Delhi Ncr Residential Real Estate Overview May 2015
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DELHI NCR RESIDENTIAL REAL ESTATE OVERVIEW MAY 2015 1 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY 3 2. CITY FACT FILE 5 3. MAJOR INFRASTRUCTURE DEVLEOPMENTS 8 4. REAL ESTATE OVERVIEW 10 5. FACTORS IMPACTING REAL ESTATE 14 6. NEW DELHI 15 7. GURGAON 20 8. PERIPHERAL LOCATIONS OF GURGAON 24 9. NOIDA 28 10. GREATER NOIDA 31 11. GHAZIABAD 33 12. LOCATION ATTRACTIVENESS INDEX 35 13. APPENDIX - I (Major Policy-based Developments) 38 2 EXECUTIVE SUMMARY The ‘Delhi-NCR Residential Real Estate Overview – May, 2015’ provides a comprehensive insight into the key trends that have emerged in the residential markets of Delhi-NCR and some of the upcoming peripheral locations. The report is an outcome of a rigorous survey conducted by ICICI Home Finance Company across the different regions of Delhi-NCR. Some of the key findings are as follows: The Delhi-NCR real estate market witnessed a slowdown during 2013, and this trend continued in 2014. Residential markets across the Delhi-NCR region witnessed subdued levels of activity in CY2014 both in terms of new launches and sales volume. On the demand side, this slowdown largely owes to a mix of factors such as unfavourable macroeconomic scenario and weak investor sentiment. Also, an impending interest rate cut kept the buyer preference to remain focused on secondary and emerging markets of Delhi- NCR. On the supply side, pressures of a substantial amount of unsold inventory and liquidity constraints due to slow absorption made the developers to focus on project execution and keep a check on new launches. There has been an increased interest in cost effective micro–markets such as Greater Noida which accounted for a majority of the total sales volume in CY2014 in the Delhi-NCR region. Capital values across majority of the micro-markets of NCR witnessed a stagnation due to subdued demand levels. Also, supply pressures are expected to remain high as a lot of projects are yet to be delivered. New launches primarily took place in the mid-segment, in the micro-markets of Noida, Noida Extension and affordable housing projects in Gurgaon. The mid and affordable housing segments are expected to witness capital appreciation in the short term. The Delhi-NCR region has been witnessing a host of infrastructural developments which are expected to create a positive impact on the overall real estate market scenario. The marquee projects such as DMIC (Delhi Mumbai Industrial Corridor), KMP Expressway (Kundli-Manesar-Palwal Expressway) and the FNG Corridor (Faridabad-Noida-Ghaziabad Corridor) are expected to give a boost to the economy in congruence with the other infrastructural development projects such as the mass transit systems and smart cities project. The Gurgaon real estate market has been traditionally heavily investor driven. Residential prices in the Gurgaon real estate market are expected to be stagnant in the short run owing to the slow pace of inventory absorption. Buyers are maintaining a cautious stance with respect to the high prices and are increasingly shifting their focus towards the secondary markets that have witnessed minor price corrections. However, prices in the long run are expected to trend up owing to the increasing cost of construction coupled with the imminent infrastructure developments in the city. During the survey, it was observed that the Noida market has been going through a wait-and-watch phase, leading to a subdued sentiment because of the deliveries not happening as per schedule. But the deliveries are expected to start in another year’s time which should have a significant positive impact on the sentiment of the market as the occupancy rates start to rise. However, Noida remained a priority destination for mid-segment and affordable housing segments and is predominantly end-user driven. Greater Noida market also witnessed significant real estate activity in 2014 in terms of both new launches and absorption, with a large number of units concentrated in Noida Extension and Yamuna Expressway. Due to the comparative affordability and planned development of these areas, developers continued to prefer launching projects in these locations. Ghaziabad has also emerged as an important micro-market catering primarily to the mid-segment and affordable housing investors. This micro-market primarily includes local investors and end-users who are looking for upgrading their current accommodation or investment. Certain peripheral locations of Gurgaon such as Sohna, Dharuhera, Neemrana and Bhiwadi have witnessed healthy demand from both end users and investors. Sohna, an emerging city adjoining Gurgaon, is being developed as per the ‘Sohna Master Plan-2031’ with an area of 6,110 hectares earmarked for future development and more than 28% of the land area set aside for residential development. The region is set to benefit from its proximity and good connectivity with the prime locations of Gurgaon. Residential real estate is still in a very nascent stage in the region, however in the near future, this location is expected to cater to the spill-over demand from Gurgaon in addition to the 3 EXECUTIVE SUMMARY local demand. The region should also benefit from the existing and planned industrial developments such as IMT Sohna and Ascendas IT SEZ. Dharuhera has emerged as an affordable real estate destination in NCR over the past few years. Residential demand has predominantly been from local end-users or investors from neighboring regions of NCR, seeking affordable options. The area benefits from its strategic location on NH-8, industrial development and good connectivity with Gurgaon. Residential units available in this belt are priced in the average range of INR 2,500 - 3,500 / sq. ft. Neemrana is one of the fastest growing industrial centres in north India. It is strategically located on NH-8 and in proximity to the other industrial sub-markets of Bhiwadi, Bawal, Khushkhera and Tapukhera. Situated in Rajasthan and as a part of Delhi-NCR, this sub-market has attracted heavy industrial investments from Japanese manufacturing firms. With 70% of the 1,200-acre Japanese Zone being operational, the investment in manufacturing facilities by firms such as Daikin, Mitsui Chemicals, Nissan, Nippon and NYK Logistics will enhance the development of this area. Bhiwadi is an industrial town and a part of Delhi-NCR. RIICO (Rajasthan State Industrial Development and Investment Corporation) has been instrumental in the industrialization of Bhiwadi since 1975. The region is also a part of the prestigious DMIC project. Market demand is largely driven by local and neighboring regions of Delhi-NCR such as Manesar and Rajasthan, as residential units in this belt are still in the affordable range. India Gate, Delhi 4 CITY FACT FILE Delhi City Delhi, the national capital of India, is situated in the northern part of the country with Uttar Pradesh bordering it in the east and Haryana in the north, west and south. The city is spread over an area of 1,483 square kilometers and lies 216 meters above the sea level. Two prominent features of Delhi’s geography are the Yamuna flood plains and the Delhi ridge. The low lying Yamuna flood plains provide fertile alluvial soil, which is suitable for agriculture but the plains are prone to floods. However, the Delhi ridge forms a dominating feature in the region. It starts from the Aravali Range in the south and encircles the west, northwest and northeast parts of the city. The Hindon river separates Delhi from Ghaziabad. The name Delhi originates from the Persian word ‘Dahleez’ (threshold of frontier) or from the name of the Mauryan king, Raja Dhillu. Some historical literature also refers to the original name as ‘Dhillika’. The satellite towns like Faridabad, Gurgaon and Noida, collectively known as the National Capital Region (NCR), surround Delhi. NCR was developed as the city needed room to expand and bear the burden of the increasing growth and development in the region. The city boasts of its historical importance from the fact that it has been home to the Mughal Empire. Delhi is the political center of India. Census 2011 Key Highlights Description 2011 2001 Actual Population 16,753,235 13,850,507 Male 8,976,410 7,607,234 Female 7,776,825 6,243,273 Population Growth 20.96% 46.31% Sex Ratio (females per 1000 males) 866 821 Area sq. km. 1,483 1,483 Density per sq. km. 11,297 9,340 Literacy Rate 86.34% 81.67% Male Literacy Rate 91.03% 87.33% Female Literacy Rate 80.93% 75.24% Total Literates 12,763,352 9,664,764 Male Literates 7,210,050 5,700,847 Female Literates 5,553,302 3,963,917 Source: Census 2011 5 CITY FACT FILE Gurgaon City Overview: Gurgaon, located to the south of New Delhi, is the industrial and financial centre of Haryana. This satellite city was recognized as a potential investment destination, especially after the liberalisation of the Indian economy in the 1990s, owing to its proximity to New Delhi and the smart policy initiatives of the Haryana government. Today, modern shopping malls and skyscrapers are dotted along its landscape after a major realty boom post the late 1990s. Geographical Stretch: The Gurgaon district comprises of five blocks: Badshahpur, Pataudi, Sohna, Gurgaon and Farrukhnagar. It is bounded by the district of Jhajjar and Delhi on its north, Faridabad district on the east, on the west lies the Rewari district and the state of Rajasthan and the district of Mewat in the south. It is located at the northern edge of the Aravali mountain ranges. Etymology: The origin of the city’s name ‘Gurgaon’ runs deep in Hindu mythology. Gurgaon is considered as the ancestral village of Guru Dronacharya (or Drona), the martial arts teacher of the Pandavas and the Kauravas in the epic Mahabharata.