LOOK BACK 2016

Realty re­set for the end-user in Pun­jab

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - Mu­niesh­wer A Sa­gar mu­niesh­wer.sa­gar@hin­dus­tan­times.com

The value of hous­ing as an in­vest­ment as­set de­clined as the end-user re­placed the realty in­vestor as the de­mand main­stay in the state. Home prices de­clined across the state , for the fifth year, mak­ing it cheaper for the en­duser to en­ter the mar­ket and unattrac­tive for the in­vestor to earn re­turns. The builder fo­cus on the bud­get and af­ford­able hous­ing also in­creas­ingly be­came the norm as builders tried to tap into the end-user de­mand in these price seg­ments.

Pro­tect­ing the home buyer - RERA

The real po­ten­tial gamechanger for end-users came in the form of the the Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Act ,2016. The law and the con­se­quent for­ma­tion of the Real Es­tate Reg­u­la­tory Author­ity (RERA) in each state gave a flip to the home buyer. The hous­ing sec­tor, hith­erto con­sid­ered the most un­reg­u­lated, is set for a change with the en­act­ment of this Act.

Though the state rules un­der the law and RERA are yet to be formed and no­ti­fied, these have to be op­er­a­tional by April 2017, as per the Act. The state govern­ment re­cently cir­cu­lated the draft rules.

“Home buyers in the state have for long strug­gled against the builder’s fail­ure to de­liver on timely pos­ses­sion and in­fra­struc­ture. Con­sumer court and crim­i­nal cases against builders pile up as realty buyers feel cheated. RERA is ex­pected to bring in ac­count­abil­ity and trans­parency in the realty sec­tor,” says Parveen Goel, 33, a busi­ness­man and home buyer in Pa­tiala.

Some of the salient fea­tures of the Act in­clude: Stan­dard­i­s­a­tion in the sec­tor with uni­form def­i­ni­tions of realty as­pects; reg­is­tra­tion of all projects with RERA, prior to sale, by the de­vel­oper; 70% of the pro­ceeds from the sale of apart­ments in a project to be kept in sep­a­rate ac­count to be used solely for it; de­vel­op­ers can’t give mis­lead­ing ad­ver­tise­ments, book­ing amount can­not be more than 10% of the to­tal price of the prop­erty, puni­tive pro­vi­sions in­clude project de-reg­is­tra­tion and penal­ties in case of contravention of the pro­vi­sions of the Act or the or­ders of the author­ity or the tri­bunal, and the Act also stip­u­lates im­pris­on­ment for term that may ex­tend to three years, or a penalty which may ex­tend to 10% of the es­ti­mated cost of the real es­tate project, or with both.

Il­le­gal colonies’ reg­u­lar­i­sa­tion

For reg­u­lar­i­sa­tion of il­le­gal colonies and plots un­der the lo­cal bod­ies, the state govern­ment has given a month from De­cem­ber 15, 2016 to Jan­uary 15, 2017. The Pun­jab Govern­ment no­ti­fied the pol­icy for com­pound­ing and reg­u­lar­is­ing unau­tho­rised colonies and plots fall­ing in colonies un­der pro­vi­sions of the Pun­jab Laws (spe­cial pro­vi­sions) Act, 2013.

The pol­icy first came in 2013, and was then ex­tended in 2014. But the prob­lem per­sists. For in­stance, in Lud­hi­ana, colonis­ers of 1,200 unau­tho­rised colonies submitted ap­pli­ca­tions with Greater Lud­hi­ana Area De­vel­op­ment Author­ity (GLADA) for reg­u­lar­i­sa­tion. Only 60 were granted ap­proval. Around 1,000 ap­pli­ca­tions were re­jected. In Ja­land­har, only 200 ap­pli­ca­tions were re­ceived for reg­u­lar­is­ing colonies, while there are 330 il­le­gal colonies in the city. “The pol­icy hasn’t solved the is­sue of il­le­gal colonies. It has only com­pounded prob­lems. A one month’s ex­ten­sion in the pol­icy is un­likely to help that also just be­fore the assembly elec­tions. There should be a holis­tic and re­al­is­tic ap­proach to­wards this is­sue,” says Anil Cho­pra, 64, chair­man of the Con­fed­er­a­tion of Real Es­tate De­vel­op­ers’ As­so­ci­a­tions of In­dia (CREDAI), Pun­jab.

De­mon­eti­sa­tion and state realty

Like the hous­ing sec­tor in the rest of the coun­try, the state’s realty too got a jolt af­ter the cen­tral govern­ment’s de­ci­sion to ban high-de­nom­i­na­tion cur­rency notes. Un­like the state cap­i­tal, Chandi­garh, where the dif­fer­ence be­tween the col­lec­tor rate and mar­ket price var­ied by 20%, this dif­fer­ence is larger in Pun­jab. “The col­lec­tor rates in some lo­ca­tions are even less than 50% of the mar­ket prices. As there is a large dif­fer­ence be­tween col­lec­tor rate and prices, it means the cash com­po­nent in realty deals is larger in the state than Chandi­garh. Prices are ex­pected to fall sharply, and home sales have al­ready started to de­cline. Deals aren’t tak­ing place,” says Atul Dhin­gra, 37, a Lud­hi­an­abased real­tor.

Price, de­mand, sup­ply trends

Home prices in ma­jor cities of the state recorded cor­rec­tions. The price fall var­ied be­tween 20% and 50%, de­pend­ing on the lo­ca­tion. De­mand lev­els were low and most of it was gen­er­ated by the end-user. There were neg­li­gi­ble new project launches in the state. Most de­vel­op­ers strug­gled with high un­sold in­ven­tory and liq­uid­ity crunch leav­ing them in no po­si­tion to fur­ther add to sup­ply. Ad­di­tional sup­ply was pri­mar­ily re­stricted to the bud­get and af­ford­able seg­ments.

In the in­dus­trial and fi­nan­cial cap­i­tal of the state, Lud­hi­ana, the realty sit­u­a­tion marginally im­proved as the price cor­rec­tion rate slowed down, and the en­duser pushed up de­mand. The mar­ket was driven by the en­duser de­mand.

Deepak Badyal, 48, pres­i­dent of the Lud­hi­ana Real­tors As­so­ci­a­tion, says, “Most of the de­mand was con­cen­trated in the 50 sq yard to 100 sq yard seg­ment. The sup­ply for these prod­ucts came f rom lo­cal builders and avail­abil­ity was in the pe­riph­ery. Plots in the size seg­ment are priced be­tween

R8,000 per sq yard to R12,000 per sq yard. The price of a 50 sq yard plot varies be­tween R3 lakh to

R4 lakh; and built-up du­plex price hov­ers around R8 lakh. Gen­er­ally, in these prod­ucts, the ground floor con­sists of a room, kitchen and small guest area, while the sec­ond floor has two small bed­rooms and a bath­room. The seg­ment was dom­i­nated by end-user, com­pris­ing small busi­ness­men and low in­come groups, with lim­ited or no in­vestor pres­ence.”

Plot prices var­ied widely be­tween R8,000 per sq yard and

R80,000 per sq yard, de­pend­ing on prop­erty lo­ca­tion whether in the pe­riph­ery or de­vel­oped in­ner city ar­eas.

The realty sit­u­a­tion in Amritsar didn’t change as com­pared to last year. Price cor­rec­tions con­tin­ued this year also though the rate of price dropped. Most buyers be­came wary of de­vel­op­ers not de­liv­er­ing on their prom­ises, par­tic­u­larly, long de­lays in giv­ing pos­ses­sions. Most of the lo­cal builders couldn’t meet the buyer ex­pec­ta­tions. Plots were priced be­tween R8,000 and

R45,000 per sq yard. The Bathinda realty mar­ket saw price lev­els touch­ing a fiveyear low. In­vestors avoided the realty mar­ket opt­ing for other in­vest­ment op­tions, giv­ing a higher rate of in­vest­ment re­turns. The end-user also opted out of the mar­ket ex­pect­ing prices to fall. Plot prices ranged from R5,000 to R30,000 per sq yard.

The slow­down was the norm in Ja­land­har, the main city of Doaba. Like Lud­hi­ana, bud­get hous­ing and af­ford­able seg­ment, though, did com­par­a­tively well as the end-user in these price brack­ets re­mained ac­tive. Plots were priced be­tween R8,000 and

R80,000 per sq yard. De­mon­eti­sa­tion is ex­pected to fur­ther dent the trend of price cor­rec­tions. In the short and medium terms, de­mand and sup­ply ex­pan­sion is ex­pected to be re­stric­tive.

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