Chandigarh to test realty market with auction of residential and commercial units

From The Indian Express

To gauge the response of the market, the Chandigarh estate office has decided to put some properties, both residential and commercial, on auction on trial basis.

A total of 40 sites have been shortlisted —20 each of commercial and residential— for the auction which is expected to be held by April. Commercial properties will be mainly booths in sectors 37, 39 and 43, while residential properties to be up for action are in sectors 40, 37 and 35. All the commercial sites are leasehold, while residential sites are freehold.

 The reserve prices of the sites have been fixed. As per practice, reserve price is fixed by taking out an average of the last three bids received for a property of the same size. Since no auction has taken place since 2009, the reserve prices have been determined by taking into account the present collector rate and yearly increment of the reserve price of the last auction.

The proposed reserve price has been put up before the administrator for approval. Chandigarh Administration had recently slashed collector rates up to 20 per cent in both commercial and residential categories. The collector rate is the minimum rate at which a property is registered. The rates are determined by the Chandigarh Administration and are revised according to market dynamics.

To work out the modalities, officials of estate office will hold a meeting with UT Finance Secretary Sarvjit Singh next week.

Kamaljit Singh Panchi, president of Chandigarh Federation of Property Dealers, said that the auction would be a failure as buyers find Panchkula and Mohali as better options for purchasing property.

Giving reasons, Panchi said that the collector rates in Chandigarh were higher than rates prevailing in Panchkula and Mohali. “Why would someone purchase a property on higher rates, that too on leasehold?” said Panchi. He added that the administration needed to bring down collector rates and make commercial properties freehold, if they were serious about making the auction a success.

The auction held in 2009 had witnessed the average price for residential sites go up to Rs 74,820 per square yard, while the commercial site price went up to Rs 2.74 lakh per square yard.

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