No major price correction in Mysuru’s realty sector
Six months after the demonetisation of high-value currency, there is no major price correction in the real estate market in Mysuru.
The immediate consequence of demonetisation was the slide in transactions by nearly 50% with respect to registration of sites. But real estate prices in Mysuru continue to hold on at the pre-demonetisation levels, belying popular perception that the government exercise would result in a slump in cost of sites.
N. Subramanya, immediate past chairman, Builders’ Association of India, Mysuru, told that demonetisation only affected the volume of sale and purchase of sites, but the plot value did not register a correction. “Only in the case of distress sales were the prices low,” he added.
As a result, the cost per sq.ft. in prime residential areas continues to hover at the pre-demonetisation rates at around Rs. 2,750 to Rs. 3,000 per sq.ft. in places like Dattagalli, and nearly Rs. 3,750 per sq.ft. in Vijayanagar. In fact, the MUDA’s recent announcement that it would distribute sites in R.T. Nagar and Lalitadrinagar has led to a spurt in property value around those areas. Recently a 2,400 sq.ft. plot in an upmarket area was registered for Rs. 1.2 crore in Vijayanagar.
As high-value transactions automatically come under the scanner of the Enforcement Directorate and the Income Tax Department, potential investors have stayed away from pumping in money, while sellers are hesitant to make all transactions in white as it would bring them under the tax net. “What has definitely seen a slump in the last six months is investment on sites for future gain, as potential buyers were waiting for prices to crash, but this has not happened. Sellers, in the meantime, have held on to their property, not wanting to dispose it of when they are not getting the expected price,” said Mr. Subramanya.
“This wait and watch situation adopted by potential buyers and sellers has resulted in a slow down in the sector. There is a huge inventory of unsold sites in and around the city.
According to Satyanarayana, a leading real estate agent, there are not less than 50,000 sites ready for sale in and around Mysuru, but there are no buyers. Besides, the number of inquiries have also dropped and there are agents who have not sold a single site in the last six months, he added.
For every 100 sites developed, only 10 sites are being sold and hence there is an underlying perception that the market will witness a correction as plot developers cannot hold on to unsold inventory of developed sites for long.