LUCKNOW: Is it the beginning of the end of real estate boom in the state capital?
Property prices in Lucknow, which had shown an upward spiral in the past decade or so, have witnessed a downward trend, albeit a marginal one, if a report undertaken by the National Housing Bank (NHB) is to be believed.
“Six cities have shown decline in prices over the previous quarter with maximum fall observed in Chandigarh (-4.4%) followed by Meerut (-3.6 %), Delhi (-3%), Surat (-2.4%), Dehradun (-2.1 %) and Lucknow (-0.5%),” states the survey by NHB, a subsidiary of the RBI.
While ‘fly-by-night type’ builders reject the study, big players in the business grudgingly admit that it’s a wake up call for them.
“A combination of factors may have triggered this trend,” says a prominent member of the UP Real Estate Developers’ Council (UPREDCO).
The unabated demand-supply gap in the property market, especially in the residential sector, has led to an accumulation of unsold flats, he points out. Though nobody has the exact numbers, according to one estimate at least 10,000 flats are currently lying unsold in various group housing projects and schemes in the city.
“This is one reason why you saw no big launches this Diwali,” reveals the young partner of a prominent real estate firm, which has made a mark for itself in the upscale market, requesting anonymity.
This unsold inventory is also perhaps why the Lucknow Development Authority (LDA), the big daddy of them all in the property business, has not announced any new scheme or project in the past five years!
“We must have around 1,000 unsold dwelling units in our various schemes,” admits a senior official of the development agency. “The agency is finding it hard to get buyers for 100 flats in one of its most prestigious housing projects ‘Parijat’ on Faizabad Road,” he adds. Similar is the situation of its schemes on Kursi Road and elsewhere. Forget new launches, private developers have now decided to go slow on the projects already underway. “The downward demand-supply trend is slowly but surely taking a toll on our cash reserves,” bemoans the UPREDCO member.
What could further add a damper to this emerging slump in the market is demand by small builders to amend existing building by-laws and allow multiple dwelling units on small plots. Ghaziabad has done it already. Lucknow has been kept out of it by the state government so far though a similar proposal submitted by LDA has been awaiting government approval for over a couple of years now.
“The move (amendment) would have a cascading effect on the city’s real estate market and would further bring down prices of flats/apartments – a major reason why deep-pocketed developers are against it,” feels an expert in the real estate business.