High reserve prices sink GMADA auction bid
Unrealistic reserve prices of property enlisted for auction on Thursday by Greater Mohali Area Development Authority (GMADA) turned out to be a flop show as only three residential plots could be sold while there were no takers for nursing institute or school sites.chandigarh Updated: Nov 02, 2012 00:47 IST
Unrealistic reserve prices of property enlisted for auction on Thursday by Greater Mohali Area Development Authority (GMADA) turned out to be a flop show as only three residential plots could be sold while there were no takers for nursing institute or school sites.
During the auction that was over within an hour, GMADA could sell only these three residential plots of 507.5 square yards each in Sector 68, which were bought by property dealers.
"GMADA has miserably gone wrong in fixing reserve prices, which is one of the foremost reason that there were no takers for properties put on the block. The real estate market is witnessing a positive sentiment after a slowdown but the authority misjudged the sentiment. The market has seen appreciation in terms of values of property but the market is still coming out of the slowdown, which GMADA did not take into consideration," said Kanwarjeet Singh, former president of Mohali property consultants association.
Association adviser ID Singh said, "In the auction, it is mostly the investors who buy properties for further sale. However, this time, the investors are not interested owing to hike in transfer fee by GMADA from 1% to 2.5% of the auction price, which contributed to failure of auction. With a ban on sale on power of attorneys, intermediate investors are missing, though there are end-users in the market."
Amarjit Singh Dadwal, a property consultant said, "The auction timing of GMADA is not right. Its reserve prices are more than those prevailing in the open market. Mostly, all investors have already invested in their business till Diwali. So, the buyers will come only after Diwali. Had the auction been fixed after the festival, it would have shown better results."
"Apart from high reserve prices of properties, there are other reasons also.
The position in money market is very tight at this point of time. NRI customers who put money in property market are missing. Another reason is that no industry is coming to the area, which could boost property market. Thus, there are no takers for properties offered by GMADA," said Shalinder Anand, another property consultant based in SAS Nagar.
"During the auction, properties in Sector 68 were preferred ones. There is a positive sentiment in the market and appreciation in terms of value is also witnessed. But the buoyancy is missing from the real estate sector. The reserve price is fixed as per the criteria. We will auction commercial properties on Friday and we would like to wait for response to those properties," said AK Sinha, chief administrator, GMADA.
However, sources revealed that the lukewarm response to the auction had forced GMADA officials to have a re-look at the reserve prices. Officials were considering various options, but were awaiting response to auction of commercial properties on Friday, sources added.