Construction ban, green norms push real estate industry into limbo in Himachal Pradesh

The repeated natural calamities, starting June, brought the hilly state of Himachal Pradesh to its knees—impacting daily lives and bringing construction activities to a halt. But there appears no end to realtors’ woes even after four months. While the state trudges back to normalcy, the real estate sector in the mountainous region is facing an uphill battle.

Unplanned construction on hilly slopes caused havoc during the heavy rains, leading to massive destruction of properties and lives due to landslides. After a prolonged season of such mayhem new construction in the region is now under the radar of the authorities. Following an observation by the Punjab and Haryana High Court on preserving the green areas in the region, state authorities have decided to tighten rules, leaving realtors in limbo.

The HP government has put a blanket ban on any hill cutting for private development and construction activities in key districts, except for reconstruction of disaster hit buildings and roads. As a result, real estate development that had gained rapid pace in recent years have come to a grinding halt.

With purchasing and converting land for residential and commercial use a major challenge for non-residents of the hilly state, plotted developments, apartments and luxury villas from realtors mushroomed in and around popular destinations like Shimla, Solan and Kasauli in recent years. From Chandigarh-based Sushma Builders that has key projects in Kasauli to Cliffton Valley that launched 2 and 3BHK apartments near Shimla, many realtors jumped the bandwagon looking to ride the surge in demand for holiday homebuyers from neighbouring states.

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“Demand for residential units, in the form of villas and apartments, grew exponentially in the past 3-5 years in Himachal Pradesh. Residents of Delhi-NCR and Chandigarh, even affluent buyers from towns like Lucknow, Ludhiana or Jaipur, especially who are exposed to the beauty of the Himalayas, were flocking to buy their second homes in these locations. However, after the massive disaster that unfolded this year demand is getting hampered. Many, who had shown interested in such properties are no more inclined to move forward with their purchases. And now with these new rules, the future looks grim,” says a real estate developer operating in HP on the condition of anonymity.

Over the last few years, the boom in demand for plotted developments and apartments had attracted leading realtors like DLF to the region, which was otherwise considered small in terms of market size. DLF that comes up with luxury residential and commercial projects primarily in Gurugram, Haryana, launched its luxury hillside project in the heart of Shivalik Himalayas in 2012. Spread across 58 acres and located in Kasauli, HP, DLF Samavana has luxury resort homes, including villas, plots and flats. With a starting price of Rs 1.05 crore—that went up to Rs 6.5 crore—it was one of the most expensive projects in HP. But that did not deter buyers, and it was sold out at the peak of the pandemic in 2020.

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