Prices have come down by up to 25% in Mumbai’s distant suburbs, including Thane and Belapur, and pockets of Hyderabad and Bangalore, according to property consultancy firm Knight Frank India. Prices in the NCR, with an exception of Faridabad and Delhi, too have witnessed a correction of up to 25%. Land prices in Faridabad have risen 10-30% in the past 3-4 months.

However, Faridabad is just catching up with its neighbouring locations. The prices in Faridabad are still lower than in Gurgaon or Noida and the current price rise is more towards building a parity with them. Land prices in Delhi are said to be stable.

But a recent land deal struck in Delhi’s prime commercial centre Connaught Place indicates that prices in the capital too are cooling off. Parsvnath Developers bought 1.18 acre, jointly owned by Mahajan Industries and Videocon Industries, for Rs 200 crore. The deal came at a discount of almost 17% at Rs 169 crore per acre, compared to what hotel major Leela Group paid for acquiring 3 acres in Chanakyapuri last year for Rs 611 crore.

Mr.Vipin Aggarwal, Executive director, Omaxe, says “Real estate sector is facing a major cash crunch. That’s why the companies are focusing on completing the project at hand, instead of adding to their landbanks”.

Till recently, real estate players were in land acquisition frenzy, with some players even pledging their equity shares to acquire land. A large landbank was showcased as the biggest asset for a company tapping the capital market

Parsvnath Developers has bought 1.18 acre land, jointly owned by Mahajan Industries and Videocon group in Connaught Place for Rs 200 crore. Compared to hotel major Leela group’s acquisition of 3 acres in Chanakyapuri last year for Rs 611 crore, Parsvnath land deal has come at a discount of almost 17 percent at Rs 169 crore per acre.

Parsvnath plans to develop retail and office space, while Leela is building a hotel. Real estate experts say Connaught Place and Chanakyapuri are comparable locations in the capital and should fetch similar rates if transactions happen at the same time.

In addition, the FAR (the ratio of developable space to total land) for both retail/office and hotels are the same at 1.5, according to Delhi’s new master plan.

Mr. Sanjay Verma, Cushman & Wakefield Asia executive managing director, said, “We have come to the end of one property cycle. Speculators have exited the market and we are seeing a softening in the housing market. This will now spread to the commercial market and then finally impact land prices. So with borrowing cost going up, and prices softening, the euphoria towards land acquisition has certainly died down”.
He cautions that there may still be several takers for prime properties such as those in Connaught Place in Delhi and Nariman Point in Mumbai. Mr. Verma said,“The land deals in prime city locations are very few and far between. So the prices, although, reflect the market sentiments, do not give you a trend”.

Parsvnath is planning to develop a luxury mall and office space in Connaught Place. The company plans to invest around Rs 100 crore in the construction of the mall, which is likely to be ready in the next 30 months.