The picturesque state of Goa has often been the destination for Richie Richs of Delhi, Mumbai, Bangalore and Pune along with NRIs to own properties in. However, the property market of Goa has slowed down for the past year. Even in 2014, there seems to be no respite for market for property in Goa.
Most of the NRI interest comes in from Middle East, Singapore and the UK. In November-December 2013, fewer enquiries were registered for properties in Goa which affected the tourist season. The weakened economies of these countries have brought in fewer buyer interests to Goa. Even though market conditions for property in Goa are quite tight, the real estate prices have been relatively flat. Many prospective buyers expected drops in prices. However, since prices have stagnated, many buyers have postponed their decision to buy. For attracting buyers, many developers are offered car parking spaces and furnishing for free while some others are exempting purchasers from registration and stamp duty payments. These moves help developers to stabilize prices without slashing them. However, with the sharp increase in prices of raw materials such as sand in cement in 2013, builders’ capacity for providing free furnishings or exemption from payment of stamp duty has come down.
The ban introduced on mining of sand has led to a sharp increase in price of sand. The prices shot up three times almost within a quarter in 2013. Since, then the prices have stabilized to Rs 1200 almost for a cubic metre. Nevertheless, the prices are still much higher than what was the actual asking price. In such a scenario, builders too are unable to offer freebies to buyers. The ban on sand mining and the regional plan’s non-finalization has resulted in the uncertainty and murkiness of the real estate market. The regional plan was expected to shed light on issues such as conversion of pastoral lands into housing real estate and investment being pumped into infrastructure.
Even though developers do not want to offer freebies to buyers but some of them are doing so quite aggressively. Trips to Europe and other similar freebies are being offered to buyers by some developers and they report that the response to the freebies have been quite good. The main reason behind the ambiguity of Goa’s property market is that most builders use the super built up area for selling properties rather than carpet areas. In 2013, the central government had passed a bill stating that properties have to be sold with the carpet area and not the super built up area as it would make the realty sector of India more transparent. Most builders in Mumbai and Pune have started selling properties according to carpet area. However, this trend is yet to take off for property in Goa. This move makes people extremely sceptical of Goa’s realty market. A lot of buyers have decided to wait and watch what happens. Nevertheless, Goa’s real estate prices being stagnant are a better proposition than going in for complete price correction, from the builder’s point of view.
The business of real estate may be slow in Goa but it is nowhere near to declination or prices spiralling down after an ecstatic boom. Properties which are selling for lower than market rate is an isolate case according to industry insiders. Sellers are holding onto their properties while buyers are holding out on their money, because they are not willing to pay Rs 40,000 to Rs 60,000 per square metre for apartments in suburban areas and flats in the cities. Most buyers are expecting a drop in prices. With the rise in price of labour, land and raw materials for constructions, builders cannot let prices free fall in a slow market for boosting sales.
For example, price of land is Rs 25,000 per square metre whereas cost of constructed area is Rs 20,000 per sq. m. If you add the cost of marketing and the value of the built up property per sq. m. in any suburban area, the price easily goes above Rs 45,000 per sq. m. The slower market has led to a fall in the enquiries about properties. The enquiries have dwindled further, ever since mining of sand was stopped. Even though there are no buyers, builders are unwilling to decrease the prices of their flats. A handful of builders are selling their properties because they want to unblock the investment.
For properties in villages such as Taleigao, the price would be around Rs 60,000 to Rs 70,000 per sq. m. while in Panaji, the amount could be more than Rs 1.5 lakhs for a sq. m. too. Realty developers believe that this situation would be unchanged in the state unless more land is made available for development. If the regional plan had been finalized, then things would have been better. Builders would have known what properties are available for development. Most builders don’t want to invest in large lands in case the land is zoned under the regional plan. Developers do not want to take this risk as the price of land continues to increase.
Most price changes have come for newer projects. As sales are dipping sharply, builders have been forced to decrease rates for projects that have been launched in the state newly. Some developers have also gone to the extent of lowering the price of existing projects and newer projects are priced lower compared to existing ones in the same area. If more land was made available for construction then housing would become affordable for the common man. Realty developers of property in Goa want a rise in the FAR or floor area ratio, releasing of the regional plan and permission for vertical constructions.
Unlike other states which have lots of land available, Goa has limited lands which can be meted out for construction and hence builders have to make do with whatever they get by. Unless certain measures are adopted by the Government of Goa for boosting housing real estate, it would become very difficult for both buyers and sellers to deal in property.
Most of the NRI interest comes in from Middle East, Singapore and the UK. In November-December 2013, fewer enquiries were registered for properties in Goa which affected the tourist season. The weakened economies of these countries have brought in fewer buyer interests to Goa. Even though market conditions for property in Goa are quite tight, the real estate prices have been relatively flat. Many prospective buyers expected drops in prices. However, since prices have stagnated, many buyers have postponed their decision to buy. For attracting buyers, many developers are offered car parking spaces and furnishing for free while some others are exempting purchasers from registration and stamp duty payments. These moves help developers to stabilize prices without slashing them. However, with the sharp increase in prices of raw materials such as sand in cement in 2013, builders’ capacity for providing free furnishings or exemption from payment of stamp duty has come down.
The ban introduced on mining of sand has led to a sharp increase in price of sand. The prices shot up three times almost within a quarter in 2013. Since, then the prices have stabilized to Rs 1200 almost for a cubic metre. Nevertheless, the prices are still much higher than what was the actual asking price. In such a scenario, builders too are unable to offer freebies to buyers. The ban on sand mining and the regional plan’s non-finalization has resulted in the uncertainty and murkiness of the real estate market. The regional plan was expected to shed light on issues such as conversion of pastoral lands into housing real estate and investment being pumped into infrastructure.
Even though developers do not want to offer freebies to buyers but some of them are doing so quite aggressively. Trips to Europe and other similar freebies are being offered to buyers by some developers and they report that the response to the freebies have been quite good. The main reason behind the ambiguity of Goa’s property market is that most builders use the super built up area for selling properties rather than carpet areas. In 2013, the central government had passed a bill stating that properties have to be sold with the carpet area and not the super built up area as it would make the realty sector of India more transparent. Most builders in Mumbai and Pune have started selling properties according to carpet area. However, this trend is yet to take off for property in Goa. This move makes people extremely sceptical of Goa’s realty market. A lot of buyers have decided to wait and watch what happens. Nevertheless, Goa’s real estate prices being stagnant are a better proposition than going in for complete price correction, from the builder’s point of view.
The business of real estate may be slow in Goa but it is nowhere near to declination or prices spiralling down after an ecstatic boom. Properties which are selling for lower than market rate is an isolate case according to industry insiders. Sellers are holding onto their properties while buyers are holding out on their money, because they are not willing to pay Rs 40,000 to Rs 60,000 per square metre for apartments in suburban areas and flats in the cities. Most buyers are expecting a drop in prices. With the rise in price of labour, land and raw materials for constructions, builders cannot let prices free fall in a slow market for boosting sales.
For example, price of land is Rs 25,000 per square metre whereas cost of constructed area is Rs 20,000 per sq. m. If you add the cost of marketing and the value of the built up property per sq. m. in any suburban area, the price easily goes above Rs 45,000 per sq. m. The slower market has led to a fall in the enquiries about properties. The enquiries have dwindled further, ever since mining of sand was stopped. Even though there are no buyers, builders are unwilling to decrease the prices of their flats. A handful of builders are selling their properties because they want to unblock the investment.
For properties in villages such as Taleigao, the price would be around Rs 60,000 to Rs 70,000 per sq. m. while in Panaji, the amount could be more than Rs 1.5 lakhs for a sq. m. too. Realty developers believe that this situation would be unchanged in the state unless more land is made available for development. If the regional plan had been finalized, then things would have been better. Builders would have known what properties are available for development. Most builders don’t want to invest in large lands in case the land is zoned under the regional plan. Developers do not want to take this risk as the price of land continues to increase.
Most price changes have come for newer projects. As sales are dipping sharply, builders have been forced to decrease rates for projects that have been launched in the state newly. Some developers have also gone to the extent of lowering the price of existing projects and newer projects are priced lower compared to existing ones in the same area. If more land was made available for construction then housing would become affordable for the common man. Realty developers of property in Goa want a rise in the FAR or floor area ratio, releasing of the regional plan and permission for vertical constructions.
Unlike other states which have lots of land available, Goa has limited lands which can be meted out for construction and hence builders have to make do with whatever they get by. Unless certain measures are adopted by the Government of Goa for boosting housing real estate, it would become very difficult for both buyers and sellers to deal in property.
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