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Prices head for plateau

The phase might be temporary. But believe it or not, there are signs of stabilisation in realty prices. T. LALITH SINGH lists the factors responsible

PHOTO: SHAJU JOHN

REASON TO SMILE: Flat prices which had shot up of late are settling down.

The real estate scenario in the city and suburbs seems all set to enter the much awaited cooling-off phase and thereby bring some relief to the middle class. While some sort of ambiguity stalks the property scene on the amount of relief, there is near unanimity that the apartment flat prices might not spiral the way they kept doing for the last few years.

Though the land prices have almost stabilised with very few locations witnessing a small doses of rise, flats too are not growing costlier, industry experts feel. Some even hope that they will come down a bit. This could come as a solace for the middle class as the rates have escalated so high in recent times that buying a plot had turned a distant dream.

Within the city, vacant land for development is available in very small patches and a trend to acquire old buildings and pull them down for apartment structures gained currency.

The immediate city vicinity offered an appropriate space for the developers to go in for a series of apartment blocks. But caught in the boom, the prices rose so quickly that for many, they too turned unaffordable.

In the belt ranging from Miyapur-Chandanagar-Gachibowli, the going rate for properly done apartment happens to be in the range of Rs.2,000 to Rs.2,500 per sq.ft. It is a different matter that flats here were hardly in demand three years ago and what were available were sold for a price range of Rs.700 to Rs.900 per sq.ft. then.

In zones preferred by the software and corporate employees, the price has further soared and gone up to Rs.3,000 per sq.ft. and Rs.3,500 per sq.ft. The luxury apartments -- based on the amenities and builders -- were even being sold upto Rs.5,000 per sft.

Experts say so

A section of the construction industry feels that the prices could come down a bit soon, though one cannot expect them to fall drastically or roll back to old rates. The reasons cited to buttress the argument are many including proposed supplies exceeding the actual demand, rigid adherence to newly imposed construction norms and the possibility of lower built-up area gaining currency.

Then, there are supportive grounds of frequent tinkering with home loan rates and subsequent changes in eligibility factors. Also cited is the recently announced Government housing project of Rajiv Swagruha applying some brakes on the unprecedented price rise.

"In some parts of the suburbs, construction activity is planned to a level that could end up with supplies exceeding the demand in that price category," reasons C. Prabhakar Rao, president of Greater Hyderabad Builders Federation. Coming days would witness abundant availability of flats at Bachupally, Nizampet and other happening spots but the builders might end up with few takers at the present price tag.

Many small time builders might find the going getting tough following the rigid FSI norms, restrictions on mortgage, setbacks, fire safety norms apart from procuring land at a price they can afford. In many places, the concept of owners giving their land for development had taken a beating in recent times as they seem to prefer selling it outright.

"When lucrative prices are offered, the owners think in terms of selling the land instead of entering into development and waiting for an apartment to be completed. It easily takes 18 to 24 months for them to expect returns if given for development. They no more appear keen on waiting," says Mr. Rao. Hence the prices might come down by at least 10 per cent to 15 per cent, he says.

However, Builders Forum President C. Sekhar Reddy hotly contends the premise of rates coming down on grounds of supplies exceeding demand.

"The demand for housing is actual and a slash in prices on this count is not really possible," he says.

Changes in home loan rates and eligibility could end up with some effect and in view of the high costs involved, many might turn realistic in days to come. "It is going to be a compromise between aspiration and affordability. From dreaming for luxury flats, many will be moving in the direction of looking for two bedroom flats," he points out.

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