Contrary to expectations, the festive month of October has seen a further dip in the realty buying in Ahmedabad. The city, especially in the western parts, saw a dip of 20 per cent in residential property buying throughout the month, said experts.
According to industry sources, while the real estate developers postponed reducing prices, end users stayed away from buying properties in the wait of a possible correction.
"Real estate developers are facing cash crunch. They also have been borrowing not only from banks but also from non-banking financial companies (NBFCs) at enormous rates such as even 24 per cent. Which is why they have not been reducing prices as of now," said Rajeev Shah, managing director, RBSA Advisory Pvt. Ltd.
Moreover, buyers have also been waiting for prices to lower down since some months in Ahmedabad. The month of October alone has seen decline in residential property buying by 20 per cent, said Shah.
On the supply side, except for a couple of large projects, developers have restrained from announcing new properties during the month of October.
Earlier, property prices did take a hit but only for around 10 per cent correction. Nirav Kothary, regional director of Jones Lang LaSalle India (JLL) attributed the slowdown in property bookings to factors like artificial hike in property prices, hike in home loan rates and more supply of high end properties.
"These factors have resulted in heavy recession in the real estate market in Ahmedabad, especially in residential properties. Add to that, developers didn't reduce prices as expected which discouraged end users from buying properties during the festive month. However, a definite in correction in residential properties is expected in the next few months," said Kothary.
