REAL ESTATE market in CHANDIGARH

Chandigarh - the shared capital city of Punjab and Haryana - is independent India's first planned model city. The city is well planned with 63 sectors, barring 13, and each sector admeasures 250 acres which are self-sufficient and complete with the required physical and social infrastructure.

The prime economic activity of the city was the bureaucracy of both the states along with the political and legislative components. Later, the development of the IT cluster in the city added the commercial office element to the real estate map. It is fascinating to note about Chandigarh that despite not having the presence of any industry it still has one of the most expensive real estate markets in India. The real estate prices have remained firm across the tests of cyclical property markets. The ready infrastructure together with the quality of life and low pollution levels has made it a coveted and preferred destination for living among the aspiring citizens of the nearby states. While it may not be a venue that will create wealth over time, but it certainly is the place where the wealthy would like to have a base.

Residential real estate in Chandigarh has always been restricted to plotted developments and individual houses. In the premium sectors, sale of plots happens at levels over Rs 15,000-20,000 per sq ft. As plot sizes are large in several sectors, the minimum transaction size is often over Rs 5 crore.

The high prices of property in Chandigarh have led to the development of taller residential and commercial real estate assets in the adjoining cities of Panchkula, Zirakpur and Mohali. The Greater Mohali Area Development Authority (GMADA) has emerged as a destination for premium properties in the vicinity. The IT City and Aero City projects, Airport Road, have become the most sought-after addresses for both investors and home seekers. While the real estate sector had recorded a slowdown during the Covid-19 pandemic in 2020, the recent trends indicate the strong recovery by the sector. The authorities were able to rake in nearly Rs 800 crore through the auction of commercial plots. There was also a major boost in the revenues collected from stamp duty and registration.

The registration fees in 2021-22 was estimated to be Rs 1,300 crores compared to Rs 822 crore a year ago, recording a growth of nearly 58% on year. Mohali city recorded revenues of over Rs 600 crore in the last fiscal and recording a growth of over 60% on year. The high value of properties and land at the Airport Road and prospects of good returns are attracting investors not only from Punjab but Chandigarh, Himachal Pradesh, Haryana, and NCR region too. This is evident from the sales during the last auction where most of the sites were bid above the reserve price. Majority of the larger sized plots were seen to go under the hammer during the auctions. Apartment prices have also appreciated by nearly 35% to 40% in the last two years.

A relatively nascent market, upcoming developments and the prevailing low interest rates have been instrumental in the revival of demand for real estate in the region. The reverse migration of white collared employees also has been a strong enabler to demand across the tier II and tier III cities which has benefitted the sub cities around Chandigarh.

Panchkula, owing to its proximity to the hills and the National Capital Region (NCR), has been emerging as a preferred location for second homes. This trend was accelerated during the pandemic across the country and here owing to its strategic location, driveable distance from the metros and a great view of the Shivalik hills. Pleasant climate, calmness and serenity have been the factors enabling the transition. Major developers from NCR are now coming up with projects to develop villas and apartments. There are over 250 apartment units to choose from in Panchkula across a wide range of prices. Majority of the premium developments are concentrated in Sector 20, and the MDC sectors. Apartments sized over 2,000 sq ft can range between Rs 90 lakhs and Rs 2 crore.

Zirakpur, located en route between Chandigarh to NCR and connectivity to other parts of Punjab is benefitting from the trade in the area. This neighbouring city of Chandigarh has become a hotspot for real estate developments. Large commercial developments are seen in the city that caters to international standards with large floor plates to cater to the demand from the multinational corporations that aim to set up base for business continuity in times of disruptions. Its proximity to the international airport has enabled the growth and development in the region. Prevailing rental values of commercial offices in Zirakpur are estimated to be in the range of Rs 40 per sq ft to Rs 50 per sq ft. This significantly lower than the commercial offices in Chandigarh, which are nearly double.

While Chandigarh may not have much scope for further development due to the scarcity of available land parcels, the sub-cities in the vicinity are witnessing heightened activities. The resurgence of tier II and tier III cities in a post-pandemic period is likely to further bolster the growth of economic activities. This is expected to favourably impact the real estate sector across all the asset classes. These individual markets surrounding Chandigarh are likely to benefit as national developers are seen to be taking keen interest in the region. The readiness of the infrastructure and proximity to major trade and business hubs will continue to fuel growth in the future.

- Santhosh Kumar

Vice Chairman, ANAROCK Group

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