Moving towards stability
CHANDIGARH: The Jalandhar real estate market has distinctive character from the general market trends in the state. The city, located in the Doaba region of the state, with large number of locals from the belt settled abroad, depends heavily on the NRI (nonresident Indian) investor for realty growth.
This also gives distinctive realty growth trajectories. At present, the local conditions follow the subdued sentiment across the state’s realty sector. In most locations in the state — tier-II and tier-III cities — the supply exceeds demand and price corrections are the norm. In Jalandhar also, the realty trend is on the same pattern.
In the land segment, though the pressure on prices is relatively less, yet, land assets have consistently lost value in the last couple of years in most locations around the city.
“In the state the city comes second only to the Ludhiana in terms of realty importance. In the past few years, the residential and commercial segments in the city came under pressure of price corrections as both local and NRI demand turned negative. The dip in the NRI demand has particularly impacted the land segment as this is traditionally a favoured segment with them,” says RP Singh, 43, a local real estate consultant.
Prices for the agricultural land in and around the Jalandhar city vary between ₹1 crore to ₹5 crore per acre depending on the location. For buyers looking for cheaper alternatives, interior areas and locations further away from the city can be explored where an acre can be purchased at even ₹15 lakh. “Prices had peaked during the 2009-11 period when the investor demand was high. The transaction volumes were in the segment at the time. While investors bought land in and around the city from the local land owners, primarily the agriculturalists, they in turn, bought land in the interior areas, away from the city. This fuelled both prices and demand in the segment,” says Jaiveer Garg, 49, a local realtor.
Since 2011, however, the segment registered steadily decreasing demand. “The demand levels are low at present. If commensurate with the dip in demand levels, prices in the segment could have been in sharper decline. But, unlike the residential and commercial segments, there is generally better holding capacity in the segment. Both builders with large land banks and the agriculturalist are not desperate to sell their land holdings. Only investor who timed the market incorrectly exited the market at lower rates. This primarily included the NRI investor. They have turned net sellers from net buyers. In the current market condition is tough to exit the market even lowered down prices,” says Garg.
Even though investment returns declined in the segment in last few years, yet, the land segment is comparatively better investment option than other realty segments, say local realty experts. “The prices aren’t expected to decline sharply in the near future. But, in the other realty segments, due to low money inflows, price corrections can continue in both the short and medium terms. For the investor, the returns might not be very attractive at present and in the short-term but the segment can hedge his investments in the segment,” says Singh. Some experts believe that the worst in the segment is over.
“The affordable housing segment, currently being promoted by the state policies, can fuel demand in the land segment. While the interior areas of the city are too expensive to support the growth of affordable housing, in the nearby areas, though, builder demand for land for constructing affordable housing can revive the segment. The investment returns from the segment, aren’t expected to turn positive in the near future,” says Garg.
OVERALL LOW DEMAND IN JALANDHAR REALTY MARKET HAS SLOWED DOWN GROWTH IN THE LAND SEGMENT ALSO