Positivity or bubble trouble?

Geetu Vaid

With the flights to international destinations finally taking off from the International Airport last week, a wave of euphoria seems to have spread in the realty market in the tricity in general and in Mohali in particular. With the developers resorting to more vigorous marketing measures, construction activity in various projects gathering pace and the investors becoming active once again in the area, life seems to be returning to the listless property market in Mohali in spite of the shraddh fortnight. 

The focus, however, this time seems to have shifted to the sectors and upcoming projects towards the airport side. Over the past few months Aero City has seen hectic construction activity and along with that the projects along Kharar-Landran Road that had been in a limbo, have also been put on a fast track by the builders. “In Mohali market currently the end-user is active and that’s why the stress is on execution and completion as the number of buyers wanting to move into their own homes is more here. This is a positive sign for the market on the whole”, says Dipinpreet Singh, Director of the city-based Westcoast Investments.

Coming in the backdrop of all this, the GMADA’s draw of lots for allotment of plots in IT City not only got a good response, but also revealed intense investor interest. While the 750 residential plots put on offer by GMADA got over 14,000 applications, the ‘lucky’ allottees claimed to have been ‘approached’ by property dealers soon after the draw with offers of hefty premiums for selling their plots. GMADA had fixed the price of Rs 20,000 per sq yd for the plots, and several allottees claimed that they had been offered premium of up to Rs 7,000 per sq yd (depending on the size of plot) for these. In the past three years the prices of property, especially in this area, had actually seen a correction of 10 to 15 per cent, thus this latest ‘jump’ of between 15 to 25 per cent has generated a lot of positivity as well as expectations among the stakeholders. “After GMADA’s draw of lots it has become clear that this year the festive season will be a good one for the real estate market in  Mohali,” says Amandeep Singh, a city-based real estate consultant.

However, this return of  the achche din syndrome has to be taken with a pinch of salt, especially if you are planning to buy a residential property sometime soon. More than the building up of positive sentiment there are signs of a boom bubble being created by a few “smart movers” in the market. A prospective buyer should not ignore the stark ground realities before being dazzled by the 15 to 25 per cent hike in premiums and hastening his buying decision. According to insiders a very small group of speculators with deep pockets is, in fact, behind the sudden surge in prices being offered for the plots in the IT City. These people want to “soak up” the supply in an upcoming area in order to create a false scarcity which would lead to price hike in the vicinity. 

The strategy used here is to offer 20 per cent premium to the allottees immediately and ask for a window of four months to pay the amount. It is in this duration that the hype around price hike is used to create a bubble. 

However, the reality, remains that there is no sudden and drastic surge in the number of end users and with only speculators holding the fort the area is unlikely to see  habitation soon. The point to consider here is that prices in the other residential township projects in the city have not seen a 15 to 35 per cent hike over the past few months. Though each pocket has its unique price bracket that depends on its location and infrastructure, the average price benchmark of an area can’t be very different. The past few months have seen some new projects by big players like Hero Homes, Sushma Buildtech, SBP Group among others being launched, while builders like TDI, JLPL, Ansals etc have gone on an overdrive to market their inventory. Thus, there is no doubt about the fact that property market in Mohali is slowly shaking off the effects of a slowdown. “However, end users need to select areas and properties with extreme caution”, says Dipinpreet while maintaning that this year festive season will be good for Mohali real estate market. 

Thus, though the winds of positivity are blowing and expectations are high at the moment, it remains to be seen whether this uptick is a long-term trend or a bubble like the one seen six- seven years back when a number of big township projects were launched along Kharar-Landran road sending the real estate prices soaring only to make the market fall flat later.