Land prices fall in Baddi

HAPHAZARD GROWTH: Investors heave a sigh of relief as demand slows down and the state government puts a master plan in place.

Land prices in Himachal Pradesh's Baddi area have fallen by 20 per cent in the last two months since the Centre extended the special tax package for the hilly states by three more years.

The deadline for the fiscal concessions that was to lapse on March 31, 2007, was recently extended to March 2010.

Land prices started going through the roof in Baddi in September 2006 as the March 2007 deadline approached. In just two months, land prices went up by over 20 per cent, real estate brokers in area said.

In the past two years, land prices in the area rose by an average of 200 per cent due to the unprecedented demand created by the large number of units relocating to the region.

But the investment frenzy seems to be over for now with demand for new land tapering off. According to local property consultants, prices have dropped by 20 per cent in the last two months and further correction is on the anvil as demand remains stagnant. Investors have also been scouting for alternative locations in Himachal and Uttaranchal, given the state of infrastructure in the Baddi belt.

Recently, however, the state government has assumed a proactive role in the organised development of the region. Now every land transaction has to get a final approval from the Baddi-Barotiwala-Nalagarh Development Authority.

The authority is in the process of framing a master plan and wants to restrain the haphazard and scattered development of the town. The chief executive officer of the authority, Dr Amardeep Garg, said that under the master plan, similar activities would be clustered together to provide good governance.

The state government had left land transactions in the area to market forces when the central government package was announced. This led to a distortion in land pricing. By contrast, neighbouring Uttaranchal adopted a systematic approach towards industrial development.

While Baddi witnessed unviable land prices and inadequate infrastructure, Uttaranchal has stolen the show by attracting larger players like Hero Honda, Mahindra and Mahindra and Tata Motors on the back of a more planned approach.