In­vestors ex­it­ing the mar­ket, pro­ject de­lays, lit­i­ga­tion crunch and lack of in­fra­struc­ture were fac­tors that led to the NCR mar­ket reg­is­ter­ing a mas­sive 68% drop in new launches in the first half of 2015

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The largest residential mar­ket of the coun­try is cur­rently in a state of cor­rec­tion, with stake­hold­ers star­ing at the pilin­gup in­ven­tory and bot­tomed-out sales ve­loc­ity, says the Knight Frank real es­tate re­port. While in­vestors formed the ma­jor chunk of the mar­ket ap­petite in NCR till about two years ago, the de­mand to­day is driven mainly by en­dusers look­ing for ready-to-move-in units. The stag­na­tion in prices and slow­down in the real es­tate in­vest­ment con­ver­sion cy­cle have fil­tered out short-term spec­u­la­tors from the mar­ket com­pletely, while long-term in­vestors are look­ing for a des­per­ate exit

NCR is now an end user-driven mar­ket – de­vel­op­ers re­strict new launches, while buy­ers care­fully se­lect clean Ap­prox­i­mately 14,250 units were sold in the first half of 2015, com­pared to 28,500 units in the first half of 2014, thus reg­is­ter­ing a year-on-year drop of 50% De­lays in the de­liv­ery of some ma­jor large-scale projects have put the buy­ers on the back­foot As some of these projects failed to de­liver on time, ar­eas such as Noida Ex­press­way and Dwarka Ex­press­way have started to look like ghost cities, with abysmally low oc­cu­pancy. These projects. Drop­ping by a stun­ning 68% in the first half of 2015, com­pared to the same pe­riod in 2014, new launches in NCR are at an all-time low.

Pre­dom­i­nantly an in­vestor-driven mar­ket, NCR al­ways showed a strong residential ap­petite, but the mar­ket bot­tomed in 2014. With in­vestors not choos­ing real es­tate as an in­vest­ment op­tion and end-users feel­ing let down by de­layed projects, de­vel­op­ers were pressed to re­strict new launches dur­ing this half, re­sult­ing in the thinnest pro­ject de­liv­er­ies would have acted as anchors and in­duced end-users to shift there Knight Frank sur­vey find­ings sug­gest that, while pur­chas­ing fresh prop­erty, buy­ers are mak­ing re­peated site vis­its to check the progress of the projects, and are also likely to get more at­tracted to a devel­oper with a good pro­ject de­liv­ery record In­vestors are look­ing for a des­per­ate exit, which is giv­ing the re­sale mar­ket sub­stan­tial mo­men­tum half-yearly sup­ply ob­served in NCR.

Reg­is­ter­ing a mas­sive 68% drop from the same pe­riod in 2014, new pro­ject launches in NCR stood at 11,360 units in the first half of 2015.

Pol­icy fal­la­cies such as the open­ing up of new land for de­vel­op­ment, al­lot­ment of group hous­ing li­cences in ar­eas with no in­fra­struc­ture, pro­ject de­lays due to lit­i­ga­tions and the liq­uid­ity crunch, and stag­nant in­comes have af­fected NCR’s real es­tate ap­petite ad­versely.

The mar­ket re­fused to cor­rect it­self in the first half of 2015 and reg­is­tered a year-on-year dip of 50%, with 14,250 units sold. How­ever, if com­pared to the bot­tomed sec­ond half of 2014, there was an uptick of 18% in the sales vol­ume.

Residential projects un­der the Haryana gov­ern­ment’s Af­ford­able Hous­ing Pol­icy 2013 con­trib­uted sig­nif­i­cantly to the new launches in NCR in the first half of 2015. Ap­prox­i­mately 43% of the to­tal new launches fall un­der this cat­e­gory.

New de­vel­op­ments, such as the clear­ing of the road con­struc­tion chal­lenges on Dwarka Ex­press­way by the Punjab and Haryana High Court and the no­ti­fi­ca­tion of op­er­a­tional guide­lines for the im­ple­men­ta­tion of the land pool­ing pol­icy by the Min­istry of Ur­ban De­vel­op­ment, are be­ing watched closely by all stake­hold­ers.

Knight Frank re­search sug­gests that cur­rently, the NCR mar­ket is pri­mar­ily an end-user-driven with lim­ited in­vestor par­tic­i­pa­tion. Long-term in­vestors who were with the de­vel­op­ers over the three to four year con­struc­tion pe­riod are now look­ing for an exit, ow­ing to the de­pressed mar­ket sen­ti­ments. Stag­nant prices and de­layed pro­ject de­liv­er­ies have con­trib­uted to­wards in­vestors en­ter­ing into a ‘dis­tressed re­sale’ mode, as they are now of­fer­ing to exit at a 15% to 20% dis­count than the pri­mary mar­ket price.

The growth rate of the weighted av­er­age price has been wit­ness­ing a down­ward trend since 2013, and has slowed down con­sid­er­ably, from 6% in the first half of 2013 to a mere 1% in the first half of 2015. This slump in­di­cates that residential real es­tate is fac­ing a strong price re­sis­tance against unattrac­tive and un­af­ford­able prices. We forecast


Backed by the Haryana gov­ern­ment’s Af­ford­able Hous­ing Pol­icy 2013, Gur­gaon skews the per­cent­age share of new launches in NCR The pol­icy in­tends to build group hous­ing projects of a pre­de­fined size via a pri­vate devel­oper, which would be avail­able to buy­ers at a pre­de­fined rate. The stip­u­lated com­ple­tion time for projects fall­ing un­der this cat­e­gory is four years from the date of the ap­proval of the build­ing plan or the ob­tain­ing of the en­vi­ron­men­tal clear­ance, fail­ing which, there will be no re­newal of the li­cence The projects un­der this scheme are not charged with ex­ter­nal de­vel­op­ment charges (EDC) and in­fra­struc­ture de­vel­op­ment charges (IDC), thus mak­ing the homes more af­ford­able than the pri­vate mar­ket The scheme will help first-time home­buy­ers pur­chase a house in the ex­pen­sive Gur­gaon mar­ket and also give de­vel­op­ers some trac­tion in the cur­rent mar­ket slow­down The eas­ing of lit­i­ga­tions on the 18-km long Dwarka Ex­press­way sig­nalled a pos­i­tive sign for the Gur­gaon mar­ket. The area saw a few launches by prom­i­nent de­vel­op­ers in the first half of 2015


The first half of 2015 saw a fur­ther down­ward trend in new pro­ject launches in Noida, reg­is­ter­ing a 60% this trend to con­tinue in the com­ing six months and pro­ject the weighted av­er­age price in NCR to grow by 3% in the sec­ond half of 2015 com­pared to the same pe­riod last year.

New launches in NCR have hit an all- time low with the thinnest ever half-yearly sup­ply of residential units in the first half of 2015, 43% of which was fu­elled by units launched un­der New launches in NCR plum­meted in the first half of 2015, with only 11,360 units launched in the coun­try’s largest residential mar­ket. Piling-up in­ven­tory and a low sales ve­loc­ity forced de­vel­op­ers to re­strict the sup­ply of new launches in this half. Of the new sup­plies added in the first half of 2015, most were in the ‘af­ford­able’ seg­ment, with a ticket size of less than ₹ 2.5 mn Greater Noida con­tin­ued with the trend of hav­ing the max­i­mum num­ber of pro­ject launches in the af­ford­able and mid-seg­ment ranges, with 73% of the launched units fall­ing in the ticket size of less than ₹ 5 mn Zone L, Delhi, also saw launches in the ticket size of less than ₹ 5 mn in the first half of 2015 the Haryana gov­ern­ment’s Af­ford­able Hous­ing Pol­icy 2013.

Tak­ing cog­ni­sance of a mar­ket plagued by the sub­dued sales ve­loc­ity and an in­ven­tory over­hang of ap­prox­i­mately 189,678 un­sold units, cash- crunched de­vel­op­ers in NCR have shifted their fo­cus to the com­ple­tion of in-hand projects in­stead of launch­ing new ones.


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