GMADA seeks to lower reserve price of plots

Dismayed with the poor response to its last two auctions of commercial and residential sites, Greater Mohali Area Development Authority (GMADA) has written to the state government to lower the reserve price of these sites by 10%.

The first auction was held in February this year and drew a very poor response, with only 12 out of 45 commercial sites being sold. Besides, eight residential sites failed to find takers. The previous auction was held in September, 2009. That too had proved to be a flop show. Only 17 out of 69 commercial had been sold then, while residential sites didn?t find buyers.

GMADA officials maintain that buyers remained elusive due to the high reserve price ?Rs 2.52 crore for residential sites measuring 500 square yards. A plot of 500 square yards is referred to as a kanal in Chandigarh and its satellite towns of Mohali and Panchkula.

The reserve price for the commercial sites hovered between Rs 1 lakh to 4.74 lakh per square yard at the same auction, which kept buyers away.

Talking to FE, Balbir Singh, estate officer, GMADA said, ?2006-2008 was fruitful for GMADA, when the country witnessed a real estate boom. The prices shot up significantly. Seeing the boom, buyers preferred investing in property. But in 2009, the real estate bubble bursted, which led to a slump in the market. The economic recession further kept the buyers away from investing in property,? he said.

The estate officer admitted that despite these changes, GMADA had to follow its norm of fixing the reserve price at 90% of the highest bid in the previous auction.

?We have to adhere to this norm, and can reduce the reserve price at our own level if three auctions do not go well. Since we have already burnt our fingers at two auctions, we have written to the state government to lower the reserve price of the sites,? he said. Till the prices are revised, GMADA has stopped the auction of new sites.

Officials admit that if sites in the market are available at prices lower than their reserve price at the auction, finding buyers will be difficult.