyers of budget apartments, two BHK and three BHK units, which are in the Rs 20 lakh and Rs 30 lakh price bracket. This market is almost stagnant after this crisis.”

Mehta says while the Gulf dominates the local construction industry with 50% business, the share of expatriated in Saudi in one tjired of it. The rest is shared by local and outside markets from Mumbai, Chennai and Bangalore. As of now, about 12,000 dwelling units are under various stages of construction.

Adding to the Nitaqat problem is the looming prospect of excess supply. Pushparaj Jain, president, Credai says, “Of the 380 projects launched recently, at least 200 are still up and running, which is actually in excess of the market demand.”

Jain, MD, Abhish Builders says that he has consciously not gone ahead with a couple of projects looking at the slow down.

Former Credai president PMA Razak discounts Nitaqat theory: “Things were down in real estate industry three months ago, but is looking up now. Nitaqat is affecting illegal employees only. Our buyers are regular employees,” he avers.

Mehta says things will improve once there is a clarity on this issue, when the three-month grace period ends on July 3. After the date, all those expatriates found in Saudi Arabia without valid papers will face penal or punitive action.

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