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The Chandigarh Housing Board (CHB) is planning to decrease the reserve price of its residential properties following several unsuccessful property auctions. According to a high-ranking official, they are contemplating a potential decrease in the reserve price for residential real estate by approximately 10 percent in the upcoming auction. In prior auctions, there was a significant lack of interest from buyers in the CHB residential properties, despite their freehold status.
Out of 35 residential properties that were put up for auction, only a meagre two managed to be sold in the most recent auction, which concluded last week. During an auction held in April for 38 freehold residential properties, only four of them were successfully purchased. During the month of March, the CHB received bids for merely eight out of the 44 residential properties that were up for auction. Out of the 49 residential properties listed in February, only seven were able to find buyers.
The performance of commercial real estate has been subpar as well. None of the 88 properties that were auctioned on June 5th and put up for sale were commercial, as none of them found any buyers. In April, although 90 commercial properties were up for lease, only two of them found a buyer or tenant. In March, only a mere two out of the 92 commercial leasehold properties available were able to attract potential buyers.
Commercial real estate has also performed inadequately. None of the 88 properties that were auctioned on June 5th and put up for sale were commercial, as none of them found any buyers. Out of the 90 commercial properties that were up for leasehold in April, a mere two were purchased. Out of the 92 available commercial leasehold properties in March, only two received bids.
The main reason for the lack of interest in commercial properties is solely due to their leasehold status. The sentiment towards buying leasehold properties has been largely negative for a considerable amount of time. Other agencies, such as the municipal corporation and UT estate office, have also received little interest in their leasehold properties. According to an official, the recent decision by the UT administration to prohibit the CHB from selling converted commercial leasehold properties as freehold has resulted in a significant decline in demand and sentiment for these types of properties. According to the official, reducing the reserve price is likely to attract a larger number of participants to the auction, resulting in a more promising outcome for the upcoming event.
Between April 2021 and December 2022, the board was able to successfully sell a total of 275 units. Out of those units, 200 residential and 10 commercial properties were sold on a freehold basis, while 16 residential and 49 commercial units were sold on a leasehold basis. The board earned an impressive Rs. 185.33 crore.
The minimum selling price set by a seller for an item is known as the reserve price. The seller has no obligation to sell if the reserve price is not met by the bidders at the end of the auction.
Owners of freehold properties hold absolute and unambiguous authority and control over their assets without any limitations or disputes. The lessee of a leasehold property does not possess complete and unbridled authority over the property. The proprietor has the autonomy to make adjustments to the freehold property without seeking anyone's consent or clearance.
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