Rental mar­ket im­proves, but prop­erty prices drop by 1%

Buy­ers go in for mid-in­come hous­ing of 40 lakh to 60 lakh in Noida-Greater Noida in April-June quar­ter, says a re­port

HT Estates - - HTESTATES - HT Es­tates Cor­re­spon­dent

The good news for the prop­erty mar­ket this year in Delhi NCR is that the rental mar­ket has im­proved slightly, says a quar­terly re­port by 99acres ti­tled In­site. Down­ward trends, how­ever con­tin­ued with a 1% drop in the April-June quar­ter this year com­pared to the Jan­uaryMarch quar­ter.

The re­port said res­i­den­tial apart­ments con­tin­ued to dom­i­nate the mar­ket, be­ing the high­est sup­plied prop­erty type in Delhi NCR. How­ever, t he de­mand- sup­ply gap i n this for­mat per­sisted de­spite apart­ments cap­tur­ing 60% of the to­tal mar­ket share.

The mid- in­come hous­ing cat­e­gory (₹40 lakh to ₹ 60 lakh) was most pre­ferred in NoidaGreater Noida, fol­lowed by Gur­gaon. How­ever, sup­ply in both the zones fell short as most new launches fo­cused on high ticket prices.

The city’s in­ven­tory com­prises mostly of large sized houses, es­pe­cially those con­fig­ured as 3BHK and 4BHK units. While the avail­abil­ity of 3BHK units suf­fi­ciently met mar­ket re­quire­ments, 4BHK units re­mained over­sup­plied. Delhi and Gur­gaon had the max­i­mum in­ven­tory of 4BHK units.

Nine out of ten home­buy­ers in Delhi NCR pre­fer ready prop­er­ties to un­der- con­struc­tion homes, due to the in­or­di­nate de­lay in project de­liv­er­ies. Avail­abil­ity of ready prop­er­ties re­mains in­suf­fi­cient for the city’s ap­petite. Af­ter Delhi, Gur­gaon had the largest share of ready-to-oc­cupy homes.

Com­ment­ing on the re­port, Narasimha Jayaku­mar, chief busi­ness of­fi­cer, 99acres, says, “The nu­mer­ous govern­ment poli­cies and in­fra­struc­ture e n h a n c e m e n t s a r e ye t t o make a mark on Delhi NCR’s prop­erty land­scape. How­ever, im­proved road and metro con­nec­tiv­ity be­tween Noida and Gur­gaon, and high rate of of­fice space ab­sorp­tion have given a fil­lip to rental sen­ti­ments. Re­duc­tion of dis­par­ity in the de­mand- sup­ply equa­tion can fur­ther im­prove the real es­tate story of Delhi NCR.”

Price trend anal­y­sis

Prop­erty prices in Delhi (AprilJune 2016 vs Jan­uary- March 2016 quar­ter) re­mained stub­bornly high de­spite in­creas­ing un­sold in­ven­tory. The av­er­age value of apart­ments fell by 2%.

In Alak­nanda, cap­i­tal val­ues in­creased from ₹ 13,835 per sq ft to ₹ 14,060 and in Va­sund­hara ₹ ₹ En­clave they in­creased from ₹ 9,800 to ₹ 9,867. Builder floors were more pop­u­lar than so­ci­ety apart­ments. More than half of the lo­cal­i­ties tracked for the sur­vey saw an av­er­age in­crease of 3% in cap­i­tal rates of builder floors, with La­j­pat Na­gar III, South Ex­ten­sion I and Sarvpriya Vi­har clock­ing the high­est growth of 4% to 6% each.

In­crease in in­ven­tory and stalled in­fra­struc­ture projects im­pacted mar­ket sen­ti­ment in Noida and Greater Noida. Cap­i­tal val­ues fell by an in­signif­i­cant 1%. Only one- fifth of the lo­cal­i­ties tracked for the sur­vey in Noida recorded an in­crease in prop­erty prices, amongst which Sec­tor 82 saw an in­crease of 4%. Prices in Sec­tor 150 in­creased by 3% over the last quar­ter. Land val­ues in Greater Noida re­mained flat and plot prices in Noida stag­nated in the April- June 2016 quar­ter, de­spite a spike of 14.19% in res­i­den­tial land al­lot­ment rates. Mar­ket sen­ti­ment im­proved slightly in Ghaziabad. Prop­erty prices in cer­tain pock­ets of Ghaziabad, es­pe­cially Ab­hay Khand, Ahinsa Khand II and Mo­han Na­gar, in­creased by 2% to 5% quar­ter on quar­ter. Govern­ment ini­tia­tives on the in­fra­struc­ture front failed to turn the for­tunes of Gur­gaon’s re­alty mar­ket, which saw a down­trend of 1%. Only 20% of the tracked l ocal­i­ties in the Mil­len­nium City re­ported growth in prices. The New Gur­gaon mar­ket, es­pe­cially Sec­tor 95, saw a growth of 4% quar­ter on quar­ter.

Builder floors posted a quar­terly de­cline of 2% in av­er­age val­ues in the April- June quar­ter.

Rental mar­ket

Though the rental mar­ket has been lack­lus­tre, cer­tain parts of Delhi – Dwarka and the western re­gion – posted de­cent growth of 3% and 2%, re­spec­tively. Rents of apar t ments i n Dwarka re­mained ro­bust, with sec­tors 7, 9, 10, 11 and 12 wit­ness­ing a yearly surge of 8%, each. High rate of of­fice space ab­sorp­tion, com­bined with seam­less con­nec­tiv­ity with Gur­gaon via the Dwarka Ex­press­way and com­par­a­tive af­ford­abil­ity, fu­elled rental growth in the sub-city. Repli­cat­ing last quar­ter’s performance, rental val­ues of builder floors in south Delhi re­mained sta­ble as a re­sult of high rep­u­ta­tion in­dex. New Friends Colony, De­fence Colony, C R Park, Malviya Na­gar and Greater Kailash II, all be­long­ing to south Delhi, topped the rental charts of Delhi with a jump of 4% to 5% each, in rental val­ues over the last one year. The rentals mar­ket in Noida suc­cumbed to the pres­sure of soar­ing sup­ply and l imited de­mand and recorded no change in av­er­age cap­i­tal rates in the last one year. While Noida wit­nessed rents of apart­ments ei­ther plateau­ing or dip­ping YoY in 75% of the es­tab­lished sec­tors, the Greater Noida mar­ket recorded an av­er­age an­nual dip of 1%. Un­like the last quar­ter, builder floors in Noida per­formed well in Q2 2016, clock­ing an av­er­age rental growth of 4%. While rental rates in 60% of t he t racked l ocal­i­ties wit­nessed de­cent growth, Sec­tors 20, 26, 27 and 31 saw val­ues surg­ing by 6%- 8%, each. Not only are all th­ese sec­tors strate­gi­cally lo­cated within a ra­dius of 5-km from Metro sta­tions in Sec­tor 18 and Botan­i­cal Gar­dens, shop­ping cen­tres and med­i­cal care units; some of th­ese lo­cal­i­ties are also wit­ness­ing re­de­vel­op­ment of old prop­er­ties. Ghaziabad con­tin­ues los­ing trac­tion to the neigh­bour­ing city of Noida, which of­fers more at­trac­tive op­tions along with stur­dier in­fra­struc­ture. The rental graph re­mained flat here.

Once again, the es­tab­lished lo­cales of Kaushambi and Ahinsa Khand II in Indi­ra­pu­ram were the fron­trun­ners, record­ing 4% rental growth, each. Th­ese lo­cal­i­ties ben­e­fit­ted from low rentals, good con­nec­tiv­ity and prox­im­ity to the of­fice and com­mer­cial hubs of Noida.

In­fus­ing some cheer into the oth­er­wise bleak real es­tate sce­nario of Delhi NCR, Gur­gaon’s rental mar­ket posted an an­nual rise of 3% dur­ing April- Jun 2016, af­ter de­scend­ing by 2% in Jan­uary-March 2016.

The 40% in­crease in Delhi NCR in of­fice space ab­sorp­tion in H1 2016 was good news for Mil­len­nium City. Un­like the frag­mented res­i­den­tial mar­ket, the com­mer­cial and of­fice arena ex­hib­ited steady in­vest­ment, thus trans­lat­ing into a spike in de­mand for rental prop­er­ties.

Builder floors

Builder f l oors sur passed apart­ments to clock 5% rise in rental rates YoY.

Sec­tors 52, 23 and DLF City Phase III led the race in Gur­gaon with a rental jump of 13%, 12% and 11%, re­spec­tively, in Apr- Jun 2016. The prom­ise of im­proved con­nec­tiv­ity via metro and prox­im­ity to work­place pro­pelled rental de­mand in th­ese lo­cales.

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