KSA Banker® replied on Tuesday, August 6, 2019 09:04 AM
I just had a look at an LRE post from 11 August 2016 (roughly 3 years ago). It showed residential 1K plot price range in prism to be 65-140 lacs with updated development charges paid. Assuming 3 installments paid at that time, the implied land cost for a prime location one kanal plot at that time was around 135 lacs (USD 128,000). As we can see in the above post, today, the upper end of the price range for a one kanal plot in prism is 145 lacs with all development charges paid. This implies land cost today of a one kanal prime location plot at around 125 lacs (USD 78,000). This means a loss of 10 lac rupees in three years on the cost of land for a one kanal prime location plot in prism (i.e. around 7% of value). In US dollar terms, the land cost today is around 40% lower than 3 years ago in August 2016. This probably sums up quite well what has happened to the real estate market over the past 3 years with prices either stagnant or showing slight decline in rupee terms but major losses due to depreciation of the rupee against the dollar.
This may be viewed in two ways. Positively, people with cash, especially in foreign currencies, may view it as an opportunity to buy their desired properties so much cheaper today than in 2016 if they believe that rupee will not slide much further. On the negative side, people who invested in 2016 and 2017 may be so scared of the losses already incurred in real terms that they may stay away from further investments causing a prolonged recession in the real estate market. Only time will tell what turns out to be the case.
Best Regards |
