Realtors throw in towel, begin distress sale

The real estate market of Ahmedabad, like that of most other cities in the country, had been under pressure for more than a year. Builders and land owners with deep pockets tried to brave out the slowdown but they too have given up now and had started distress sale of properties.

A couple of such realty deals pegged at more than Rs600 crore is believed to have taken place in the city recently.  

A consortium of developers that includes Sarthav Infrastructure and Adicorp Enterprises and some NRIs, had bought around 2800 bighas of land in the summer of 2010 at Mulasana on Sanand-Thol road for a whopping Rs800 crore.

There is a buzz in the market (which is yet to be confirmed) that after two years of waiting, the consortium recently sold around one-third of the land parcel to a leading developer of the city. The consortium is believed to have paid Rs280-300 crore for the land parcel at the rate of Rs30-31 lakh per bigha.

Land prices in Ahmedabad and surrounding areas had gone through the roof after 2009 and almost tripled in the next two years before stabilising a year ago. Yet the consortium could barely manage a return of 10-15% after two years.

Market players see this as distress sale. “This is the rate of a bearish market. If the market had been bullish, the land parcel could have sold at Rs45-50 lakh per bigha,” said a leading real estate consultant.  The same developer is believed to have struck another deal for around 60,000 square meters of land in the middle of the city. The buzz  — once again not  confirmed —  is that the seller had quoted Rs250 crore as the price for the land parcel. 

The land once belonged to a textile mill but was later bought by an industrial house operating in real estate, retail and finance sectors. Market players believe that the deals will not boost market sentiments.

Buyers are willing to buy only if they get good rates in view of the bearish mood in the real estate sector across the country. Liquidity crunch is forcing land bankers to go in for distress sale, sources in the market said.