Pradeep Jain
While the slowdown in real-estate is a nationwide phenomenon, Delhi-NCR seems to be worst hit as the incidences of project delays have been the highest here and the trust deficit in the property buyer is at an all-time low. Pradeep Jain Chairman, Parsavnath stated, “Delhi NCR market is spread across the states of Delhi, Haryana and Uttar Pradesh. Affordable residential market is doing fairly good in the price range of 25-30 lakhs. Today, developers are launching only those projects which comply with the RERA regulations and are likely to be completed within the promised time frame.”
The developers have understood that the real-estate sector is customer driven market. Most of them are pursuing affordable housing projects, vertical development and the transit oriented development to cater to the market demand. Manoj Gaur, Managing Director, Gaurs Group
Micro-markets Behavior
National capital Region (NCR) that includes Noida, Greater Noida, Ghaziabad, Faridabad andGurugram accounts to one of the biggest realty markets in the country, There is a flurry of infrastructure projects coming up around Delhi and within these micro markets giving them a distinct market identity.
The industry has been on a back foot since the last quarter of 2016 given the effect from demonetization. The industry witnessed a dull demand resulting in a limited number of new project launches in H1 2017.As per industry experts, the demand is majorly for ready-to-move-in properties and only 10 per cent buyers are interested in under construction projects.Residential micro-markets are following a development pattern in alignment with transit oriented development as it suffices the need for the majority of prospective homebuyers.
Delhi is mostly saturated in terms of new housing construction. Due to limited vacancy, the property prices are high but have remained stable.The new Land Pooling Policy and plans for redevelopment of old DDA colonies are expected to open up land for new housing projects.
Gaur City, Noida
Noida is a home buying destination for mid-income group and the extension of metro till Greater Noida and Noida extension has made this area a favorable option. Affordable housing options are available in Noida Extension. According to Manoj Gaur, Managing Director, Gaurs Group, “Noida, Greater Noida and Raj Nagar extension in Ghaziabad are the budget housing destination. Noida and Greater Noida region has a better catchment area with better commercial setup because of the existing population.”
Manoj Gaur
The prices have largely remained stable with a noticeable correction of 5-7% across Dwarka Expressway and Golf Course Extension Road on the back of high availability of inventory in the secondary market.
Project by Central Park, Gurugram
Gurugram is the employment hub and high-income residential area, but with inferior infrastructure. Given the quality of office space available, most of the MNCs are setting shop here leading to high demand for rental homes. Gurgaon Extension, Sohna Road, Golf Course Extension have been earmarked for infrastructure development in the Gurgaon Development Plan 2021.Last year, about 40% of the new launches were in Sohna and Golf Course Extension Road. Though the base selling price has not come down, developers have reduced the size of the units to bring affordability.
Amarjit Bakshi, Managing Director, Central Park elaborated, “Sohna Gurgaon or ‘South of Gurgaon’ (SOGO)is s one of the hottest real-estate investment destination among aspiring class buyers owing to factors such as prime location, easy accessibility, affordability and developing infrastructure and connectivity. While Cyber City and Golf Course Road are most favoured for commercial projects due to their preferred status and accessibility, absorption on Sohna Road, National Highway 8, Udyog Vihar has been mainly due to their high affordability. Large IT companies have shown interest in Special Economic Zone (SEZ) projects and upcoming corridors in Golf Course Extension.”
Parsvnath City Mall, Faridabad
Faridabad and Ghaziabad host many industries and factories and have metro connectivity from Delhi. Though the residential projects available here cater to all segments of home buyers, the lack of lifestyle amenities is a constraint. Raj Nagar Extension, Indirapuram and Vasundhara in Ghaziabad and NIT 3, Pali Village, Sector 17, Sector 19 and Sector 25 in Faridabad are some of the popular locations.
Developers have been constrained with cash flow problems over the past few years due to significant unsold stock. The development of affordable housing sector is expected to provide some relief and opportunity to focus on sales of pending stock. Amarjit Bakshi, Managing Director, Central Park.
Amarjit Bakshi
Commercial realty going strong
During the April-to-June 2017, Delhi NCR witnessed close to two million square feet of office space absorption. A majority of this take-up was recorded in the Gurgaon micro-market. While Gurgaon dominated leasing activity during the review period, Noida recorded a quarterly increase in absorption. Sustained occupier interest resulted in the micro-markets of NH8, Main Noida and DLF Cybercity driving more than half of the regions leasing activity. Most of the absorption was in non-IT spaces in developments on NH-8 in Gurgaon, Aerocity in Secondary Business District and Main Noida.
According to the recent report by CBRE South Asia Pvt. Ltd, on the supply side, quarterly supply addition increased but was limited to Gurgaon. Most of the new supply entering the market was due to the receipt of long pending completion certificates. Leasing activity continued to be driven by small to medium-sized transactions, DLF Cybercity (SEZ) witnessed a rental growth of about 3 – 4 percent q-o-q. Rising vacancy levels in select developments resulted in a marginal rental dip of about 2-4 percent q-o-q in the Secondary Business District of Nehru Place and Jasola in Delhi.
Talking about the growing commercial market of Delhi NCR, Jain opined, “Supply of the commercial properties is limited but there is a strong purchase and rental demand for the commercial properties. The future growth is likely to happen along the GT road belt of Kundali-Sonipat and Greater Noida belt.”
With the focus on completing existing projects, the dip in new projects supply may increase the prices by 15-20 percent. Hopefully, residential market will improve quarter-on-quarter and will fully stabilize within a year. Pradeep Jain Chairman, Parsavnath
Role of Government
The real-estate sector in India has traditionally not enjoyed a favorable image in the eyes of consumers for various reasons - construction delays, sub-standard quality of construction and poor customer service. Even though real estate is the second largest employer in the country, it still lags behind in comparison to other sectors owing to old reforms, complex practices and unregulated policy framework. “Jain concurred to the fact and said, “Introduction of RERA had a positive impact on the demand and supply scenario. It is encouraging serious investors into the market and prospective end-users have slowly started gaining trust. There used to be lack of clarity for the home buyers on how much usable area they were getting for what they were paying. Now, the assured transparency for the investors and buyers is sprouting hopes for the concerned shareholders.”
One of the key provisions of the RERA act is that developers need to maintain a minimum of 70% funds collected from customers in an escrow account that would be utilized exclusively to meet the construction cost of the project. Also, if the developers fail to deliver on the project in the promised time frame, they would need to pay back same interest as the EMI being paid by consumer.However, the realty sector is still a long way from achieving a single window clearance regime. Gaur commented, “The government should try and make the land bill uniform in order to assure better land procurement. Also, the single window clearance would bring in approvals on time and fasten project construction life cycle.”
“Although the government has laid the foundation for streamlining a lot of hurdles with RERA, the onus lies equally on the developers to change the image of the sector. The developers need to address this on priority and find ways to ensure speedy completion of pending projects,” added Bakshi
It can be rightly said, that the passage of land pooling policy in Delhi is a welcome step towards streamlining the process of acquiring land for urban development.Once the mechanism of addressing project approval delays, land price, quality of construction, title and other changes are put into practice, the Delhi-NCR real-estate will slowly and gradually turn positive even showing great results.
The Roadmap
Delhi-NCR luxury and commercial segment slumped due to the downturn in the overall national economic growth. But, there has been a minor drop in prices for low- to medium-cost housing. This shows, in which segment the future growth lies for the sector in this region. In addition, the government’s push for affordable housing segment is creating favorable conditions for the real-estate sector of the micro markets of NCR.
Moreover, the developers of the region are gradually coming up with RERA certified projects. They are also maintaining proper escrow accounts and assuring transparency from their end. Developers know that maintaining transparency is the only way out to deal with the trust issues of investors and home buyers.The advent of regulating acts will give a positive approach to the homebuyers and developers, creating a climate of accountable deals.
Given the current scenario in Delhi-NCR, residential real-estate prices seem to remain subdued for at least next two years especially among middle-income buyers. RERA will correct many of the anomalies and ward off speculative investors yet more reforms are required in state’s project sanctioning authorities. The period of transition is painful but post transition, the Delhi-NCR and the entire country’s real-estate is set to become a buyers’ market.
