With slowdown pressure building up, property prices crash in city periphery

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For the first time in the past 18 months, the real estate market in Chandigarh's periphery is showing signs of a downturn. Having stuck to their prices in the hope of a revival in the realty market, property investors and dealers are now buckling under pressure and have slashed their prices. In some cases, the reduction is upto 30 per cent.

While there seems to be no hope for a boom for the investor who had picked up large quantities of property during the upswing, the time to buy is now for the end user who waited for the prices to come down.

"The rates crashed because the investor's market did not pick up after the Assembly elections as was being hoped. The majority of the builders have not been impacted much because they had launched their projects more than a year ago and their entire lot was picked up during soft launches. Investors with deep pockets are hanging on to the lot but others are selling out at lower rates," says J S Kochar, managing director, KBKinfra.in, a property web portal.

In Mullanpur, currently the hot spot for investment, a spacious apartment floor is available for anything between Rs 27 lakh and Rs 33 lakh. In fact, here the rates for a property of this kind in resale is lower than booking a fresh property from a builder or a project promoter. And yet there are not many buyers.

"The glut of projects has made available over 75,000 flats in the periphery in various stages of launch and construction, most of which have been sold out by the builders but held on to by investors. The supply is simply not matching up to the demand of the end user," adds Amit Joshi, president of the Shimla Hills Cooperative Housing Society.

On the Kharar-Landran road, two- or three-bedroom flats or independent floors in under-construction projects are available for Rs 25-35 lakh. The cost of plots too has come down — from Rs 18,500-20,000 per square yard to Rs 14,500-16,000 per square yard, and in some projects it is even lesser. On the Kharar-Kurali road, a builder is offering a two-bedroom flat for Rs 14 lakh. Similarly, on the Zirakpur-Derabassi Highway, flats are being sold for less than Rs 25 lakh.

Since many projects have failed to deliver the product on time, there is a trust deficit in new launches. "The buyer would rather spend on a ready-to-move-in property even if he has to pay a little more. The elusive end users are the king of the market now. For a readymade flat or house in the range of Rs 28 to 35 lakh, there are enough buyers despite the inflation and hike in the cost of living in recent years," adds Kochar.

For the builder, because of the sharp increase in construction cost, launching a new project at too low a cost is not possible and bringing down the rates too is not an option. In Zirakpur, for instance, many builders are holding on to the original rates. They are offering other attractions to bring in buyers. Gold coins, air conditioners, LED TV sets and even cars are coming free with flats here. Others are offering no EMI option till possession. In one case, a project developer claims to pay the buyer's house rent till he gives the possession.

Prateek Kumar, a property consultant handling five major projects in Zirakpur, says there has been no increase in the cost of property but there has been no crash of prices either. "It could have happened in some individual cases of builders who may or may not be able to deliver," he adds.

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