A grim year for region as investors and buyers stay away

The real estate sector in Himachal is facing the twin challenges of slowdown and inflation and there has been only marginal improvement in market which has not shown any sign of rapid recovery even after cut in interest rates. The housing activity had picked up in the state in the  past few years with the entry of agents and promoters but in spite of the presence of over 80 registered promoters/agents, the individual plot owners have turned into small developers, increasing the number of vacant houses and causing concern to builders, who are not willing to scale down the prices.

Advertisement

A comparison of   census data for 2001 and 2011 reveals that the number of unoccupied houses in Solan and Shimla districts of Himachal, where most of the housing and industrial project have been permitted,  has shot up from 11 to 25 per cent. Thus, every fourth house is vacant and the percentage has increased further over the past four years as a large number of projects have been completed. There was no need for opening the floodgates for private builders and allowing conversion of agricultural land becomes evident from the fact that out of the total 12,361 flats constructed by private colonisers across the state 11,063 flats have no takers. Further, 77 more licenses have been issued to private builders for raising 12,892 apartments, which under various stages of construction.

Adverse fallout of this has been that the land prices have gone up following the entry of private builders. As a result end users are finding the prices beyond their reach.  In spite of abundance of high priced vacant/unsold houses, the government is contemplating measures to give boost to real estate instead of focusing on the middle to lower end of the spectrum where the shortage of residential units is acute.

Shimla

In Shimla area, the prices have increased marginally in past three years but no private land is available along the National Highway and state highways in 30 Km stretch from Mashobra to Shoghi and only the forest and government land is saved.

The prices of two-room and three-room flats range s between Rs 30 lakh and Rs 80 lakh and rates are even higher in prime locations. However, the builders are not getting buyers for the price demanded in interior areas as the places not connected by road and prices are very high due to increase in prices of land.

The trend of individual plot owners constructing four or five flats, retaining one or two flats selling the remaining ones is picking up. This is also hurting the commercial interests of builders.

Prices

As per the circle rates of Revenue department, the prices of land in Shimla vary from Rs 4,000 to Rs 11,000 per sq mt but infact the actual prices are Rs 7,000 to Rs 16,000 per sq mt. In some of the areas in the main town, the rates are 15 to 20 per cent higher.

Kangra, Chamba and Una

Real estate development in Kangra, Chamba and Una districts is happening in an unorganised manner  only. Most of the real estate development is happening around the existing towns including Dharamsala, Kangra, Palampur, Dalhousie, Chamba and Una.

People are either developing houses on plots sold by land owners or farmers or being offered by small property dealers. Due to this most of the colonies being developed in these towns are having narrow lanes, no sewerage or street lights.

The development at the main tourist places as Mcleodganj is also happening in an unorganised manner. As per the data obtained from the town and country planning department just about 30 per cent of total buildings that have come up in Mcleodganj, Bhagsunag and Dharamkot, the  three main tourist places in the vicinity of Dharamsala, have adhered to the norms and rules.

Most of the old properties in Dalhousie town were given on lease by the British in pre-independence era. Now their lease stands cancelled by the state government. The old inhabitants of the town are alleging that they are not in a position to change or alter their buildings as their lease has been cancelled by the state government.

The Himachal Pradesh Urban Development Authority (HIMUDA), which is main agency responsible for planned development or urban areas in the state has only managed to develop a few colonies in the all three said districts that have provided residential plots to just a few hundred people. In Dharamsala the colony of HIMUDA has developed near Dharamsala is lying vacant.

The state government even during the stint of previous BJP government and even now had proposed to develop satellite townships near Dharamsala. However, till now even the land for the purpose has not been acquired.

Solan and Sirmaur

With the markets remaining sluggish the realty scenario in Solan, which had registered the highest growth rate of 57 per cent in the last decade, remained grim in 2015.

All major towns like Solan, Kasauli and the industrial belt of Baddi-Barotiwala-Nalagarh failed to attract buyers for flats and commercial properties. Since the new investments have been reduced to a trickle after lapse of the central industrial package in March 2010, the industrial area did not witness much demand for plots or flats. 

Builders who did complete their commercial projects in Solan, Kasauli and BBN were yet to find takers for the commercial space created in the prime areas. This has virtually left the commercial properties uninhabited thus pointing towards a downswing in the realty scenario.

With hardly any buyers in the market the prices have remained static in the last nearly a year in Solan and Sirmaur. .

No new housing project has come up in the area and those under construction are also proceeding slowly in the absence of adequate number of buyers. Several tourism projects in Kasauli did come into operation though no new major project has come up in the last nearly a year.

In Sirmaur the growing towns of Nahan and Paonta Sahib did witness some realty activity with neither public nor private sector project having come up.

The state government, however, extended relief to the builders operating in an area of more than 40 bighas by reducing the mandatory norm of constructing flats for the economically weaker sections from the earlier 25 per cent to 10 per cent. 

Realtors operating in the area opine that though a few queries were received from time to time about property rates, the high rates failed to catch the fancy of the buyers.

Prices

Solan — Rs 20,000 to Rs 50,000 per sq m, 

Kasauli — Rs 1.5 lakh to Rs 2.5 lakh per bigha

Mandi and Kullu

Located on the banks of the Beas River, Mandi has not seen much growth in the past several years. But with the announcement of four-laning of the Kiratpur to Manali National Highway-21, prices along the highway have skyrocketed overnight. There is hardly any scope left for expansion in the cup-shaped main town except on the Mandi-Sundernagar road.

The most preferred areas in the town include Khaliar, Tarna Hills, Nela, Sanerhi, Bijni and Talyhar. An official of the Town and Country Planning said there was hardly any scope of expansion in the municipal limits of the town, but people now preferred to build houses in villages located on the periphery of town.

Sandeep Awasthi, a property consultant, said now, people had started purchasing property in Sundernagar, Balh, Gagal and Aut on the highway. In Kullu district, land price has rapidly increased in the past couple of years as vacant land is hardly available in Kullu and Manali towns. Now, builders are developing tourist accommodations in the suburbs of Manali.

Deepak, a property dealer in Kullu, said the trend of buyers in Manali was towards developing hotels and cottages for tourists.  Sakshi Manchanda, an entrepreneur undertaking a real estate project at Kais village near Kullu, stated that a lot of buyers had shown interest in their high-end projects with top class facilities consisting of independent villas and apartments.  

Prices

Land in the suburbs of Kullu and Manali is reportedly available for Rs 3 lakh to Rs 5 lakh per biswa. 

The prices of the land in Nela range from Rs -5 lakh per biswa, at Sanehri between Rs 3-6 lakh per biswa depending on the distancefrom main road.

— With inputs from Bhanu P Lohumi, Ambika Sharma, Lalit Mohan and Dushyant Pundir