A day after its auction of 66 commercial sites got only 18 successful bidders, the Greater Mohali Area Development Authority (GMADA) on Wednesday received another jolt as two of the 16 backed out. The deterrent is the same -- high reserve prices - though it was a belated realisation this time.
In fact, the story has not been very different for half a decade now.
Of the 18 people who won the auction on Tuesday, those who got booths in Sector 59 and 67 did not submit any money by the deadline on Wednesday, confirmed GMADA estate officer Navjot Kaur. The Sector-67 site had got the highest bid of Rs 88.1 lakh against reserve price of Rs 88 lakh, while the successful bid for the Sector-59 booth was Rs 46.8 lakh against the relatively lower reserve price of Rs 29 lakh.
JP Singh, chairman (coordination), Mohali Property Consultants' Association, remarked, "Why would somebody buy property at such a high reserve price when the market price is lower? In the past five years, the auctions have flopped only due to this."
But the GMADA officer disagreed: "We have sold properties at much higher prices in the past, and we have been increasing the price as per the past practice." She argued that the "current slump in the property market" in the region has hit transactions, "as there are virtually no buyers".
Another realtor, Rakesh Oberio, said, "The auction flopped as the town does not even have basic amenities like water and power supply, has broken roads, no parking space and general lack of infrastructure. People prefer Chandigarh obviously."
If one sees the GMADA's auctions in the past five years, the poor response has been consistent. In November 2012, out of 47 sites GMADA only sold 18; an SCO in Sector 61 fetched the highest Rs 6.2 crore against reserve price of Rs. 3.35 crore. In November 2011, of 61 sites only 42 were sold. In 2010, only 12 of 53 sites were sold. In 2009, just 17 of 84 commercial sites were sold.