Stability returns to land segment in Amritsar
Price stability is returning to Amritsar land segment, though, the slowdown and the subdued market sentiment persists
The five years of slowdown, then the demonetisation, implementation of the Real Estate (Regulatory and Development) Act and GST regime (Goods and Services Tax) has pulled down the demand in Amritsar’s realty sector. The overall slowdown in the housing sector has its bearing on the land segment also and lost value in the last five years.
In the last couple of months, price stability is returning to the segment.
“The segment generally follows the overall market trends. There were sharp price rises between 2009 and 2011, when prices in some locations more than doubled. Most of the appreciation took place on the GT Road (NH-1), Manjitha and Airport roads during this period. A number of local and national builders launched township projects in the area. They added to their land banks during this period. In addition to it, the improved Indo-Pak trading relations also benefited the land segment in and around the city. The speculator investor also fueled the price growth as trading volumes remain high during the period,” says DS Chugh, 56, a local real estate consultant.
The reversal in market fortunes started in 2012 when the economy started to slowdown and the real estate sector also showed signs of downward slide. “The end-user demand couldn’t catch up with the increased supply. Investors also withdrew from the market. But by then, builders were sitting on large unsold inventory and started to struggle with liquidity crunch. So, from the builder, and the investor, the demand for land substantially declined,” says Rajiv Gulati, 45, a local realtor.
Prices for land, on an average, vary between ₹20 lakh per acre to ₹1 crore per acre depending on the location of the property. “The slowdown impacted more the land located far from the city or in the interior areas. On national highways on the city’s outskirts, the price correction was minimal due to limited supply,” says Chugh.
The sector is still struggling with slowdown, but, in the last couple of months, price corrections in the segment have started to stabilise. “A new government took over in the state, which raised the expectations and checked the pessimism in the market,” says Gulati.
Local real estate experts say that the last five-year slowdown eroded the gains of the last boom years. “There is little scope for major price corrections in the segments. Most investors who were struggling with holding on to their properties have already exited the market at lower prices. Now, the land is either with builders who are unlikely to sell off their land banks, or with the local agriculturalists that are also not keen to sell their lands at lower prices. This has also con- tributed to the price stability in past few months,” says Rajbir Singh, 37, a city-based trader and real estate expert.
Some real experts also contend that the demonetisation also played a part in stabilising the prices in the land segment with people investing in the segment. This spiked demand in the segment and stabilised prices.
The segment is expected to witness stable demand and prices in the short-term. “It is still a good time to enter the market. At present, he is more likely to get land at actual price rather inflated prices. Sellers are still amiable to price negotiations. For the investor, though, it is best to sit out the short-term unless they are ready for a longterm investment,” says Chugh. The investment returns from the segment aren’t going to be positive unless the main end-user, the builder, re-starts adding to his land banks for new projects or expanding older projects, say local realty experts.