Land Deals At Prime Locations In Metros Losing Its Sheen
By Ni3, Section Gurgaon Real Estate Property
Posted on Sat May 03, 2008 at 05:14:32 AM EST
The soaring land deals in prime location of metro cities, which had scaled astronomical levels in the past few years, seem to be losing steam. The deals being struck this year are at an increasingly lower prices than the ones last year.
Parsvnath Developers has bought 1.18 acre land, jointly owned by Mahajan Industries and Videocon group in Connaught Place for Rs 200 crore. Compared to hotel major Leela group’s acquisition of 3 acres in Chanakyapuri last year for Rs 611 crore, Parsvnath land deal has come at a discount of almost 17% at Rs 169 crore per acre.
Parsvnath plans to develop retail and office space, while Leela is building a hotel. Real estate experts say Connaught Place and Chanakyapuri are comparable locations in the capital and should fetch similar rates if transactions happen at the same time.
In addition, the FAR (the ratio of developable space to total land) for both retail/office and hotels are the same at 1.5, according to Delhi’s new master plan.
“We have come to the end of one property cycle. Speculators have exited the market and we are seeing a softening in the housing market. This will now spread to the commercial market and then finally impact land prices. So with borrowing cost going up, and prices softening, the euphoria towards land acquisition has certainly died down,” says Cushman & Wakefield Asia executive managing director Sanjay Verma.
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He, however, cautions that there may still be several takers for prime properties such as those in Connaught Place in Delhi and Nariman Point in Mumbai. “The land deals in prime city locations are very few and far between. So the prices, although, reflect the market sentiments, do not give you a trend,” says Mr Verma.
In March, the Mumbai Metropolitan Region Development Authority (MMRDA) auctioned three plots in city’s Bandra-Kurla Complex (BKC) for Rs, 1,322 crore compared to Rs 2,790 crore the authority earned just three months back for a similar transaction, confirming a slowdown in the city’s property market.
The MMRDA had put five plots on auction in the G-Block of Bandra-Kurla Complex, two commercial, two residential and a club house. However, it did not open the bids for one of the commercial plots, while there were no bidders for the club house property. Jet Airways was the sole bidder for one commercial property and won it at a rate of Rs 32,000 per sq ft, compared to Wadhwa Builders’ Rs 46,000 per sq feet in November. Wadhwa’s transaction is considered the most expensive one in Mumbai.
Parsvnath is planning to develop a luxury mall and office space in Connaught Place. The company plans to invest around Rs 100 crore in the construction of the mall, which is likely to be ready in the next 30 months.
Source:Sanjeev Choudhary & Rajesh Unnikrishnan From Economic Times 03/May/08
