Rapid urbanisation creating new spaces in Delhi NCR market
Sonepat, Faridabad, Rohtak, Jaipur, Agra and Meerut grow on better connectivity...What makes the Delhi-NCR real estate market stand out compared with many other corridors in the country?
Nov 28, 2013
Source : The Hindu


DELHI: What makes the Delhi-NCR real estate market stand out compared with many other corridors in the country?

To start with, both investors and industry watchers agree that the sector attracts investments as it is one of largest job creating clusters, has world-class infrastructure and there is a fair degree of property appreciation.

All the four sub-sectors – housing, retail, hospitality and commercial – are growing as they are linked to industries that are fostering employment and economic development.

Realty watchers note that the Indian real estate sector has been a mixed bag of growth in the last decade.

A Crisil report says that growth in the real estate sector in Delhi-NCR region started in 2001 and lasted till about 2010.

Growth parameters

Rapid urbanisation along with proliferation of nuclear families, a culture of moving into apartments also picked pace along the way. Additionally, factors such as higher disposable income and FDI money in various sectors such as services, manufacturing and retail boosted growth.

Banks and NBFCs also encouraged lending during 2001-05. This led to a huge demand for real estate. Developers started to offer schemes and discounts.

Not just the NCR region, but also adjoining areas such as Sonepat, Faridabad, Rohtak, Jaipur, Agra and Meerut grew on the back of connectivity such as expressways and road and rail links.

The NCR real estate segment showed resilience during the slowdown. Going forward, residential real estate prices are expected to increase owing to the limited land supply coupled with an increase in construction cost.

According to the Delhi Master Plan 2021, the population pressure is expected to move up from 18.2 million in 2011 to 19.9 million in 2016 and to 23 million in 2021.

The population density is expected to move up to 225 persons per hectare in 2021 only for Delhi National Capital Territory as indicated by the Delhi Master Plan 2021 from 112.97 persons per hectare for Delhi NCR as indicated in the Census 2011 data. Hence, significant demand is expected to hit this micro market, which shall support the upward movement in prices.

NCR market now

International property consultancy Jones Lang LaSalle India says that Delhi-NCR is the largest urban agglomeration in India and the second largest in the world. What makes the Delhi-NCR market interesting is that it has an independent planning board, which was constituted to channel the flow and direction of economic growth and development along more balanced and spatially orientated paths. The body creates its own functional plans for the various constituent sub-markets of Delhi NCR and ensures implementation at state level, keeping in mind the overall regional plan.

Ashutosh Limaye, Head - Research & REIS, JLL, says, “All three real estate sectors in Delhi NCR — office, retail and residential — are displaying growth on account of the suburban towns surrounding the prime city. The market drivers in these regions are the considerable untapped development potential in these areas, and the substantial financial viability and affordability that they offer to both developers and end-users.”

Delhi NCR typically comprises suburban sprawls of Gurgaon, Noida, Ghaziabad.

Knight Frank India notes that the NCR market has fared both in terms of launches and absorption in the wake of cautious consumer sentiments. The NCR market is striving for a better equilibrium and developers focusing on project completion and deferring new launches.

In the first half of this year, NCR witnessed a total absorption of 35,000 units, an increase of 18 per cent from last year. Increase in sales can be attributed to the high number of project launches in the affordable category.

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “The NCR residential market indicated signs of stability in H1 2013. Nearly 49,000 units were launched in this period showing marginal increase of 11 per cent compared with H1 2012. However, a comparison with the first half of 2011 and 2010 reveals a dip of 33 per cent and 59 per cent, respectively. It is quite evident that developers are keeping new launches in check in order to bridge the supply and demand gap.”

Samantak Das, Chief Economist & Director Research, Knight Frank India, said: “Over the past two years, the NCR market has experienced a fall in launches by nearly 40 per cent compared with the peak levels of 2010. Both short-term and long-term moving average of launches confirms a plummeting trend. However, demand has recently stabilised and improved in the last few quarters, which sketches a healthy residential market scenario for NCR and if the supply-demand gap tapers further, the region is likely to face an upward pressure on property prices.”

Outlook for Delhi NCR

The NCR residential market shows a cautious outlook owing to the slowdown in both project launches and absorption. Developers are facing a liquidity crunch due to limited access to both domestic and international funds leading to a slowdown in construction activity resulting in project delays. Consumer confidence has been marred due to higher interest rates, inflation and the current economic outlook.


A RICS India Commercial Property Survey says that sentiment in the Indian occupier and investment real estate markets has been hit on account of deteriorating levels of growth in the economy, continuous fall in the rupee value, high retail inflation and subsequent rise in key policy rates.

Sachin Sandhir, Managing Director, RICS South Asia, said, “From the occupier’s point of view, commercial spaces often involve more capital. Problems such as lower sales, cash flow crunch, expensive loans, high cost of labour and inflation have made occupiers cautious about their investments. Even investors — considered a good source of funds for developers — now prefer residential over commercial.”


A DTZ survey adds that despite the cautious outlook for the retail sector, several international chains have announced expansion plans – Cinepolis, a multiplex operator, which intends to operate 400 screens in India by 2016; Starbucks has plans to open 100 outlets by end of next year.

As of Q3 there is a proposed supply pipeline of 21 million sq ft scheduled for completion over the next three years. However, in the wake of the economic condition, several developers continue to re-evaluate the scheduled timelines of their projects.


Cushman and Wakefield says that top eight cities have witnessed total estimated residential unit launches of 132,000 units between January and September 2013, a five per cent increase over the same period for 2012.

High-end property launches in the first three quarters of 2013, which was recorded at 23,500 units, saw the highest growth of 142 per cent over same time last year, while launches in the luxury housing category declined 10.5 per cent between January and September 2013 over same period last year. The residential market has been witnessing stagnant trends in the capital values as well through most micro markets as through across major cities on account of restrained activities.

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