On a come­back trail

Hindustan Times (Chandigarh) - Estates - - ESTATES - ht­es­tates@hin­dus­tan­times.com HT Es­tates Cor­re­spon­dent

Sta­bil­ity re­stored: Af­ter reg­is­ter­ing price cor­rec­tions for nearly six years, land prices in Zi­rakpur sta­bilise as de­mand picks up in some ar­eas

The Zirka­pur real es­tate mar­ket is in the midst of a slow­down. All re­alty seg­ments in the town, lo­cated in Mo­hali district and shar­ing bor­der with Panchkula and Chandigarh, reg­is­tered price cor­rec­tions and low sale vol­umes in the last six years.

The land seg­ment also reg­is­tered price de­cline with both the end-user and the in­vestor de­mand de­clin­ing. “The prop­erty that was priced at ₹14 crore per acre around six years ago is now avail­able for around ₹8 crore. The av­er­age price, at present, hov­ers be­tween ₹5 crore per acre to ₹8 crore per acre. Seven years ago, priced had peaked to around ₹14 crore per acre on the Zi­rakpur-Am­bala high­way,” says Ram Chan­der Phogat, 61, a Zi­rakpur-based real es­tate agent.

Be­fore 2011, both the end-user and the in­vestor de­mand had fu­eled sharp price ap­pre­ci­a­tion in the seg­ment. “Re­mem­ber, Zirka­pur re­alty ex­panded fast from a small vil­lage to ma­jor town in the pe­riph­ery within a span of a decade. The ex­pan­sion in the res­i­den­tial and com­mer­cial seg­ments fu­eled the de­mand for land. A large of builders, mostly lo­cal builders, bought large chunks of land in the area to de­velop ei­ther plot­ted colonies or group hous­ing mutli-storey apart­ment so­ci­eties. The plot­ted de­vel­op­ment came first, and when the land be­came ex­pen­sive, the multi-storey projects mush­roomed all over the town­ship. All this fu­eled land price growth. In a decade, prices in the seg­ment in­creased by more than 1000% But af­ter 2011 the price de­cline be­came the norm,” says Ra­jiv Sood, 48, a lo­cal real es­tate con­sul­tant.

In last three months, say lo­cal re­alty ex­perts, the de­mand in the seg­ment has re­vived, though prices are stills sta­ble .“Af­ter more than six years the seg­ment is wit­ness­ing new land deals hap­pen­ing. There is in­crease in de­mand with builders lead­ing the way,” says Amit Mit­tal, 42, a Zi­rakpur-based builder.

The spike in land de­mand is be­ing at­trib­uted to the changed mar­ket con­di­tions and pol­icy en­vi­ron­ment.

“The de­mand re­vival in the seg­ment, in­ter­est­ingly, started in the pe­riod af­ter de­mon­eti­sa­tion was an­nounced. Builders with sur­plus cash in­vested with the lo­cal land­lords. The en­act­ment and im­ple­men­ta­tion of the Real Es­tate (Reg­u­la­tory and De­vel­op­ment) Act 2016 is con­tribut­ing to a re­vival in de­mand. Builders now have to fol­low strict rules re­gard­ing projects reg­is­tra­tion and ap­provals. Also, the process must be trans­par­ent,” says Phogat.

Though, some builders have started buy­ing land but new project launches aren’t ex­pected in the near fu­ture. “For the builders, land is like the much needed raw ma­te­rial. Though, the slow­down has pushed out some builders from the sec­tor, but, for those who are pro­fes­sional there is no way to grow ex­cept through ex­pan­sion. In the last six years, most of th­ese builders were fo­cus­ing on de­liv­er­ing older projects and all new project launches were on the back-burner. Now, this is chang­ing and some builders are look­ing to ex­pand. With the re­quire­ment of Rera regime in mind, builders are more dili­gent in buy­ing land,” says Mit­tal.

The rise in de­mand is still to bring back the up­ward price move­ments in the seg­ment “The de­mand has picked up. But, it is only bring­ing in rel­a­tive price sta­bil­ity. The builder de­mand is mainly on the out­skirts. Within the in­ter­nal parts of Zi­rakpur large par­cel of agri­cul­ture land are not avail­able. Last time the price nearly dou­bled in the seg­ment was when the in­vestor was very ac­tive. Cur­rently, the mar­ket sen­ti­ment is still sub­dued and we don’t ex­pect the in­vestor to re­turn to the mar­ket any time soon,” says Phogat.

Like in other re­alty seg­ments, it is the end-user which is driv­ing the seg­ment move­ment. “The de­mand lev­els in the res­i­den­tial seg­ment are still low, but, with price cor­rec­tions in the last few years, the end-user is more ac­tive now. Apart­ment sales are driven by the end-user. The de­mand is not enough for the full mar­ket re­vival. But, some builders in ex­pec­ta­tions are in­vest­ing in build­ing land bank for fu­ture re­vival in buyer de­mand,” says Sood.

Lo­cal real es­tate ex­pert say, the price growth will re­turn to the seg­ment only when the in­vestor re­turns to the seg­ment. “In the short-term this isn’t ex­pected to hap­pen. The re­quired in­vest­ments in the seg­ment are still rel­a­tively high, and the re­turns are ei­ther neg­a­tive or very low. Fur­ther, ex­it­ing prop­er­ties is still not easy. In th­ese cir­cum­stances, the in­vestor is un­likely to en­ter the seg­ment,” says Sood.

Even the re­cent spike in de­mand, lead by end-users, has been ac­tu­al­ized be­cause of seller’s readi­ness to cut prices. It would no sur­prise if in the short­term, the price cor­rec­tions re­turn to the seg­ment, say lo­cal re­alty ex­perts. The best op­tion for the in­vestor is to adopt a wait and watch ap­proach, and for the end-user, it is to time to start ex­plor­ing the mar­ket for at­trac­tive deals


The spike in land de­mand is be­ing at­trib­uted to the changed mar­ket con­di­tions and pol­icy en­vi­ron­ment.

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