Why Are Real Estate Prices Zooming Up?

'After Covid, people started looking for bigger houses with pools and landscaped gardens.'
'Even middle class buyers are looking at plots of land in smaller towns.'

The prices of residential plots have doubled or tripled in the last two years and, in some cases, doubled in just one year due to strong demand in cities such as Bengaluru and Gurgaon and tourist destinations in Maharashtra, according to property consultants and developers.

They say demand is rising owing to an increase in incomes in the IT industry and families preferring independent homes post-pandemic.

Estimates by Anarock Property Consultants indicate that the sale of such plots has risen by three to four times since the onset of the pandemic.

In Bengaluru, average prices of residential plots have shot up from Rs 2,000 per square feet to Rs 4,500 per sq ft in the last two years, indicating a 2.25 times growth in prices, said Mayank Saksena, chief executive (land services) at Anarock.

"In Bengaluru, techies who have changed jobs have got five times their previous salaries. Those who haven't changed their jobs have got three times and recruiters got twice their salaries. Income levels have gone up. All that money is coming into real estate," said Saksena.

Bengaluru-based Prestige Estates sold 808 plots in a single day in its project Great Acres last year.

In Gurugram, on an average, plot prices have gone up from Rs 60,000 to Rs 65,000 per square yard (Rs 6,666 per sq ft to Rs 7,222 per sq ft) to Rs 1,70,000 (Rs 18,888 per sq ft) to Rs 180,000 square yard (Rs 20,000 per sq ft) in the last two years, indicating a growth of 2.8 times in prices. (One square yard equals nine square feet).

Golf Course Extension Road has emerged as the most attractive for buyers in Gurugram, followed by Sohna Road and Dwarka Expressway.

"Many new developers have forayed into Golf Course Extension due to heavy demand," said Saksena.

IT firms have opened offices twice a week in some cases and so IT staff are shifting to peripheral areas from the main areas, he added.

Abhinandan Lodha, founder of the House of Abhinandan Lodha, said that in two of his company's launches in the Konkan region of Maharashtra, prices have doubled in a year.

In Dhapoli, the first phase was launched in October 2020 and the second phase in April 2021 and prices have doubled in both.

In another of Lodha's projects in the same region, prices have gone up 30 per cent since October 2021.

"Buyers are looking at them as good investment opportunities and wealth creation ideas. They are willing to pay a premium for good developments," said Lodha.

Buoyed by the response, he is planning to launch plotted developments in Goa, Ayodhya, and other cities in the next 9-12 months.

Vinit Matlani, a property consultant in Mumbai, said prices in Alibaug and Mangaon, on the periphery of Mumbai, have shot up.

In Mangaon, plot prices have risen from Rs 50 to Rs 55 per sq ft in 2019 to Rs 100 to Rs 125 per sq ft, said Matlani.

In Alibaug, a beach destination near Mumbai, prices have gone up from Rs 300,000 per gunta (Rs 275 per sq ft) to Rs 650,000 per gunta (Rs 597 per sq ft).

In Lonavala, a hill station near Mumbai, prices have gone up from Rs 150,000 lakh per gunta (Rs 138 per sq ft) to Rs 350,000 per gunta (Rs 321 per sq ft).

"After Covid, people started looking for bigger houses with pools and landscaped gardens. That is available in these destinations. Even middle class buyers are looking at plots of land in smaller towns and this has added to demand," said Matlani.

Earlier it used to be investors who were buying plots, Matlani added, but now it is actual users who are buying land to build houses for themselves.

Consultants say that, despite the Reserve Bank increasing key rates, the sale of plots will not be impacted much due to strong demand and good growth in the income levels of buyers.

Feature Presentation: Aslam Hunani/Rediff.com