Slump drags down smart city

Neeraj Bagga

Slow demand and a huge inventory overhang in the holy city continue to haunt the investors and dealers as the real estate business continues to remain listless. The change of government in the state more than a year ago, too, has failed to bring a turnaround in the realty fortunes. 

Though traditionally, Amritsar has not been a highly happening real estate market like Ludhiana, yet the current slump has been unprecedented. 

While the buyer remains elusive still, may sellers are   resorting to distress sale as hopes of a revival seem bleak now.   Narinder Pal Singh, a local resident, who had sold his 150-sq yd house for Rs 83 lakh in New Amritsar locality in March, said he barely managed to salvage his investment. He had bought  the same plot for Rs 28,000 per sq yd in 2016. “It was a Herculean task to find a buyer and ultimately I was so desperate that I took whatever was offered”. A real estate dealer on the Airport road Partap Singh added that a one-acre plot on the airport road that had fetched over Rs 2 crore in 2010, had no takers for Rs 1 crore also now. 

The sharp descent in real estate prices is a direct consequence of the demonetisation and introduction of the GST and even after a year the market is yet to stabilise in the city. Manager of a national-level real estate firm, which is having an integrated township project on the Amritsar-Jaladhar GT road, says on the condition of anonymity, “There is at least 30 per cent reduction in the prices of plots in localities close to the bypasses. Most of the plots were being sold for between Rs 9,000 and Rs 16,000 per square yard in these planned localities for the past some years”.

It is a buyers’ market at the moment and a buyer with money can negotiate price as per his convenience. “Similar trend can be witnessed in some of the posh localities within the city also”, he quips.

Like in the rest of Punjab, Amritsar, too, has unauthorised colonies where several people had invested due to lesser prices. But because of RERA implementation and government strictness the sale and purchase here has been affected. A majority of the colonies set up on the stretch between Ajnala, Loharka and  Fategarh Churriyan roads. “Ever since the government made it compulsory to procure an NoC for residential and commercial structures in unauthorised colonies, the real estate sector has not come out of the slump in the city”, added the manager of a realty group here.

Construction on a standstill

Ongoing construction work is a direct indicator of the health of the real estate market in a city. If one looks at this aspect then the realty slump in Amritsar becomes all the more evident. There is very little construction going on in different localities of the city or in the colonies on the outskirts of the city. Deep Davinder Singh, a construction contractor, claims that there has been a 70 per cent fall in the construction of houses between 100 sq yd and 250 sq yd area over the past few years.

Besides the low sale purchase volume, increase in the cost of construction material like sand, cement, sanitary and electrical fittings have also served as a deterrent for those wanting to construct their houses, he adds. 

Real estate players opine that a large number of new colonies had emerged around the city between 2001 to 2010. They feel that high inventory outpaced the demand in the market which led to stagnation. It will take some years to clear the stock and the market to regain confidence.

Unrealised dream

When Amritsar figured on the list of 100 Smart Cities to be developed in the country, the hopes of real estate boom had soared. Availability of funds as well as  infrastructure boost were projected as favourable factors for property prices. But over the past 18 months nothing positive has emerged from this move.  Dogged by delay in the appointment of project management consultants, and CEOs, the progress of smart city projects remains slow. Area-based development and pan-city development are the two main components of smart city project. Under the pan-city development part in Amritsar work on BRTS (bus rapid transport system) corridor in the city and piped gas network for household and commercial usage are underway. Various other plans are still in the planning stage. Under the area-based development redevelopment of parks, parking system, Wi Fi facility around Darbar Sahib are being examined. The impact of these on the realty prices will be visible only after these are fully operational. Till then the market has to sustain itself on the buyer interest. And the way things are going, investors  are not likely to return to Amritsar sometime soon and burdened by the existing inventory the demand-supply mismatch is going to extend the tenure of slump  here.