The slump in the real estate was evident at the Chandigarh Housing Board's (CHB) three-day auction of 145 commercial booths on leasehold basis as only two sites were sold on the first day on Wednesday. The auction was held after a gap of five years.
Property experts blame the CHB's decision to give these booths on leasehold basis and a ground rent of 2.5% to be paid by the buyer on annual basis, besides the bid amount, as reasons for the poor response.
The CHB conducted the auction of commercial property situated in Manimajra, Sectors 38(W), 49B, 40A, 51A and 61 (Khajeri).
"The outcome of the auction was expected as these booths are on leasehold basis and the buyer will have to pay a ground rent annually, making these non-viable for buyers. We have been demanding auction of commercial booths on freehold basis," said Charanjiv Singh, president, Chandigarh Beopar Mandal.
"The high reserve price of the property is one big deterrent. With cash not available in the market, the buyer will have to finance the property on high rate of interest," said Arvind Jain, president of Sector-22 market.
"As it is the property is on leasehold and the CHB's decision to charge service tax makes it all the more non-viable option. Owing to these anti-investor policies, people are not ready to invest in the city and are moving to SAS Nagar and Panchkula," said Kamaljit Singh Panchhi, president, property federation, Chandigarh.
CHB terms it a success
Despite the poor show, the CHB termed the auction a success, considering its failure to sell any booth in 2009.
"Considering the slowdown in the market, we have been able to sell two properties, which is quiet a success in itself," said Mandeep Kaur, CHB secretary and chairperson of the property allotment committee.
"It is a good opening for the first day of auction and we are hopeful for getting a bigger response in the next two days," she added.
Booth Reserve price Sold for
Sec 38(W) Rs 60.24 lakh Rs 61.13 lakh
Manimajra Rs 60.80 lakh Rs 62.25 lakh