Lucknow city has shown a stagnation with return on property investment showing a slow and declining return. This decline was noted to be almost 20 percent in the year 2012 which was observed in the year 2013 as well. The developers noted that the decline in sales has been as much as 50 percent for some of them. There has been an excess of supply and limited demand in the city and apparently the situation is getting worse now.
Hesitation among buyers is primarily because of delays by builders in delivering their projects. This could be a result of many factors like delay in government approvals, clearances and land acquisition issues. Because of this the pre-launch offers don’t take off in the city and end users mostly refer only finished ready to live projects.
A member of the top real estate firm said to Times of India that, “The concept of ‘pre-launch’, in which companies take help of brokers to invite investors to fund the project even before it takes off, has given birth to an investor-driven market here. About 70-80% units are being bought for investment purpose in the city. Only ready to move in units are being preferred by end users at the moment.”
He also said that, “One can see only small developers and brokers mushrooming and thriving in the city. Big players have either underwritten the projects to brokers or are not interested to launch projects here.” All these factors are inhibiting the real estate market discouraging people to buy properties from companies directly. The slowdown started showing last year, he adds.
Residential plots in Deva Road, which has been one of the top developing localities in Lucknow has observed a decline in the price of plots as well over the past few quarters. The stable real estate prices in the year 2011 did not translate in the year 2013 and 2014. This is because the year 2012 observed a good pace in the realty developments.
Projects were going in a smooth and timely manner and hence the sentiments of home buyers were also good. If you are looking to invest in residential plots in Deva Road this is the right time, as the prices are extremely affordable. You can get plots for as less as INR 5100 per square yard. The surprising factor remains that the area saw a great price hike in the July – Sept 2012 quarter with prices as high as INR 20,000 per square yard.