Price cor­rec­tion is the norm in Kar­nal land seg­ment

DE­MAND CRUNCH The land seg­ment in the real es­tate mar­ket strug­gles here with low de­mand and sub­dued prices

Hindustan Times (Chandigarh) - Estates - - ESTATES - HT Es­tates Cor­re­spon­dent ht­es­tates@hin­dus­tan­

CHANDIGARH: The land seg­ment in the Kar­nal real es­tate mar­ket has failed to de­liver at­trac­tive re­turns on in­vest­ments as price growth in the seg­ment re­mained sub­dued in the last five years.

The city, lo­cated mid­way be­tween state cap­i­tal Chandigarh and the na­tional cap­i­tal Delhi, is a ma­jor hub for trad­ing of agri­cul­ture pro­duce.

Tra­di­tion­ally, in­vest­ments to the land seg­ment fol­lowed from the sur­pluses gen­er­ated in the agri­cul­ture trad­ing and lo­cal in­dus­try. Land for re­alty projects also contributed to de­mand in the seg­ment.

In the last five years, how­ever, de­mand from all th­ese seg­ments con­sis­tently de­clined, pulling down prices in the land seg­ment in and around the city.


The real es­tate sec­tor in the city fol­lows the gen­eral trend in the re­gion’s re­alty mar­ket. From 2003-2006, land prices reg­is­tered an up­swing as builder de­mand for land peaked.

“Be­tween 2003 and 2006, the end-user de­mand drove the de­mand in the seg­ment. There were a num­ber of new town­ship projects launched in the city. Both lo­cal and na­tional-level builders en­tered the mar­ket push­ing up de­mand for land. As builders rushed in to cre­ate their foot­print in the city and make most of the boom­ing lo­cal mar­ket con­di­tions, nearly 1,000 acres of agri­cul­ture land around the city came un­der new re­alty projects,” says Ra­jveer Ma­lik, 48, a lo­cal real es­tate con­sul­tant.

Sev­eral res­i­den­tial and com­mer­cial re­alty projects were launched in­clud­ing, Chd City Kar­nal; Al­pha In­ter­na­tional City, Narsi Vil­lage; An­sal Hous­ing’s An­sal Town, An­sal API and Land­mark’s Sushant Royale.

In the res­i­den­tial seg­ment, the project cre­ated sup­ply of plots of 150, 360, 500, 750 and 970 sq yards. Land prices rose sharply dur­ing this pe­riod.

In some lo­ca­tions, par­tic­u­larly, on and near the Na­tional High­way num­ber 1, prices nearly dou­bled. Th­ese devel­op­ers mainly cre­ated sup­ply on the NH-1 in sec­tors in­clud­ing 27, 28, 32 etc.

The Haryana Ur­ban Devel­op­ment Au­thor­ity (HUDA) also cre­ated new sec­tors


Af­ter a cou­ple of years of price and de­mand sta­bil­ity, there was again a re­vival in the mar­ket be­tween 2009 and 2011. Un­like the pre­vi­ous sharp growth years where the en­duser dom­i­nated the de­mand, dur­ing this pe­riod, the in­vestor be­came more dom­i­nant.

“It was a spec­u­la­tion-driven mar­ket wherein the in­vestor bought land ex­pect­ing it to sell to the builder at a pre­mium. Some in­vestors suc­ceeded in this en­ter­prise as builders looked to ex­pand their land banks. But, for most the en­duser de­mand never ma­te­ri­alised,” says 52-year-old Ash­wini Taneja, a lo­cal real es­tate con­sul­tant.

Since 2012, like most other re­alty seg­ments, the land seg­ment has also reg­is­tered slow­down. Both the end-user and the in­vestor de­mand de­clined sharply as both the builders and the in­vestors couldn’t at­tract enough de­mand.

“It is one of the longest slow­down in the city’s re­alty mar­ket. With the eco­nomic slow­down in the coun­try, the sur­plus from the trad­ing com­mu­nity, that tra­di­tion­ally ended up in the land seg­ment, stopped. Also, builders strug­gling with low de­mand and a sit­u­a­tion of over­sup­ply were in no po­si­tion to build on their land banks. The mar­ket sit­u­a­tion hasn’t changed much in the last cou­ple of years. Av­er­age price in the seg­ment ranges from ₹25 lakh per acre in the in­te­rior ar­eas to ₹4 crore per acre on the na­tional high­way,” says Taneja.


Price cor­rec­tions are the norm in the seg­ment like in the res­i­den­tial and com­mer­cial seg­ments.

The rate of price cor­rec­tions is rel­a­tively lower in the land seg­ment than in other re­alty seg­ments.

“It is a ques­tion of hold­ing ca­pac­ity. In the res­i­den­tial and com­mer­cial seg­ments, par­tic­u­larly, in the new projects, the builder has to gen­er­ate funds by sell­ing his prod­ucts. The un­sold in­ven­tory with the builder has con­sis­tently in­creased in the last six years and there is no home buyer. So, the builder is un­der tremen­dous pres­sure to cut on prices and at­tract the buyer. This has lead to sharper price cor­rec­tions in the res­i­den­tial and com­mer­cial seg­ments. In the land seg­ment, the seller, gen­er­ally, is in no rush to exit his prop­erty. He has al­ter­na­tive sources of in­come gen­er­a­tion, agri­cul­ture in par­tic­u­lar. If he gets an at­trac­tive price quote for his prop­erty, he opens to a sale, other­wise he is adopt­ing a wait and watch ap­proach,” says Ma­lik.


Price cor­rec­tion in the seg­ment is an at­trac­tion for buy­ers to en­ter the seg­ment. But, low prospects for ex­its at an at­trac­tive in­vest­ment re­turn is dis­cour­ag­ing the in­vestor from the en­ter­ing the seg­ment.

“We don’t ex­pect price to de­cline fur­ther, in­stead, price sta­bil­ity should be the norm. Even though there are more in­vestors try­ing to exit the mar­ket, yet sharper price cor­rec­tions aren’t ex­pected as des­per­ate sell­ing days are long over,” says Taneja.

Re­alty ex­perts sug­gest the best op­tion in the cur­rent mar­ket con­di­tions is to wait and watch till the mar­ket re­cov­ery takes a strong ground in the seg­ment and the re­alty mar­ket

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