South Delhi witnesses slump in property prices
Delhi- Besides slowdown of economy, overflow of new residential properties in South Delhi has been hampering the real estate growth of the city. Sluggishness in the market is forcing some of the developers to sell apartments at discounted rates.
Property prices are stagnating and in colonies like Saket and Greater Kailash, apartments are being sold at lower rates.
Property dealers of South Delhi claimed that the business is moving slow mainly because of the demand-supply mismatch in the property market. Most of the houses have been replaced by builder floors, with stilt+four floors, thus making large number of floors available for sale. But though many property options are available for sale, there are not many buyers, thus leading unsold properties to pile up in the inventory.
Realtors like Saket, GK-I, GK-II, Panchsheel Enclave and others are offering discounted for some of their apartments in Delhi. The scenario is not the same in projects in NCR.
The price stagnation in the last two quarters is due to the oversupply of housing units in South Delhi, reported a senior consultant of Cushman and Wakefield. Floors come in the region of Rs 4 crore to Rs 6-7 crore, depending on the size of the plot. For this amount, buyers see greater value in properties in Gurgaon and Noida, he explained.
Builders incur loss due to longer holding time for their projects which are up for sale. As the units are usually quoted at higher rates, they will have to hold on for one or two quarters which blocks their investments. Therefore builders are coming up with reduced prices.
A number of developers have entered the realty estate of Delhi to construct apartment on a plot by promising that they will give 60 percent of the apartments built to the plot owners. Besides the apartments, sometimes builders have to pay money also to the plot owners depending on the location of the plot.
Besides oversupply of apartments, increasing prices in the last couple of years in South Delhi has made the realty investments less attractive. At present, buyers find apartments much attractive than builder floors as they do not provide modern facilities like gym, swimming pool and round the clock securities. This has also affected the market adversely.
Update
The properties in South Delhi have recorded a 20 to 35 percent fall during Sept 2012 to Aug 2013. This is an effect of liquidity-crunch developers offering discounts to speed up their sales in a slowing economy. Even the investors have been facing a cash-crunch situation and have been anxious about selling the high-end apartments which they had purchased few years ago. In the last two-three quarters, the sales in South Delhi have drastically reduced by around 50 percent.
Owing to the market slowdown, the buyers and end users are hesitating to invest in real estate segment. And the few who are coming forward are negotiating hard for a much lesser price. Since there is huge fall in sales, the developers are also willing to negotiate.
The fall in prices has been observed in all residential colonies in South Delhi, while it is high in Defence Colony and Vasant Vihar. For example, a property priced around Rs 12 crore a year ago, is now available for Rs 9 crore itself.
The inventory of unsold properties has been piling up largely. There are more than 3,000 unsold apartments in areas including Defence Colony, Vasant Vihar, Panchsheel Park, Greater Kailash, Gulmohar Park, etc and another 1000 properties are likely to be added soon. There is an oversupply of properties in many localities. Some developers have chosen to abandon their projects which are in different stages as there are no takers. The property prices were also affected by factors such as hike in circle rates, ban on power of attorney sales and levy of service tax.
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