Monday, November 9, 2009

Property Demand In Delhi Ncr

Property Demand In Delhi Ncr

The National Capital Region is witnessing frenzied activity again. This time round, it is across segments and in all categories including plots, floors and apartments. The elections were a big driver. Affordable housing has caught the fancy of private developers in Delhi, and large developer groups from the NCR, such as DLF have launched affordable housing in Moti Nagar.

Values have gone up by 8-10 per cent across the board in established areas of Delhi and another 5-7 per cent hike is expected in capital values after the budget. The buyer profile includes end users, investors, builders and High Net Worth individuals.

In premium residential areas such as Defence Colony, Vasant Vihar and Greater Kailash there has been a significant number of transactions. As a result there is very little stock waiting to be sold in the market. Only those sellers who are asking for unreasonably high values are left with stock. According to a real estate consultant, "In a rising market the expectation of the owners rises faster than the market. In a falling market, on the other hand, their expectations fall slower than the rest of the market."

In the less premium market such as Saket, Hauz Khas and Green Park the rate of transactions has been low with values falling 15-20 per cent from peak values. In middle class areas such as Moti Nagar and Vikas Puri values have registered a steep fall of almost 30 per cent.

Mayur Vihar and much of East Delhi is riding the crest of the Commonwealth Games and the advent of the Metro. Areas which had previously recorded very low capital and rental values have already witnessed a 100 per cent rise. The reason for shifting of population from expensive Noida to the more affordable Mayur Vihar has been the rental values and the steadily rising demand for rental housing. The advent of the Metro will enhance these values further.

The demand for builder floors saw a drop of 37-50 percent across Delhi in the last few weeks. With active trading in plots across South and West Delhi, the builder floors market is expected to rebound.Rental values of builder flats and apartments did not undergo any major change in Q3-Q4 2008-2009. They are more or less stable with just a marginal change of 5-15 per cent in the prices depending on the location and deal. As per the local real estate agents in Delhi, people living on rent are the end users and hence there is always a demand for rental homes in Delhi.

Delhi retail market has been slow with a mere 10 per cent transactions happening in the last few months. Retail malls are fetching rental values of Rs 225-250 per sq ft on lower floors and Rs 100-125 per sq ft for the upper floors. On high streets rental values ranged between Rs 700-800 per sq ft, down from Rs 1100 per sq ft an year ago.

In neighbourhood markets, such as Lajpat Nagar and Sarojini Nagar small format units were available at Rs 350-400 per sq ft. However, these come without any power back-up or maintenance. Super to carpet area ratio in small format stores is a mere 10 per cent compared to the 40-50 per cent loading in large format store and malls.

Delhi market has been witnessing a weakening sentiment because of the global economic slow down and consequent job losses. Today the active buyer segments are traders and businessmen. According to experts there is money with potential buyers but they are holding back, either waiting for market to bottom-out or because they are waiting for the economic scenario to improve. For serious end user buyers this is probably the right time to buy. After this once the Metro advances from across Delhi to the NCR, values are bound to rise. Today it is possible to negotiate with sellers but after a few months this may not be possible. The retail market will take more time to stabilise. Neighbourhood markets and Local Shopping Complexes have scored over shopping malls which have seen a drop in footfalls.

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