Softening Land Prices in Prime Metro City Locations
The astronomical land deal prices in prime locations of metro cities, which had skyrocketed in previous years, are now witnessing a downward trend. Recent transactions indicate increasingly lower prices compared to the previous year.
Parsvnath's Connaught Place Acquisition
- Location: Connaught Place, Delhi
- Land Area: 1.18 acres
- Purchase Price: Rs 200 crore
- Seller: Mahajan Industries and Videocon Group
- Intended Development: Luxury retail and office space
In contrast, last year's acquisition of 3 acres in Chanakyapuri by the Leela Group for Rs 611 crore highlights a significant price difference. Parsvnath's deal translates to approximately Rs 169 crore per acre, marking a 17% discount per acre compared to the Leela Group's purchase.
Comparable Locations, Similar Expectations
Real estate experts point out that Connaught Place and Chanakyapuri are comparable locations in the capital, suggesting that transactions occurring simultaneously should fetch similar rates. Moreover, both locations have the same Floor Area Ratio (FAR) of 1.5 for retail/office and hotel developments, as per Delhi's new master plan.
Insights from Industry Experts
- Mr. Sanjay Verma, Cushman & Wakefield Asia Executive Managing Director:
"We have come to the end of one property cycle. Speculators have exited the market, and we are seeing a softening in the housing market. This will now spread to the commercial market and then finally impact land prices. So with borrowing costs going up, and prices softening, the euphoria towards land acquisition has certainly died down."
"The land deals in prime city locations are very few and far between. So the prices, although reflecting market sentiments, do not give you a trend."
Parsvnath's Development Plans
- Investment: Approximately Rs 100 crore
- Project Timeline: Expected completion within the next 30 months
- Development Details: Luxury mall and office space in Connaught Place