FEWER LAUNCHES, HIGHER COSTS
Approval of the Greater Noida Master Plan, and the passage of the land acquisition bill in Parliament made headlines this year
Sentiments remained cautious across the Delhi NCR residential markets in 2012, largely due to the global economic slowdown and local market conditions. The year was characterised by few new launches in the NCR, high interest rates, rise in input costs and upward revision of circle rates in Delhi.
The approval of the Greater Noida Master Plan by the NCR Planning Board in July was perhaps the only bright spot. It added the much-needed zing in the Noida Extension market, something that was missing during the festive season in 2011.
The buzz was about...
Increasing supply of integrated townships, primarily in parts of Gurgaon, Noida and Greater Noida. The opening of the Yamuna Expressway led to an increased momentum in the region. In Gurgaon, a number of proj- ects were delayed due to restrictions imposed on construction work by the Punjab and Haryana High Court because of water scarcity.
As for the festive season, developers resorted to outof-the-box marketing techniques and pricing mechanisms to boost sales. Many offered monetary benefits to buyers instead of the usual white goods or cars. Gold coins were hot favourites.
Some movement was also witnessed in the branded residential segment with a number of projects being launched in the NCR to cater to niche domestic and global investors. These projects were either designed by or had brand associations with national and international celebrities. Supertech’s ORB in Noida, Homestead’s Michael Schumacher World Tower and Maria Sharapova Tower in Gurgaon are some examples.
Green buildings generated some interest thanks to the launch of projects such as 3C’s Greenopolis. Investors also expressed keen interest in FDIcompliant projects such as Experion’s Windchants and SARE Homes’ Petioles in Gurgaon.
The land acquisition bill was passed by Parliament but property magnates were not amused. They criticised it, saying it would increase land cost and housing prices.
Chairman and country head of leading consultant Jones Lang LaSalle India, Anuj Puri, said demand of housing projects would be affected in the future with the passage of the bill in Parliament. “The cost of land will go up and developers will pass on the additional burden to consumers. Definitely, it will affect the demand if prices go up beyond the capacity of a home buyer,” he added. Capital values appreciated by 15-42% over the last year across micro-markets in the NCR. These included Dwarka Expressway and the Southern Peripheral Road in Gurgaon along with the Noida-Greater Noida Expressway micro-markets. Gurgaon witnessed the highest capital value appreciation in all categories (30-42%).
According to Santhosh Kumar, CEO, operations, Jones Lang LaSalle India, residential real estate behaved rather predictably in 2012. The expected correction in prices did not occur, though the rise in capital appreciation did slow down significantly.
Shveta Jain, executive director, residential services, Cushman & Wakefield , India, points out that the number of launches in Delhi-NCR declined from 2011 by approximately 25%. A significant share of the project launches was confined to Noida (approximately 69%) and Gurgaon (31%), mostly catering to the mid-income and affordable segment. Other micro-markets such as Faridabad and Ghaziabad witnessed a total of approximately 8,500 residential unit launches during the
year. There were comparatively lower transaction volumes, though some of the micro-markets clearly outperformed the rest.
Gurgaon’s residential market performed reasonably well in 2012, but the performance was not uniform across all areas. There were high levels of unsold inventory in some parts of the micro market. Golf Course Road, Golf Course Extension Road and Sohna Road achieved reasonable appreciation in both capital values and rentals. These regions can be classified as the best performing pockets in Gurgaon for 2012 in terms of sales volume and appreciation achieved.
Dwarka Expressway also did well. Its proximity to the international airport and the proposed diplomatic enclave resulted in price appreciation and high sales volumes in the area this year. Projects that were launched at R4000 per sq ft touched R7000 per sq ft towards the end of the year. The area also saw launches by well-known brands. Residential demand on Golf Course Road was driven by heavy demand from corporates. Golf Course Extension witnessed a high level of activity from investors looking for lucrative returns.
The Noida Extension market was driven by end-user demand due to the affordability of available options. Some of the projects in the area appreciated by 25%. Noida’s residential realty market achieved an appreciation of around 20% in 2012, according to data by Jones Lang LaSalle.
The Delhi residential property market did not see very impressive action, largely due to exorbitantly high rates and very limited supply. The action has now shifted to L zone under Master Plan 2021, especially after the farmhouse policy of Delhi was passed by DDA (not notified). The policy sought to bring down the cost of ownership of farmhouses and allowed for a minimum size of 1 acre against 2.5 acres earlier.