At last! With spring comes hope

POS­I­TIVE SEN­TI­MENT There are green shoots of re­cov­ery in the prop­erty mar­ket with deals be­ing fi­nalised in south Delhi and NCR mar­kets

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - Vandana Ram­nani vandana.ram­nani@htlive.com

It has been a long win­ter af­ter the gov­ern­ment’s Novem­ber de­mon­eti­sa­tion move but as spring ap­proaches, hope seems to be spring­ing in the home­buyer’s heart. Most of them seem to have mus­tered up the con­fi­dence to con­tem­plate pur­chase of prop­erty, largely be­cause of re­duc­tion in in­ter­est rates, a 10% to 20% cor­rec­tion in prop­erty prices and the fast ap­proach­ing dead­line for states to im­ple­ment the Real Es­tate Reg­u­la­tory Act.

In the last three months, fence sit­ters wait­ing for months have started con­clud­ing trans­ac­tions. While real es­tate prices and dis­counts dif­fer from deal to deal, end-users look­ing for prop­er­ties are tak­ing ad­van­tage of cor­rec­tive val­u­a­tions and clos­ing deals in Delhi-NCR, mostly for readyto-move-in prop­er­ties or where the pos­ses­sion date is near. Plot­ted de­vel­op­ments in south Delhi are also be­ing con­sid­ered. The mar­ket over­all is look­ing up­beat, say real es­tate ex­perts.

Even in the sec­ondary mar­ket, there are now enough mo­ti­vated sell­ers reconciling them­selves to the cor­rected prices and to the fact that these are not likely to go down fur­ther. The re­sale mar­ket, too, is grad­u­ally pick­ing up in Gur­gaon, Cen­tral Delhi.

A re­cov­ery in end-user ac­tiv­ity now looks very likely and peo­ple ear­lier hes­i­tat­ing to in­vest are now con­clud­ing trans­ac­tions. Prices and dis­counts dif­fer from deal to deal. End-users who were on a look­out for prop­er­ties are tak­ing ad­van­tage of cor­rec­tive val­u­a­tions and the mar­ket is look­ing up­beat. There is a 15% to 20% dif­fer­ence from the bench­mark price, de­pend­ing on the lo­ca­tion of the prop­erty.

Mar­ket sources say that the re­sale mar­ket is grad­u­ally pick­ing up in mar­kets such as Gur­gaon and Cen­tral Delhi. A high-end deal was re­cently struck for ` 42 crore in Malcha Marg for a 375 sq yard plot. Be­fore de­mon­eti­sa­tion it would have been sold for about ` 50 crore. Apart­ments that are readyto move in or near­ing pos­ses­sion are now avail­able for the same price at which they were avail­able two years ago. What this means is that prices have more or less re­mained static since then. The 15% to 20% cor­rec­tion is ac­tu­ally re­flec­tive of in­fla­tion-cor­rected prices, ex­plains Shveta Jain, man­ag­ing di­rec­tor - res­i­den­tial ser­vices at Cush­man & Wake­field.

The south Delhi plots mar- ket is also see­ing some ac­tiv­ity. While many de­vel­op­ers went in for joint de­vel­op­ment or out­right pur­chase a few months ago, there has been a slight change in the model af­ter de­mon­eti­sa­tion, es­pe­cially with re­gard to pay­ment. Ear­lier, builders who would en­ter into col­lab­o­ra­tive agree­ments with own­ers of plots paid own­ers for it im­me­di­ately. They are now, how­ever, opt­ing to go in for a stag­gered mode of pay­ment stretch­ing for about 12 to 18 months which is ac­cept­able to own­ers.

For own­ers of plots in south Delhi, this is a great way of mon­etis­ing their as­sets. They are open to stag­gered pay­ment by builders over out­right pay- ments be­cause the ve­loc­ity of sales is slow in the mar­ket right now. What this means is that since they are un­able to get a buyer for the plot sell­ing at

` 30 crore to ` 40 crore and that too out­right pur­chase, they are in­stead find­ing it a lu­cra­tive op­tion to give it to a builder to con­struct apart­ments that can be sold for say around ` 6 crore each (some of which they are keep­ing with them and sell­ing the rest to the de­vel­oper). Most plot own­ers are hold­ing on to their share of apart­ments to be sold later when mar­ket sen­ti­ments im­prove, says Jain.

De­mon­eti­sa­tion had hit the mar­ket hard, bring­ing down deals in the plot­ted de­vel­op­ment mar­ket by 50%.Now there is more sup­ply in the mar­ket and re­al­is­tic pric­ing, she says.

Ro­hit Cho­pra, SanD Ad­vi­sory Pvt Ltd re­ports a mo­men­tum in the South Delhi mar­ket since the last three months. Most peo­ple have bought units at a dis­count of 4% to 8% in Jor Bagh, De­fence Colony, Vas­ant Vi­har and GK 2.

In De­fence Colony there was an out­right sale of a 325 sq yard plot for ` 25 crore which be­fore de­mon­eti­sa­tion would have sold for about ` 27 crore. In Jor Bagh a 4BHK flat which would have oth­er­wise gone for ` 22 crore be­fore Novem­ber 8, 2016, was sold for`20 crore. In GK 2, a flat lo­cated in a plot of 250 sq yard was sold for ` 4 crore.

Home­buyer con­fi­dence is now set to in­crease on the back of sev­eral sen­ti­ment-build­ing mea­sures such as the na­tion-wide roll­out of RERA and courts de­liv­er­ing a se­ries of con­sumer-favour­ing ver­dicts RAMESH NAIR, CEO and coun­try head, JLL In­dia

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