The soaring land deals in prime location of metro cities, which had scaled astronomical levels in the past few years, seem to be losing steam. The deals being struck this year are at increasingly lower prices than the ones last year.

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.