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Mohali sets the pace for revival

Sales improve by 9 per cent, new launches by 37 per cent in the Tricity area in the first half of 201822 Sep 2018 | 1:54 AM

As returns on property investment maintain a low trajectory, there is a slim chance of a massive thrust during the forthcoming festive season in the Chandigarh, Mohali, Panchkula Tricity region.

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Geetu Vaid

As returns on property investment maintain a low trajectory, there is a slim chance of a massive thrust during the forthcoming festive season in the Chandigarh, Mohali, Panchkula Tricity region. Though market watchers warn of a lukewarm festive season response from buyers for the third year in a row, yet data-based analysis provided in NHB Residex and the ‘Realty Decoded Report’ by PropTiger reveal a steady increase in prices in the Tricity in 2018 so far. NHB Residex, which is the official housing price index, reported an escalation of 6.4 per cent in prices in the Chandigarh region during the quarter ending in March. The report by PropTiger Data Labs revealed a growth of 9 per cent in the Tricity as housing sales jumped from 2,067 units in first half of 2017 to 2,249 units in the first half of 2018. However, the growth in prices and sales being reported is mainly due to the performance of Mohali realty market in this year. The prices as well as the sale volumes have seen a steady growth, and with a drop in the number of new launches the existing inventory is being fast offloaded here. This is a healthy sign for real estate revival. In 2014, the region had an inventory overhang of 25 months which rose to 42 months by the end of 2017. However, a drop in this trend of inventory overhang has been witnessed in the past six months,  on the back of improved sales and limited launches. “The micro-markets of Mohali contributed 55 per cent to the overall sales in the Tricity.  In the past 12 months, nearly 2,300 units have been sold in Mohali, whereas only 700 units were launched. Zirakpur, on the other hand, sold approximately 1,500 units with new launches of 1,300 units during the same period”,  says Ankur Dhawan, Chief Investment Officer, PropTiger.

Decline in new launches

Overall, new unit launches in the Tricity area has halved in 2017 from 2016 levels. A total 4,778 units were launched in 2016 as compared to 2,443 units launched in 2017. The declining trend continued in 2018 also as the number slipped by 37 per cent in H1 CY18 as against that in H1 CY17.

Mohali contributes most to the new launches in the Tricity area followed by Zirakpur. Derabassi and Panchkula, however, have not seen any new launch since the second half of 2016.

Sale picking up

With buyers in the wait-and-watch mode for around two years now, the sale volumes have remained low in the whole of Tricity. Demonetisation was the biggest spanner in the works as far as sales were concerned. There was a 30 per cent drop in sales in 2017 as only 4,112 units were sold as against 5,828 units in 2016 .  But with the implemenmtation of RERA, the buyers are slowly coming forth to finalise the deals now. “We are witnessing a reversal of this trend with sales having increased by 9 per cent to record a number of 2,249 units in H1 CY18 compared to 2,067 units in H1 CY17”, says Dhawan. Meanwhile, Mohali remains the most popular destination for buyers with over 4,000 units being sold in the past 12 months in its micro-markets like New Chandigarh, Kharar and Zirakpur. Dera Bassi , however, has benn been struggling in terms of both launches and sales during the past two years. Dera Bassi and Panchkula  have recorded sales of nearly 2,000 units and witnessed a new supply of only 900 units since January 2016. 

Price points

The Tricity region is predominantly a market for apartments, which accounts for almost 84 per cent share of the total absorption in the past 12 months. Plots and villas have collectively contributed only 16 per cent in sales. Maximum underlying demand in the region is for 3 BHK variants followed by 2-BHK units. Nearly half of the total sales in the region were reported in the Rs 30-60 lakh budget segment during the past 12 months. Currently the market has around 12,700 units available for sale, out of which approx. 68 per cent are in the price bracket of Rs 30-60 lakh. 

Growth drivers  

Mohali and Zirakpur now have excellent connectivity and a flourishing demand for commercial office space that is driving the  demand for residential property. Prateek Mittal, Executive Director, Sushma Group, says, “Zirakpur, now, has an excellent connectivity with the new International Airport and as a result the areas along airport road are premium locations for commercial spaces. This is driving the demand for residential property also. Subsidies under the Pradhan Mantri Awas Yojna and restored faith because of RERA are the key  other growth drivers for this micro-market.”

There is also increasing demand for office space in Mohali by corporates, IT and ITES companies. It is good investment as average rental yield of commercial properties is 6 to 10 per cent as against 1.5 to 3 per cent for residential properties,” says Sanyam Dudeja, Chief Executive, Jubilee Group.  Airport road and Sector 70 are the emerging commercial and retail hubs where new projects are coming and investors are showing interest. 

New Chandigarh, developed by the Greater Mohali Area Development Authority (GMADA), located near Mullanpur is the new smart city with various ongoing/upcoming development plans such as the development of  Medicity, Education City, Eco City (a residential township) in Mullanpur etc. 

Top market in Punjab too

With average montlhy transactions of more than Rs 35 crore, Mohali is the top district in Punjab for real estate transactions followed by Ludhiana. According to the Punjab RERA website, most of the new residential projects are concentrated in the Tricity area. Out of a total of 575 projects registered with RERA, 368 are in the GMADA region. The next largest city is Patiala with 70 projects, while all other cities combined account for only 137 projects.

Chandigarh not only has limited choice for home buyers, the collector rates and prices are way too high for a majority of buyers here. Panchkula, on the other hand, has seen few new launches over the years. Thus, price consolidation, decreasing inventory overhang and wide choice for buyers in Rs 30 to 60 lakh price bracket, have made Mohali a flagbearer of realty revival in the Tricity.  

Mohali sets the pace for revivalTribune photo Vicky
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