While signs of life returned to the residential property sector through 2009, commercial real estate, tricity failed to recover from the reversal that started in 2008. The trend is likely to continue, going by the lukewarm response to this month’s auction of commercial sites, by Estate Office, Chandigarh — only 12 of the 103 sites were sold, netting Rs 72.77 crore. The average price per square yard came down substantially to Rs 2.74 lakh from Rs 3.18 lakh in the auction held last year. There was no major demand push from the retail sector in the tricity. Commercial transactions have been slow for more than a year now, say experts. The failure of the recent government auction only reinforces this, says a Chandigarh-based property dealer.
The situation of the commercial property market is similar in the twin cities of Mohali and Panchkula. “The buyer is yet to return to the market, and is expecting a (further) fall in prices. In the shopping malls, retailers have neither rented nor bought space this year,” says a Mohali-based property consultant.
The drop in the rentals looks steep as they were very high in 2008, before the slowdown began. Experts estimate a fall of around 20 per cent since the beginning of this year. There was no significant rental growth this year even in the commercial hubs of the Chandigarh like sectors 17, 35, 8 and 9.
Panchkula is the hardest hit in the tricity region. A Panchkula-based realtor, says, “This year, the commercial rental market struggled as the rentals were sluggish and demand very low. This is especially true for space on the first and second floors. Here, the rentals have fallen by around 30 per cent in the past one month.
Several national retail chains have either closed or reduced the number of outlets in Panchkula. Landlords, who earlier benefited from the competition, are now struggling to find tenants, more so because cash-rich financial institutions like private banks are not snapping up property any more.
The commercial rental market is following the buying-selling pattern of the residential property market,” says a consultant in Panchkula. “Like the sellers in the residential market, landlords in the commercial market are hesitant to reduce rents. Instead, they are waiting for demand to increase again. This has led to vacant spaces. Market experts do not anticipate a quick turnaround, though they talk of a slow revival as the overall market conditions improve.