An apartment built by a private builder in Bhubaneswar. Telegraph picture

Bhubaneswar, May 16: Real estate prices are skyrocketing in the city. In certain areas of Bhubaneswar, real estate prices have gone beyond Rs 3,000 per square foot, which is as high as that of Noida, in the vicinity of Delhi.

“People belonging to middle class suffers the most because of this,” said Ashok Sahu, a trader of Ganganagar area. According to Niladri Bihari Panda, a banker, the rise in land price in Bhubaneswar is mainly attributed to the fact that this is perhaps the only city in the state with facilities such as educational institutions, hospitals, entertainment centres and shopping malls.

“So, even after the industrial boom in the Angul-Talcher-Jharsuguda belt and other regions across the state, the focus is still very much on Bhubaneswar. But the government should focus on planned regional development so that areas other than Bhubaneswar cab also offer similar kind of facilities,’’ Panda said.

But members of real estate associations say that the unprecedented price rise has other reasons as well. According to them, land price hike by the government has increased the base price.

On the other hand, government agencies such as the Bhubaneswar Development Authority (BDA) and Orissa State Housing Board (OSHB) have now adopted the public-private-partnership (PPP) mode in housing schemes, indirectly causing a price rise.

“Earlier, the construction cost was less as the projects were executed solely by government agencies. But now, as the PPP mode has come into effect in housing schemes, the business interest of the executing agencies causes the cost escalation,” said founding member of Real Estate Developers Association (Reda), Anup Mohapatra.

President, Confederation of Real Estate Developers Association India (Credai), Orissa, D.S. Tripathy, said: “With government agencies raising land prices, real estate developers are also increasing their base price. Land cost and taxation alone account for as much as around 60 per cent of the property price. Delay in project approval also results in price rise.’’

Auctioning of land by BDA and OSHB in the city has also contributed to escalation in land prices. Real estate developers say that auction process has no link with the local land value.

Interestingly, for its upcoming project near the All India Institute of Medical Sciences, the OSHB has asked the applicants to the lower income group houses to produce certificate of income of Rs 40,000 to Rs 1.2 lakh per annum to be eligible for purchasing the houses in that particular category. But the clause seems out of context as an LIG apartment is priced at Rs 12 lakh there.

“Only by controlling the price of land, the state government can reduce building cost to around Rs 800 to Rs 1,000 per square foot, so that a two-bed room apartment in the much sought-after Pokhariput and Patia areas can be made available for around Rs 20 lakh, whereas the present price for the same is more than Rs 32 lakh. So if the taxes are simplified and delay in the approval system is addressed, the prices can come down a bit and the real estate scenario can become more people-friendly,” added the members of the two real estate bodies.