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High realty prices drive down resale deals in NCR by 40%



TIMES NEWS NETWORK[ FRIDAY, SEPTEMBER 08, 2006 12:23:08 AM]

 

NEW DELHI/GURGAON: Sky-High property prices have, ironically, become a matter of concern. Resale transactions, particularly in the NCR, have gone for a toss. In fact, industry sources in the property transaction business claim that resale transactions have gone down by as much as 30 to 45% in certain catchment areas. Though this trend has not had any significant impact on prices yet, it may have implications in the long run.

The major reason for this drop in property sale transactions is because of the initial investors — those who booked apartments by paying 10 to 15% of the total cost.They comprise, in most cases, cash-rich financiers, who make up 30 to 50% investor in any real estate project.

However, property dealers says that in most high-end catchment areas, end users are not willing to pay the prices being quoted and are subsequently moving to lesser-expensive localities. If this trend continues, initial investors in possession of high-value properties may go in for panic selling, and this will have disastrous consequences,” says Rajan Ahuja, director of Gurgaon-based consultancy Realty Verticals.

Others feel that the problem of resale transactions is evident only in investor-dominated markets. “The number of transactions seems to have gone down in some pockets. Moreover, these are lean months. There may be some dip in values also in some areas, which are dominated by investors, but that was always expected,” says Omaxe Group CMD Rothas Goel.

According to Cushman & Wakefield’s Sanjay Verma, residential market in ceratin areas is witnessing a rationalisation of capital values, because of which the market is finally establishing price thresholds.

This trend is visible essentially in select locations, where new supply is being released in the market. This additional stock will help feed the current demand and act as a stabilising factor to the continuous spiralling of values, over the next eight to 12 months.

The huge disparity between the expected seller’s and buyer’s price, which was visible over the last few months, is dissipating, with an anticipated stabilisation of capital values, he says. Developers also attribute this to uncontrolled rise in land prices.

 

By vayaM CS