Time to make a kill?

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TNS

Are prices going to fall further? Is it the right time to enter the property market or should one postpone the decision to buy by a few months more? There are shades of the Hamletian dilemma in the “to buy or not to buy” queries that are being posed to market watchers at the beginning of the festival season this year. With the Navratras failing to give a boost to the sales graph, the sector is likely to witness a lacklustre October-December quarter. But where does it leave you if you want to invest in a property.

There are a number of factors that are responsible for a buyer’s dilemma. Much media attention was given to the National Housing Bank’s (NHB) Residex data for the period April to June 2013 for the top seven cities that showed an across the board fall in the prices of residential units.

However, while the NHB Residex showed price drop, the ground realty is that prices in big metros have remained high. It is the smaller metros and the Tier II and III cities that have seen price levels get destabilised due to the rickety economic ecology in the country. Even in this, the data certainly doesn’t predict an immediate price correction across the board.

The dismally low sale volume and rising inventory overhang is the other factor that is making buyers defer their decision in anticipation of a desperate sale by developers the subsequent price cutting. The unsold inventory level is 23 months in NCR and up to 48 months in Mumbai (the comfortable level is 14-15 months). But here, too, it will be erroneous to assume that the developers will blink first and lower the prices further. Few developers would admit to lowering the prices send wrong signals to buyers. The fact is that whatever fall is depicted by different agencies is generally in the secondary market where the sellers can lower their profit margins. In the primary market some new projects can be launched at slightly lower rates, but those under-construction or nearing completion are likely to maintain the price levels.

Taking stock of the current scenario of the tricity market one can see the buyers in wait-and-watch mode. But if buying a property is on your shopping list this festival season then according to experts the time is ripe to take a plunge as prices are likely to stagnate and not plummet. “With most of the customers waiting to make a kill, the market will zoom the moment economic and political stability returns post elections. Then the prices will surely go up”, says city-based realty consultant R.P. Malhotra.

Low sales and the current slump in the tricity region actually doesn’t mean that there are no buyers. It is just that no buying is being carried out. “We get about 400 to 450 client visits each month. So, if so many people are looking for the right deals and property then it means that they have an interest in buying. It is just that an average buyer is waiting for the right moment”, says Prateek Mittal, Executive Director of Zirakpur-based Sushma Buildtech group. “Those entering the market in the next six months are likely to get immediate returns as they wil be able derive maximum benefit once the market recovers”, he adds.

The secondary market in Chandigarh, Panchkula and Mohali has taken a severe hit over the past one year. The prices have gone down by up to 35 per cent in certain areas. “For Chandigarh this is unprecedented as real estate prices here have never dropped so much. At the most these have remained stagnant, but this time around the fall has been significant”, says Malhotra. So, even though very few sellers are desperate enough to sell in this low tide, it is time to make a kill if one gets a good deal, he adds.

However, for a mid segment buyer with a budget of Rs 30 to Rs 50 lakh the choice lies only in the periphery areas. Here, too, the primary periphery zones like Zirakpur, Mullanpur and Pinjore-Kalka Urban Complex may not have much on offer if you want to buy this festival season. But one can check out good options in projects in Dera Bassi, Kharar, Banur, Landran Road and Baddi areas.

And if return on your investment and appreciation of prices is also on your agenda, then also the periphery areas have good potential. “All these areas will give a return of over 30 per cent over the next 18-24 months. An investment in property is hardly a dead investment ever only point is that you should have the ability to hold your investment till the time favourable winds start blowing once again”, adds Malhotra.

“Once economic stability returns and a new government is in place the situation is certainly going to improve for the realty sector in the country in general and in the tricity region in particular”, echoes Mittal.

Commercial property also makes a good investment if one chooses the project and location wisely. For example the Delhi national highway stretch in Zirakpur which already has Best Price, Metro outlets, it is already active and currently the price range there for commercial property is between Rs 5900 and 7500 per sq ft depending on the construction level of commercial projects and according to market experts these rates will be in the range of Rs 9000 per sq ft once the construction is complete as the area has good commerical potential so one can get a good return on investment besides getting almost 12 per cent annual assured returns being offered by some developers there on up front payment for commercial space .

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