The article lists out the factor affecting the fall in prices in the real estate sector affecting the builders, promoters and buyers as well. While, introduction of RERA and the policy of demonetization are initially seen as the sole factors for halt in prices of land deals. The bids have been largely affected by up to 20% to be approx. Various factors enlisted under RERA such as limited developer’s ability in buying of land with advance payment, paying full amounts through Cheque’s and project clearance.
The reduced cash deployment has largely affected the land valuations leading to a setback in the industry. The RERA has largely affected the builders while bidding for properties. Pre-RERA the builders used to bid land deals based upon past experience, while Post-RERA the builders have shifted themselves based upon future expectation and growth in vicinity to the site being developed.
Another important factor towards slowing down of real estate sector is that of demand and supply in market. While the properties where the market promises to establish i.e. the central business locations are highly in demand and thus the prices are high, while areas which are not so centrally located have comparatively low demand and thus the market rate is still low. For e.g. HDFC, SIDBI, HP and PFC have already booked an upcoming 10-floor commercial tower at Nauraji Nagar for Rs. 1,100 crore. The property bought is about Rs. 38,000 per sq. ft., much higher than prices prevailing in Connaught Place. The HUDA Authorities have been regularly revising the circle rates to enhance and improve the property deals.
On the consumer end, it is believed that such halt in prices of property provides consumer with varied options to choose from.
Note – Please note that the above article is for education purpose only. This is based on our interpretation of laws which may differ person to person. Readers are expected to verify the facts and laws