April 06, 2007

Land prices look set to crash in Haryana

With Reliance’s ambitious 25,000-acre SEZ project in Haryana hitting a limbo following the EGoM decision on special economic zones, land prices in the surrounding areas is likely to witness a major crash. Incidentally, ever since a major part of land and around Jhajjar was notified by the Haryana government for the Reliance SEZ project, early 2006, it resulted in a major boom in land prices. For land to be acquired by the corporate major, the state government had imposed a minimum floor rate of Rs 22 lakh per acre, which was about 7-8 times the then prevailing market price of Rs 3 lakh. The resultant effect was simultaneously felt in the adjoining districts, like Rohtak, Jind and Rewari, where in the last 12-15 months, land prices have jumped 6 times over, to more than Rs 15 lakh per acre. Real estate developers however are of the view that though there will be minor corrections as far as land price is concerned, there is no need to panic as far as a land price crash is concerned. Says Parsvanath CMD Pradeep Jain, “At best, land prices will be rationalised. Developers who have the vision for developing SEZ projects will go ahead with land procurement. The demand is sufficient enough to sustain the boom in land prices.” However, contesting this notion, an official of Rewari development authority said, “The land prices in our area are around Rs 8-10 lakh per acre, but we estimate a substantive downfall in the prices due to centre’s notification, which has caused problems in the land acquisition of Jhajjar SEZ. The prices may see a drop by around 40-50%.” According to Jharuhar development area officer, the areas in closest proximity to the RIL’s SEZ would be worst hit. “In anticipation that prices would rise in future, small time developers of the region bought land at very low prices, which could fetch them higher rates in future. Now, post notification, their land bank would be hit badly due to lack of takers,” he said. National Real Estate Development Council (Naredco) deputy director Sumit Jha is of the view that areas which did not deserve to be such highly rated, would now become realistic in terms of prices. “The areas would definitely have to go through a correction phase. But developers would definitely come and development of real estate is bound to happen in these areas too at realistic prices,” he said.