Saturday, September 6, 2003
R E A L   E S T A T E

Property market thriving
R. P. Malhotra

NOTWITHSTANDING the long-drawn recessionary trend the world over since the mid-nineties, the prices of real estate have never come down in Chandigarh.

Reformative, progressive and investor-friendly policies like reduction in stamp duty coming at par with state of Punjab introduction of the Apartment Act, reforms in rent laws and abolition of the leasehold system in the recent past has gone a long way in giving the city real estate scene an upward swing. The government auctions, held immediately after the rent notification, witnessed an unprecedented rise nearly 50 per cent in the previous average rate per sq yd. The resale market too negotiated a rise of 25 to 30 per cent in all categories of properties.


Adequately supported by soft-term housing loans offered by MNCs, FIs and banks, the overall real estate trade has bounced back. With the prevailing tax exemptions to the investors in the housing sector, the availability of affordable housing accommodations to suit each pocket has improved. By borrowing a housing loan at 10 per cent per annum and availing income tax rebate (interest payments up to Rs 1.5 lakh/ the principal up to Rs 20000 are eligible for exemption under Section 88 of the IT Act), the net effective rate of interest payable, for an investor of 30 per cent tax bracket, works out to be about 7.5 per cent per annum.

"The trend is likely to continue as the process of clearing the backlog of the lean period continues. A number of would-be buyers, who had deferred their proposals since they expected a fall in prices in the wake of the recession, have now speeded up their process of materialising the deals," said R.K. Bhasin, a leading real estate consultant of the city.

With a five-marla plot auctioned for Rs 24 lakh in the open auction, the price of an old house of the same size is now being quoted at Rs 25 lakh to Rs 27 lakh depending upon the location, sector and construction of the house. Similarly a 10-marla house is now being quoted at Rs 45 lakh onwards. Interestingly, the first floor of a 10-marla house with roof rights was recently sold for more than Rs 30 lakh. The price of an old one-kanal house has also jumped from the earlier quotation of Rs 60 lakh to Rs 75 lakh. Bigger houses of sizes more than one kanal have also witnessed a proportionate jump.

"Houses built by builders are also in great demand, negating the general belief that they offer substandard construction. Builders are offering innovative designs with quality constructions. The buyer too is ready to pay for the quality," says Avtar Singh Walia, a reputed builder.

A piece of advice for those who have been investing in other fields like shares, stocks and gold and have been intentionally maintaining a safe distance from real estate: this neglected field is going to fetch them dividends in the times to come. Moreover, with gold touching an all-time high due to global disturbances, the real estate is certainly going to be the best bet and a less risky investment.

"With housing finance companies running after you, there couldn't have been a better time to buy a house of one's choice," expressed R.K. Gupta, a real estate consultant.

With limited boundaries and avenues, the city's periphery is also buzzing with huge construction activity to meet the unending housing demand of the city. The satellite towns of SAS Nagar and Panchkula are too helping to meet the housing burden of Chandigarh.

This feature was published on February 26, 2000