Nov 2, 2014Hindustan Times (Lucknow)
M Tariq Khan
tariq.khan@hindustantimes.com
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.
