DELHI NCR REALTY: POISED FOR A REMARKABLE YEAR ENDER
The present real estate market is seeing a deluge of new trends from the upsurge in luxury residential sales, and the revival of office and retail leasing to hospitality shifting from seasonal and off-seasonal traffic to consistent demand all year round. The major demand in Delhi NCR is driven by mid and high-segment housing in areas that are close to employment hubs. While the infrastructure de-development is driving high pricing of commercial & retail properties. Commenting on the new dynamics, Arvind Rai, Senior Director, Valuation Services, Colliers expressed, “High demand for consumer goods such as cars, mobile devices, and TVs demonstrates as- pirational shift among buyers. The property market has shown similar trends since 2022, mirroring the peak levels of 2013-14. Premium residential projects are in high demand in Delhi NCR and commercial leasing is nearly back to pre-pandemic levels. These exceptional shifts in real estate demand and pricing are unprecedented, with land values and transactions also witnessing significant changes.” Sharing his insights Dharmesh Shah, CEO, of Hero Realty Pvt. Ltd. said, “The real estate sector is closely monitoring rate stabilization and relies on current trends to support events. Q2 2023 data reveals a 7% increase in housing prices across India, indicating significant growth driven by factors like FDI, India's post-G20 global image, and favorable economic policies. The market is predicted to maintain its momentum until elections, after which changes may occur. Following the elections, industry fundamentals should spur additional expansion in 6-8 months. The present-day real estate sector, influenced by social media information dissemination, is well-regulated and better-informed compared to 2011 or 2014, with the expectation of sustained growth in the foreseeable future.” Neeraj Bansal, Co-Head & COO– India Global, KPMG In India, concurred that the real estate sector is influenced by economic growth, public opinion, and infrastructural progress. “Rapid real estate revival in the National Capital Region (NCR) is driven by improved connectivity and urban planning efforts. A favorable economic backdrop and government support bolster the property market's stability and purchasing power. Despite potential economic obstacles, a balance between luxury and affordable options will ensure ongoing growth in the coming year.” Gaurav Jain, CEO – of India Projects, Infracorp, added, “With 30 years of experience in the NCR region, I assert that NCR's real estate market is flourishing due to factors such as global appeal, thriving industries, and quality infrastructure developments in the region. Land prices vary from 3 to 100 crores per acre, based on the location. The region benefits from unique advantages compared to other areas in India and these factors indicate that the NCR real estate market will continue to prosper for at least another 5 to 10 years.” NCR’S MARKET CHALLENGES The industry experts remain quite optimistic about Delhi-NCR's growth potential Arvind Rai stated, “Previously, land prices reaching 100 crores per acre were unimaginable. However, recent trends indicate soaring real estate prices, even in suburban and peripheral regions. Locations like Gurgaon, Noida, and surrounding areas now exhibit a new normal with price barriers as high as 15,000 rupees per square foot.” Dharmesh Shah added, “Recent launches have demonstrated a shift towards higher rates. For example, our latest launch on Dwarka Expressway achieved a rate of Rs 17,000. While Gurgaon, was once considered a 7-8,000 market, it now appears to be transitioning to a 10,000-plus market. Consequently, this change is affecting our underwriting; however, it does not necessarily influence our purchasing strategy. Overall, we anticipate the rates may continue to increase in the future. As a developer what is critical in enhancing a project’s cost efficiency is ensuring a comprehensive geotechnical report and third-party validation guided design that will rule out later date water and soil-related challenges, manage risks, and ensure the success of the project.” Gaurav Jain agreed that project expenses and land costs have significantly increased demand a through feasibility study by the developer. Also impacting the affordability and profitability aspects are the approvals, and construction process. Profits of listed companies and branded players are minimal. Government restrictions exist on affordable housing, but not land acquisition, leading to elevated land prices over time. Infrastructure and correct policy are key contributors to financial growth in the industry. However, as new development areas will emerge in NCR, land prices may stabilize.” Arvind Rai sharing a similar view stated, “Land demand remains high, with rates reaching nearly 50 – 100 crores per acre. Acquiring land for high-rise developments or similar projects has become increasingly challenging in the current context.” Neeraj Bansal advised, “Determining the feasibility and potential profitability of a land acquisition and project completion is a meticulous process that should involve comprehensive analysis to understand the present context as also future trends.” NEW GROWTH MOMENTUM Delhi NCR currently holds the distinction of being India's most expensive office rental market and ranks 6th in the Asia Pacific region. As per Neeraj Bansal, “The Delhi NCR office market in India has seen remarkable growth, attracting global companies due to excellent connectivity and affordable land. Infrastructure improvements, including airport expansions, have further supported this development in NCR.” Arvind Rai added, “The rise in warehousing demand during pan- demic by e-commerce has led to the establishment of large fulfilment centres in NCR. Factors such as land cost, connectivity, and local requirements influence warehouse location decisions, making areas like Greater Noida attractive. The convergence of expressways and infrastructure developments further entices logistics players, including third-party logistics and national companies like Amazon to prefer the Delhi-NCR corridor.” Considering the significance of real estate as an investment, there are new investment trends in the region. Dharmesh Shah briefed on how the investment landscape has transformed over the years, “The three key trends impacting real estate investments in Delhi-NCR are the growth of Alternate Investment Funds, the rise of digitally-focused younger investors, and the emergency of digital assets and tokenization. The growing accessibility and transparency offered by new investment platforms have made it easier for a new age group of 25-35 to invest in real estate.” Gaurav Jain added, “A key distinction in project development is the initial investment, with some developers investing 50% of the project value while others only 10%. Noida's real estate market has grown due to increased faith in larger groups and improved infrastructure. Ensuring proper financial closure before projects commence can lead to greater market maturity and avoid potential crises. We are seeing a new trend of experienced professionals assisting in financial management, thereby providing confidence and comfort to individual investors. Future years are poised to witness digital assets and cryptocurrency playing a more significant role in the real estate sector.” THE FESTIVE SEASON INCREASE IN SALES NUMBERS INDICATES A POSITIVE MOMENTUM IN THE DELHI-NCR HOUSING MARKET THAT WILL CONTINUE BEYOND 2023. THE REGION’S OFFICE LEASING ACTIVITY IS INCREASING AS COMPANIES ADOPT HYBRID SYSTEMS AND ENCOURAGE EMPLOYEES TO RETURN TO THEIR WORKPLACES. DELHI-NCR TRENDS Real estate in Delhi-NCR has proved to be a centre of attraction as far as the demand is concerned. Millennials planning to invest in realty are driving the real estate market, both residential and commercial. Demand for residential realty precedes commercial properties. The percentage of first-time buyers has gone up and the percentage of those who want to upgrade to bigger spaces has also risen. Demand for 2-3 BHK is witnessing great traction with people opting for bigger homes. THE HYBRID OFFICE MODEL AND COMPLIANT GRADE A WORKSPACES ARE ENCOURAGING BOTH DOMESTIC AND INTERNATIONAL INVESTMENTS IN THE DELHI NCR OFFICE MARKET. WHILE TRANSACTION VOLUMES HAVE GROWN, RENTAL LEVELS HAVE REMAINED STABLE AS LANDLORDS FOCUS ON RAISING OCCUPANCY LEVELS -NEERAJ BANSAL THE GOVERNMENT SHOULD EITHER LIMIT LAND ACQUISITION OR PROMOTE EXPANSION INTO PERIPHERAL AREAS TO MAINTAIN REASONABLE PRICING. MARKET FORCES ULTIMATELY GOVERN THE INDUSTRY, WITH PROFIT MARGINS MANAGED BY AGGREGATORS INFLUENCING INVESTMENT RETURN- GAURAV JAIN GURUGRAM HOLDS GREAT POTENTIAL TO EMERGE AS A GLOBAL CITY, THANKS TO ITS CAPACITY FOR GROWTH AND DEVELOPMENT. ENHANCED INFRASTRUCTURE IS ON THE HORIZON, PLACING THE CITY IN LINE WITH OTHER MAJOR METROPOLITAN INVESTMENTS-DHARMESH SHAH POLLUTION CONTROL CONSTRAINTS AND CONSTRUCTION BANS IN NORTH INDIA SIGNIFICANTLY IMPACT AFFORDABLE HOUSING PROJECTS. ADDRESSING SUCH REGULATORY CONCERNS MAY REQUIRE POLICY ADAPTATIONS WHILE RECOGNIZING THAT SUCH FACTORS PRIMARILY INFLUENCE PRICING - ARVIND RAI
Tags : GAURAV JAIN ARVIND RAI NEERAJ BANSAL DHARMESH SHAH KPMG Hero Realty Colliers Infracorp