Losing the race

Geetu Vaid

While the winds of slowdown have been sweeping the tricity region on the whole with plummeting sales and slow progress of the ongoing projects, Panchkula seems to have been hit the most as far as real estate fortunes are concerned. Prices have dropped by almost 35-40 per cent and it has an inventory overhang of 20 months according to market watchers.  

Though it is one of the key cities of Haryana, the real estate market here has performed badly in comparison with that in Mohali and its micromarkets of Zirakpur and New Chandigarh. 

The policies of the state government have actually stunted the real estate growth in Panchkula as  projects smaller than 6 acres can not come up here as is the case in Mohali and other Punjab areas.  There are FAR restrictions also as almost 80 per cent of the area has to be kept green and open, which makes the projects unviable for smaller builders on price band. Because of this only big builders have come up  with residential projects  here over the past 10 years. “For the real estate growth to become more widespread there is a need to promote small and local developers as they have more reach among the local population”, says Amit Gera, Proprietor of Gera Engineers. 

It seems that the state government is not in favour of projects less than Rs 1,000 to Rs 1,500 crore to come up in the state. DLF, Ireo and Pearl group,  have been the main builders who have launched residential projects in Panchkula area. But over the past five years the pace of development in these projects has been very slow.  Even in the Kalka Pinjore urban complex one can see the structures coming up but there is little happenning on the actual habitation front.  

The growth of these mega projects has not only been very slow but because of the high prices most of these are investor based. 

Poor score card

As many as 7,670 units have been supplied in Panchkula since 2011 and the average absorption rate has been 73 units per quarter in 2013-2014 as against 233 in Zirakpur and 133 in the still-developing New Chandigarh area. 

On the commercial front the malls have performed dismally here with Shalimar Mall being the chief example of retail and commercial fiasco in the city as it lies closed now after drawing poor response from shoppers as well as retailers for more than four years.

In residential segment, too, the sale-purchase has hit rock bottom with even the most ‘loaded with supply’ Sector 20 also showing significant price correction. “While high prices serve as a deterrent for end users looking for apartments, investors and sellers are holding on to their stock. As a result there is virtually no sale-purchase going on in the sectors having high rises and supply of apartments”, says Rajesh Bansal, a local property consultant. 

The relatively newly developed sectors like 25, 26, 27, 28 across Ghaggar river  in Panchkula Extension area have also not got a thumping response  basically because of the distance factor. Even though the area is well developed with wide roads and parks and a green belt running along the Ghaggar river bed. The buyers are not particularly keen on checking out the options available there. “Security and distance issues are the main game spoilers here. This area is close to borders of Himachal as well as Punjab and it is easy for criminals to escape to these states after committing a crime in Panchkula, which is why several buyers are reluctant to settle here till the time proper police and law enforcement facilities are available here”, adds Bansal.

Price factor

There has been a correction of over 40 per cent in some pockets in the city. “A 10 marla built up house which was available for over Rs 2 cr three years back has no buyers even at Rs 1.7 crore”, says Gera. Even in the apartment segment the prices have seen a similar drop. Most of the  apartment supply is in Sector 20 which has approximately 110 societies, most of which have been in existence for over 15 years. 

The current prices in sector 20 are between Rs 3500 and Rs 5000 per sq ft for high rise flats while land is priced at Rs 55,000 to Rs 85,000 per sq yd in different sectors

What ails Panchkula

As a city Panchkula is well planned with wide roads, lesser traffic and more green areas and it’s liveability quotient is much higher,  yet it is not a real estate magnate.

As the real estate growth has been restricted here due to government policies not many people have moved into the city. The population growth  is less, which is a big hurdle in getting better infrastructure. “In order to get corporation status also the Pinjore and Kalka areas had to be included in Panchkula as the required population was not there for this status”, says Gera.

In Haryana urbanisation is not there at the level at which it is in Punjab as only big builders can afford to come here. In such a scenario it is not feasible for smaller builders to have projects here. Market watchers opine that a small builder and a smaller project has more reach for the local population, whereas a big builder is more concerned about figures and about investors ready to invest long-term. As a result the growth remains stunted and most of the township projects are reduced to ghost towns. Moreover, there is no set deadline for these big builders to finish these huge projects.

For example take the case of the DLF project. The country’s biggest developer has more of an investor base and the high price band doesn’t suit the local buyers. The IREO project is also very steeply priced and the development has been going on in fits and starts and buyers are in a fix over the tentative date of completion.

Panchkula has suffered  because of the two main factors of lack of reputed educational institutions as well as of medical facilities as compared to these in Mohali. “Mohali has clearly pipped Panchkula in the realty race due to the presence of good hospitals, reputed educational institutions like IISER, ISB, NIPER  besides a host of engineering colleges. The Punjab government has established a strong civic base to bring more and more people to Mohali, and people are the key to real estate demand”, says Bansal.

Planning too is less than that in Mohali as the roads are in bad shape in many of the sectors, even basic hospital facilities are not there.

only big houses and is more for the rich people with very little inventory for the middle income group. 

On the one hand the state government is promoting the affordable housing scheme by giving incentives to builders but on the other its policies are against such develpment. By allowing only bigger projects the basic price of units is jacked up as a result there is very little on offer for the middle income group people wanting to purchase property in Panchkula. Even in Pinjore where land prices are cheap in comparison the price of houses in the mid segment is around Rs 30-40 lakh for a 125 sq yd plot. “If there was a provision to build projects on smaller plots then these prices can easily be in the range of Rs 15-30 lakh”, says Gera. 

According to experts a dearth of developable land and higher capital values for existing developable pockets would tend to impede significant development of organised group housing projects. 

Thus, it is time to soften some of its policies so that real estate growth that is already suffering due to the severe slowdown gets some fillip in smaller centres in the state.