<b>Property market unable to recover from shocks

Property market unable to recover from shocks Friday, July 27, 2001

BY PRAVEENA SHARMA, THE TIMES OF INDIA NEWS SERVICE
AHMEDABAD: Ahmedabad's property market, which had slumped after the high-intensity earthquake on January 26, continues to be plagued by sluggish demand. The property market refuses to recover with hardly any deals being struck in the G-3 and G-4 high-rise buildings and demand in G-0, G-1 and G-2 remaining as low as less than 5 per cent of the business levels before the quake.
Sale in the tenement and bungalow segment also remained low as the current prices in this segment (ranging Rs 6,500 to Rs 8,500 per sq yard) are beyond the reach of those on the look out for new accommodation. According to market sources, bungalow owners also preferred to wait rather than enter into a distress sale at low prices.

Apart from the slight demand that was generated in the G-1 and G-2 categories after the Ahmedabad Municipal Corporation (AMC) and Ahmedabad Urban Development Authority (AUDA) certified buildings in the city, the depressed property market has not looked up since the quake.

"Most of our clients are not ready to move into high-rise buildings, and the 5 to 10 per cent clients, who are considering buying a house in high-rise, do not want to go any higher than fifth floor. Five out of 100 clients consider top floors, but no one wants to move into a penthouse," says City Asset Management proprietor Deep Gagnani.

All this is making the prices of property in the residential sector go haywire. Six months after the quake, the rates of top floor apartments are still down by almost 50 per cent from pre-quake level. Apartments till the fifth cost 20 per cent less and beyond fifth floor, the drop in the apartment prices are ranging between 20 per cent 40 per cent.

According to Space Management Limited joint managing director Kishore Dedhia, rates of houses by reputed builders are still pegged at the pre-quake level as buyers are confident of their construction. It is the small-time builders whose apartment schemes are languishing as buyers are holding back investing in property till buildings are strengthened.

"After the quake, buyers have become more discerning; ensuring things like safety certification, BU permission and such other matters. So a builder has to spend more on strengthening the building, which increases the cost of construction. This may again disturb property prices," says Dedhia.

But even as the sentiment in the property market is not very buoyant, experts and town planners expect the current trend to dissipate. Environment Planning Collaborative (EPC) executive director B R Balachandra says these buildings are valuable assets and they cannot become derelict. "Their demand has dipped because property strengthening has not taken place. Once this happens and proper certification is acquired by the developers, they will be back into reckoning," he says.

He says lower income group may shift into abandoned or low-occupant buildings. He also feels that property market could swing back to normal faster if the different segments in the market respond to the present situation. "What could possibly push the market is the housing finance companies, insurance companies and developers coming together to build a system, where the customers are given enough guarantee for their purchases," says Balachanran.

"Since none of the builders are coming out with any new scheme and not many are ready to move into high-rise building, there will be a severe shortage in the property in Ahmedabad, that is when the price correction will happen, and also force many to abandoned schemes," says Dedhia.

Town planners forecast that the present trend may result in horizontal development, which could lead to inflation in the land prices in the periphery of the city. Dedhia, however, rules out this price hike. "There is ample land in the periphery of the city, and only speculation can escalate prices," he says.
News Source : Times Of India News Service [ Lightning News ]

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