NASHIK: The slowdown in the real estate and the rise in Ready Reckoner (RR) rates in the past few years have hit the sector hard. The result: around 3,000 flats worth Rs 900 crore are lying vacant across the city.
The hike in RR rates up to 48% by the state government in the last calendar year (2014) has left the builders a worried lot as close to 1,000 flats at some locations in the city could not be sold out. The RR rates of these flats are higher than the market rates.
The real estate sector is already facing a recession for the past four years. The gap between demand and supply has also increased considerably in the city. The supply is good, but not the demand. Moreover, the construction cost of the projects has increased by Rs 500 per sq m because of the rise in construction cost on the in foot notes of the RR rates from Rs 12,000 to Rs 22,000 per sq m.
Speaking to TOI, Jayesh Thakkar, president, Confederation of Real Estate Developers' Association of India (Credai), Nashik said, "The real estate sector is still facing a recession, but there will be signs of improvement in the next few months as the banks have reduced interest rates on loans. The state government has made 20% reservation mandatory for the Economically Weaker Section (EWS) and the Lower Income Group (LIG) in housing projects coming up on 4,000 sq m or above. We are not against the reservation, but there is no clarity in the laws. As a result, builders or developers are not opting for the large projects over 4,000 sq m."
Nilesh Chavan, president, Indian Institute of Architects (IIA), Nashik branch, said, "The sector is passing through a phase of recession. Around 500 flats were sold during festive occasions such as Gudhi Padva and Akshay Tritiya. But the demand is for the small flats and not the big ones starting from 1,000 sq ft. Many ready flats across the city are lying vacant because of the recession. But it is difficult to share the exact number. Apart from recession, the delay in the Development Plan (DP) of the city is one of the major reasons that new projects are not coming up in the city. Some are coming up, but in a very few numbers."
The state government announces RR rates from January 1 every year for stamp duty purposes. In 2014, the RR rates of land, residential and commercial properties were increased in the range of 1.62-48.93% in different parts of the city. The land or plot rates were increased by 10-48.93%, while the rates of residential properties like flats and row houses were hiked by 18.04-34.36%. The rates for commercial properties such as shops and offices were increased by 1.62-30.5%. For the calendar year 2015, the RR rate hike in plot and land rates in some pockets across the city was up to 18%, while it is up to 10% in residential properties like flats and row houses. This has also led hike in property prices.
An office-bearer in Credai said, "There has been a substantial hike in the RR rates during the 2014 calendar year. As a result, the RR rates of some properties went higher than the actual market rates. Close to 1,000 flats in various residential building projects in areas such as Gangapur Road, Mahatma Nagar, College Road and Trimbak Road are yet to be sold because of this gap."
Land prices in Nashik have increased by three to 20 times in various parts of the city in the past seven-eight years and have virtually gone beyond the buying capacity of the middle class people. The land prices, which were in the range of Rs. 1,100 to 15,000 per war (per nine square feet) in different parts of the city in the past six-seven years, have now gone up to in the range of Rs 12,000 and 40,000 per war.
The flat prices, which were in the range of 1,500 to 2,500 per sq ft in the city six-seven years ago, have shot up to the range of Rs 2,700-Rs 6,000 per sq ft. A mid-size flat would cost at Rs 25-30 lakh. High-end apartments in upscale areas such as Gangapur Road, College Road and Mahatma Nagar cost in the range of Rs. 5,000 per to Rs. 7,000 per sq ft. However, the demand is mainly for two and two-and-a-half BHK flats. But, residential properties on the outskirt areas such as Pathardi, Makhmalabad and Adgaon would cost in the range of Rs. 2,700 to Rs. 3,500 per sq ft.
Naresh Karda, secretary, Cerdai, Nashik, said, "The situation is improving following reduction in the interest rates by the banks. There have been some bookings noticed in residential projects from April. We hope the real estate scenario to improve in the next few months."