Property markets in Uttarakhand and Himachal Pradesh, which have had a dream run in recent years, are set to face a downturn.
The Uttarakhand calamity may bring the prices of residential units down at least 10 to 15 per cent, according to industry representatives and analysts.
“The real estate market will slow down for the next six to eight months. The prices in the interior, hilly areas, will see a dip of 10-15 per cent. Besides, property transactions will also take a hit,” a broker in Uttarakhand said.
However, realtors are still betting big on the long-term prospects. The slowdown would be temporary and once the situation normalises, it would be business as usual, the broker claimed.
Sumit Jain, CEO, Commonfloor.com, a real estate website, said the enquiries for properties in Uttrakhand and Himachal had dipped on the portal over the last four to five days. “The prices would definitely see a drop of 5-10 per cent and investors’ interest would come down." Jain, too, downplayed the impact.
North India-based developer Supertech is among those still upbeat on the future of real estate in the hills.
Supertech has three projects in Uttarakhand and has invested Rs 1,000 crore (Rs 10 billion).
Chairman and Managing Director R K Arora said though there would be dip in prices in the hilly areas by up to 15 per cent, the rates in the foothills/plain areas could see an upward movement by a similar percentage due to the increase in demand there.
“People would like to move to safer areas like Dehradun, Rudrapur, Pantnagar and Haridwar, among others, in Uttarakhand, ” Arora said. He, however, admitted the sales would come down over the coming months.
A broker in Himachal Pradesh said the end-user market would not be impacted much. But people looking for second or retirement homes in hill stations would think twice.
Rudrapur in Uttarakhand has attracted an estimated $2-billion investment in real estate and is being touted the next-big market. Tata Motors, Voltas, Britannia, HCL, Hewlett-Packard and Dabur have bought land there.
In Uttarakhand and Himachal, buying is mostly restricted to domicile holders. Flats or apartments are largely free of such restrictions.
However, there is a contrarian view, too. Jones Lang LaSalle Real Estate Research Head Ashutosh Limaye said the prices won't be impacted.
"Nobody buys a property in pilgrimage destinations, where the tragedy has occured, so it won't deter people from buying their second homes in such areas. And if government sends clear signals that sustainable planned development would take place from now on in these areas, the interest would not go away."