DDA faces challenges to auction plots
Due to a slump in the real estate market, for the first time The Delhi Development Authority (DDA) is pondering over the rationalisation of the reserve price for auction of commercial and institutional land in the city.
The last big auction which had attracted the buyers was the one which was held before the 2010 Commonwealth Games when several hotel plots were sold. Sadly enough in 2011, only five of the 78 commercial plots put up for auction were sold.
In 2012 only two of the 65 plots put up for auction had takers and in the latest auction organised in January 2014 just three of the 57 plots found bidders. The DDA vice chairman Balvinder Kumar mentioned that at many places the market rates are lower than the reserve price fixed by DDA. Hence there is no demand for these auctioned plots among the buyers.
The DDA has unsold commercial and institutional land worth Rs 50,000 which is just increasing their land inventory. They have been trying to sell these land parcels for the last few years.
The economic slowdown has hit the property market and the authority’s auctions in the last few years. The DDA sets its reserve price by considering the previous highest auction price and builds in an additional premium over that price. The land prices in the open market were corrected; however DDA did not factor these aspects while arriving at their reserve price and continued following their own procedures of arriving at a reserve price for an auction.
DDA feels that they can lure the buyers by offering two attractive options- downward revision of the reserve price and offering the buyers mixed-use plots which will have both residential and commercial areas.
Source- The Economic Times
78 commercial plots put up for auction, a plot in face of acute shortage of land in Delhi, DDA is pondering over the rationalisation, reserve price fixed by DDA
