Practically all cities across the country have registered a 15-30% drop in realty rates, depending upon the area. The boom in the real estate sector that saw rates soaring way beyond your budget has registered a correction in the top-end residential segment in cities across the country. This has also resulted in short-term investors shying away from putting their money into property any morekeeping the market wide open for actual end-users, says Rajiv Agnihotri, senior business analyst, Propertiesindia.com.
Take the Delhi NCR for instance. Rates at Kundli in east Delhi, which were Rs 2,100 per sq ft. six months ago, have come down to Rs 1,450-1,500 per sq ft. Ghaziabad, which had risen to Rs 1,800 per sq ft, is today selling at Rs 1,450-1,600 per sq ft.
The correction in Mumbai is somewhat nominal in comparison to Delhi. Six months ago, residential rates in Mulund and Thane were Rs 4,000-4,800 per sq ft and Rs 2,500-4,500 per sq ft, respectively.
Today, they are in the region of Rs 4,000-4,600 per sq ft and Rs 2,500-4,200 per sq ft.
Practically all cities have registered a 15-30% drop in realty rates
Somajiguda in Hyderabad is in the range of Rs 2,200-2,600 per sq ft today, a drop from Rs 2,500-3,000 per sq ft six months ago. Rajendra Nagar in the city has fallen from Rs 2,500-3,200 per sq ft to Rs 2100-2,500 per sq ft. Whitefield in Bangalore has decreased to Rs 2,500-3,000 per sq ft from Rs 3,200-3,500 per sq ft. Koramangala, too, has dropped to Rs 3,000-3,250 per sq ft from Rs 3,500 per sq ft.
In Chennai, Kilpauk, which recorded a rate of Rs 3,000-4,500 per sq ft six months ago, has today decreased to Rs 2,400-4,000 per sq ft. Velacheri has dropped to Rs 2,200-3,800 per sq ft from Rs 2,600-4,500 per sq ft .
The correction is not restricted to the metros alone. Zirackpur, outside Chandigarh, has fallen to Rs 2,100-2,450 per sq ft from Rs 2,250-2,600 per sq ft six months ago. In the posh Aliganj area of Lucknow, rates have fallen from Rs 2,800-4,000 per sq ft to Rs 2,500-3,500 per sq ft.
The correction has, however, primarily affected the residential sector at the moment. The commercial segment is going great guns with demand generally outstripping supply. Kushagr Ansal, wholetime director, Ansal Housing & Construction Ltd, feels that the residential correction has taken place in areas where realty rates had shot through the roof--like Gurgaon in Delhi NCR and Whitefield in Bangalore. Builders had escalated prices sighting future developments. Since they could not find too many buyers, the next best step to take was to bring down the rates, he says.
However, some developers feel that the correction has not taken place in the branded offerings, but is prevalent in the resale market. Says Kunal Banerji, VP (marketing & corporate communications), Ansal API, It is investors that are selling property at rates lower than the market, afraid that with interest rates on the rise, they might not get this price again. From the developers side, there is no correction.
Agrees JC Sharma, MD, Sobha Developers, It is only the peripheries of cities that have registered a drop in rates. Developers have not reduced prices, it is the dealers that are doing so and it also depends upon location. Demand is still very robust and the residential segment is highly under-serviced. In fact, property consultants believe that the correction in real estate (pricing) market is not as evident as many people believe. Despite the increase in home loan rates and constant and steady increase in property prices, it is only in exceptional areas that prices have come down or remained stagnant. Otherwise, the correction is reduced growth rate and stagnationnot a fall in price, says Ashutosh Limaye, VP, consulting services (west), Trammel Crow Meghraj Property Consultants.