High on plans, low on action
EXPANSION Sectoral and housing development in the Pinjore-Kalka Urban Area is yet to take off even after years of inception
double by 2021, and increase to more than four fold to 5 lakh by 2031.
The scope of expansion of Panchkula city is limited. The PKUC is planned as an additional planned development with Panchkula city to meet the increasing housing needs in the tricity. Another catchment area for the PKUC is the Baddi-BarotiwalaNalagarh Industrial Complex in Himachal Pradesh’s Solan district, 10 km away. “People working in the industrial belt are dependent on this area and adjoining towns for residential, educational, and health facilities. The location of the area on the border of Himachal Pradesh and Haryana, and on the Shivalik foothills gives it an added attraction,” says Dharminder Goel, 47, a Pinjore resident and businessman.
Though home prices are relatively low in these towns and nearby areas than Chandigarh and Panchkula, it has failed to realise a sizeable demand because of inadequate implementation of planned development. But if the master plan is implemented efficiently, the area can be a major housing hub. “Most buyers find Chandigarh, Panchkula and SAS Nagar too expensive. Options such as Zirakpur have also become comparatively expensive and these areas are still struggling with infrastructure. The PKUC should be developed at a faster rate to become a meaningful alternative to cities. Relatively cheaper areas in the tricity such as Zirakpur and Dera Bassi aren’t well planned and are struggling with inadequate infrastructure,” says Randeep S Saini, 43, a resident of Amravati Enclave.
Demand consistently increased before the market slowdown four years ago. Earlier, it was the comparatively low prices in the area but later the attraction was the planned development. Demand in the area is still dominated by low and middle income g roups, and people planning to settle here after retirement. The coming of private players boosted supply, particularly in the area between Pinjore and Panchkula. If plans are executed well, the area can be a better alternative to Mullanpur coming up in SAS Nagar district adjoining Chandigarh, say local realty experts.
One of the prominent players in the area is the Haryana Urban Development Authority (HUDA). A couple of years ago, it floated an 890 plot The commercial realty segment in the Chandigarh tricity in 2016 followed last year’s pattern with the slowdown prevailing in most areas.
The periphery performed relatively better than the cities where both the rentals and capital values continued to decline. In several locations, for the first time market prices fell below collector rates. Local realty experts cite high supply, low demand and high collector rates for price corrections this year.
The periphery, however, experienced minimum exposure to the slowdown because of improved road connectivity and relatively better f u t u r e p ro s p e c t s. The immediate impact of demonetisation of higher value currency notes was also minimal as trading in the segment was relatively low, and market prices less than or in the same range as the collector rates.
The situation of price corrections persisted this year, with price levels approximating the price levels five years ago. Both the end-user and the investor demand remained low; high vacancy rates also pulled down the rental growth rates, scheme for Sector 30 in PKUC. Amravati Enclave (integrated township) has already been developed in the area along the Kaushalya river adjoining National Highway 22. It has plots, independent floors and apartments. DLF (DLF Valley Panchkula) and Ireo (Ireo Fiveriver), Panchkula, are other two major private players active in the area. Most of the recent supply expansion has taken place in the independent floor segment with more than 3,000 independent floors in different stages of development. Other options available include luxury villas and apartments. Prices are in the correction mode for four years. The last major price appreciation took place in 2010-11 when prices increased by 25% to 30%. Generally, the prices range from to
per sq yard. The possession delay in the newer projects has led to price corrections in addition to the slowdown in the market, say the experts. particularly, for the first and second floors in bigger showrooms. In some locations, collector rates are even higher than the market rates. The only exception to this general slowdown trend was the Sector 20 market where the end-user demand was healthy and vacancy rates low.
This year, proved that City Beautiful is no longer i mmune to sharp price corrections, and the commercial segment exemplified it. There were not only price corrections across the city, even in commercial hubs such as Sectors 17 and 35 prices dropped. The city also struggled with high vacancy rates and this caused the rental values to decline. There is limited industrial and commercial activity in the city. Financial institutions and high-end retails were earlier prime movers for growth in the segment. But, this year demand for commercial and office spaces from these segments could no longer fuel growth. Also, the coming up of shopping malls in the industrial area drew away demand from sector markets, say local real estate experts.
The trend in the city’s commercial segment was similar to the rest of the tricity.
Unlike the rest of the tricity where the commercial property supply expansion was restricted, in Zirakpur commercial and office spaces continued to grow and register price appreciation this year. The Ambala-Chandigarh national highway and the Zirakpur-Patiala highway witnessed the coming up of new shopping complexes, new concept products such as SOHO (small office, home office) and floor-wise commercial spaces. “Though, the demand didn’t match with the supply growth yet most builders, mostly local, created supply in expectation of future growth around the highways. The failure of the residential segment to attract buyers forced developers to start exploring the commercial segment this year. Both the end-user and the investor were active in the market,” says Vineet Goel, 32, a local real estate consultant.
Though the overall market sentiment in Kharar was subdued but on the newly opened airport road, which connects the town with the international airport, Zirakpur and Patiala road, the demand for the commercial properties increased. “Most of the commercial property in the town is either located on the highways or within residential colonies. Demand levels were not very high but there was enough demand to keep prices either stable or restrict price corrections in most locations,” says Rakesh Saini, 40, a local real estate consultant.
The investment returns from the commercial segment isn’t expected to turn positive in the near future. The importance of the segment as an investment asset declined considerably this year, and this trend is expected to continue in the short and medium terms.
“The demand f rom the financial institutions such as banks can boost demand in the sector if these focus on expansion in the wake of demonetisation impact. Banks are cash rich at present. Still it would impact rental incomes in some locations,” says Goel.
It was tough to exit commercial properties, and this situation is expected to continue in the new year.
Investors keen to invest in commercial properties should focus on smaller commercial spaces within and around residential areas that can attract end-user demand, particularly in the periphery, say local realty experts.