Real Estate Business in NCR

By-Sadhvi Goel

Preview

• Introduction• Demand of housing in NCR

• Supply of housing in NCR• Main players in real estate• Salient features of real estate• Highs and lows of real estate• Future of real estate

Introduction

Hub of industrial and commercial activities

Major infrastructural developments

• Delhi Mumbai Industrial Corridor (DMIC)• Faridabad – Noida – Ghaziabad Corridor• Kundli – Manesar – Palwal Expressway• Dwarka Expressway• Noida – Greater Noida Expressway• Yamuna Expressway• Rapid Metro Rail Gurgaon

Slowdown since 2013

Demand of Housing in and around NCR

Subdued activity level in terms of new launches, sales

Unfavourable macroeconomic scenario

Weak investor sentiment

Impending rate cut making buyers focus on secondary markets

Supply of Housing in and around NCR

Pressure on developers for substantial unsold inventory and liquidity constraints

Focus currently on project execution, lesser new launches

Mid and affordable housing segments expected to witness appreciation

Infrastructural developments expected to create positive impact on real estate market

Increase in inventory overhang from 38 months to 74 months indicates a weakening market

Signs of stability as absorption remains constant

DDA’s approval of land pooling policy expected to unlock 40,000 acres of land and will act as a cooling measure for property prices

Region-wise Key Players

DelhiSupertech, Gaursons, DLF, Parsvnath,

Ansal, Raheja, Omaxe, Unitech, Amrapali,Emaar MGF, DDA

Noida Prateek, Wave Infratech, 3C, Supertech, Lotus Greens

GurgaonDLF, Ansal, Unitech, IREO, TATA Housing, Emaar MGF,

Vatika, Paras, 3C, Anantraj, Godrej, Uppal, Vipul, Bestech, Raheja, BPTP, Indiabulls, Ramprastha, Mahindra Life

Space, Chintels, Sobha

Bhiwadi Avalon, Nemai, Terra City, M2K, Cosmos, Essentia, Omaxe, Kajaria, Krish

Sohna Raheja, IREO, Gold Souk, Avalon, Central Park, TATA

Reality, Godrej, MVL, Universal, ILD, Parsvnath, Paras, Homestead

Dharuhera Bestech, Vipul, Piyush, Avalon, Parsvnath, Raheja, Dwarkadhish

Ghaziabad Sare Homes, SG Estate, Ajnara, Gaursons, Landcraft, Prateek Group

Key Projects Launched in 2015

CRISIL Real Estate Star Ratings

Highest rating is 7 star and lowest is 1 star

Salient Features of Real Estate

Demand Supply Statistics

Delhi Market Analysis

Analysis of Peripheral Regions

Region Scan: Noida

Renewed interest as Noida is a cost effective micro-market

Micro-market primarily of end-users and local investors looking to upgrade their current accommodation or investment

New launches in the mid-segment

Hampered by delayed deliveries

Priority destination as it is end-user driven

Accounted for 42% of total absorption in 2014

Region Scan: Gurgaon

Heavily investor driven region

Prices will be stagnant due to slow inventory absorption

Buyers shifting focus towards secondary markets

Prices expected to trend up in the long run due to increasing cost of infrastructure and imminent development

Peripheral regions Sohna, Dharuhera, Neemrana, Bhiwadi witnessing demand from end-users and investors

Sohna expected to cater to the spill-over demand from Gurgaon

Neemrana has attracted heavy industrial investment from Japanese firms

Factors Impacting Real Estate

Contrasting methods of land acquisition followed by different jurisdictions

Infrastructure challenges in terms of water, power and roads

Unsold inventory and real estate mostly located in uninhabitable regions

Highs and Lows of Real Estate

Analysis

Real estate activity sluggish in terms of launch and absorption

Supply additions declined by 23% and absorption shrunk by 52%

43% share of launches in Greater Noida, 23% in Gurgaon

Average capital values of new launches fairly constant, indicating a slow market due to low demand levels

Unsold supply build-up inhibited the capital value appreciation

Supply and Absorption Trends

Inventory Overhang (months) = Unsold Inventory at the end of a quarter / absorption in that quarter

Pricing and Unsold Inventory Trends

Micro-market Trends

New Launch Absorption Unsold Inventory

Future of Real Estate

Land Pooling Policy

Land Pooling PolicyAim is to prohibit the sale of land without owner’s consent while while enabling private players to create housing pockets in a more viable manner

Small holdings will be pooled and a part of it will be taken for provision of infrastructure and public facilities

DDA (land pooling agency) will provide basic amenities such as education, health, water, sewerage

Rest of the land (40% - 60%) will be returned to original owners for development

Self-sustainable unit based on renewable energy

Integrated green spaces, residential and commercial areas

Minimal waste by increasing energy efficiency and water conservation

Based on Gujarat International Finance Tec-City

Developers will offer land parcels

DDA will create infrastructure before handing over to developers for providing residential and commercial complexes

Smart Cities

Other Policies

Increase in Floor Area Ratio (FAR) in Delhi

Affordable housing policy in Haryana

Low Density Residential Area (LDRA)

Transit Oriented Development (TOD) zone in Haryana