Monday, September 17, 2007
Rising interest rates have pulled down the property prices in the National Capital Region (NCR) of Gurgaon, Noida, Greater Noida, Indirapuram and Charmswood Village by 10% to 20% in the past 6 months even as the prices have appreciated in the Capital.And despite the reduced prices in the NCR, there are not many buyers. But this hasn’t forced sellers and builders into slashing the price further.
In many cases, the builders’ price in the primary market is higher than that of secondary market even though dealers have not been able to sell the old stock, says property consultant Abhay Poonia. Worst still is the case of plotted colonies, which have witnessed a sharper decline in their value.
Experts attribute the fall in property prices to the rising interest rates which have pushed up the cost of investment. A senior consultant says investors are wary of taking positions in the real estate market as the return in a short period of one year is almost nil in suburbs.
However, profits in the commercial space have gone up substantially because of huge demand for it. And that’s why investors have turned their attention towards commercial real estates in the past one year. Poonia says the investors are out of the residential sector and are now investing in the commercial sector.
However, those who have already invested in the residential properties, experts say, are holding on to their properties and are not willing to sell them off. "Those who have bought properties have now fixed a price to sell them. But the buyer is not ready to pay that price. So, they are holding on to the properties. It remains to be seen how long they can do so. The day they would start selling, there will be greater fall in property price in Gurgaon," says real estate consultant Sumit Bhaskar.
Experts say that investors are not selling their property at a lower price because they anticipate an appreciation in next one year. And this hope has been fuelled by the fact that the builders are launching their new projects at a higher price than that of the secondary market.
A senior dealer argues that the general perception in the market is that the appreciation in the medium term would be more than the cost of holding the property. Therefore, investors are ready to hold. The confidence also stems from the fact that the property prices in Delhi have been rising in the past six months.
According to global consultants Cushman and Wakefiled, property prices in posh colonies like Greater Kailash, Vasant Vihar and Chanakyapuri have risen by 15% to 30% in the past six months. In other areas like Rohini, Pitampura, Mayur Vihar, Patparganj, the prices have appreciated by around 10%. Therefore, the builders and dealers argue that the prices in the adjoining areas would also appreciate sooner than later.
Their confidence is also boosted by the high demand for commercial space in the NCR, which will create demand for residential space also. According to global consultancy firm DTZ, around 13 million square feet of commercial space will be absorbed in 2007. This will provide working space to around 1.5 lakh employees. Even if a fraction decides to buy residential apartments, a huge demand will be created. A senior builder says this kind of demand is likely to be created year after year for quite some time and this will push up the prices.
President of Gurgaon property dealers association Satis Kataria said that with the city getting Metro connectivity and Manesar coming up, the prices will rise. There is a significant increase in the rental of residential properties. Rental of three-bedroom apartments has increased to Rs 20,000 a month, he said.
Source:TOI
Labels: NCR Properties, NCR Real Estate, Property Rates in NCR
Author: Rakesh Malhotra » Comments:
