Over the last two years, land prices have shown a northward trend. Now, it’s time now for a realty check.

Record land auction at Mumbai’s Bandra-Kurla Complex– like the Rs 46,000 per square feet buy by Wadhwa Builders in November 2007 are passe. The last auction at BKC, by Jet Airways, has seen rates tumbling to Rs 32000, a drop of a whopping 30% in just about four months.

Year 2008 has already seen some setbacks in land prices across Mumbai, Pune, Bangalore, Chennai and Gurgaon. Most agree that land rates across cities are coming down and deal volumes have decreased. “There has been a visible downward trend in land auctions that started beginning of this year,” says Anuj Puri, chairman and country head, Jones Lang Lasalle(JLL).

Consultants like JLL claim that land prices at Thane’s Waghale Estate has come down from Rs 20 crore an acre about 6-9 months back for an industrial plot to Rs 15 crore, the asking price today.

Even at Turbhe and Nerul in Navi Mumbai, rates are down from Rs 18-20 crore an acre to Rs 15 crore. A deal for a housing society at BKC’s neighbouring Kalina was called off a while back as the Rs 30,000 per square feet price being quoted was too high.

In Pune, where landowners weren’t willing to negotiate on prices, there has been a 10-20% fall in prices in some areas. Like in most other locations, in Pune too, the number of deals has dropped considerably.

In many cases, landowners are sticking to their rates but negotiating in a different way. Mr. Praveen Kumar, associate director, land and consulting, JLL, said, “Land prices might not be down on the ground but the development structure has changed in the last few months. There are many more joint development agreements being signed between landowners and developers in Bangalore”.

Though there has been some upward movement in land rates near the new Bangalore airport, places like Whitefield, Bannerghatta Road and Hosur Road have seen a considerable drop in land prices.

According to a prominent real estate consultancy, which has tracked land rates in these areas, Bannerghatta Road has seen a drop of 25%, Whitefield has seen a drop of around 50% and Hosur Road has seen a dip of 10-12% over the last 6-8 months.

In Chennai, prices had gone beyond realistic levels, says a Chennai-based real estate consultant. He says that at Kelambakkam on OMR, land value is down from Rs 10 crore to Rs 7-8 crore an acre. Similarly, at Ambattur, land value is down from Rs 10 crore to Rs 6.5 crore an acre.

Further he added, “A lot of deals are on hold as a number of landlords are not willing to negotiate at the moment”. Over the next 6-8 months, the consultant expects a further drop of 10% in Chennai.

Even in Gurgaon, things have slowed. According to a consultant, deal volumes have come down considerably and like some other locations, more and more joint development agreements are taking places. The way things are going, the consultant expects a further 10-15% drop in land values in the next six months.

Overall, there is a feeling that prices are going to drop further. Mr. Puri stated, “If the market remains soft for another six months or so, there should be a further drop in land prices”.