Over 75,000 homebuyers of Amrapali, Jaypee Infratech and Unitech will not be eligible for support from Rs 25,000 crore stress funds in the National Capital Region, because of numerous conditions applied by the government under the scheme, said homebuyers and industry players.

“Maybe these three players are not qualified, but the property sector is beyond these three. Also if we exclude ventures under these three firms, there will be benefits for two lakh home-buyers”, said Gaurav Gupta, joint secretary of the NCR chapter of the Confederation of Real Estate Developers’ Association of India.
Though about 35,000 Amrapali customers intend to file a petition before the Supreme Court, in order to make the buyers eligible for the funding, while asking about this, majority of homebuyers of Jaypee and Unitech told that they haven’t taken a call on the next step.

The Ministry of Finance had explained that the Fund would not be spent on the projects that are going through litigation in the high court and Supreme Court. The NCR also does not apply for houses that cost more than Rs 1.5 crore. “The next hearing will take place on December 2, when we intend to appeal the court to direct the government or pass an order to allow our apartments to receive funding,” said Amrapali homebuyer Abhishek Kumar.

Amrapali projects had been de-registered by the SC. In accordance with the directives of the finance ministry, funding would only be eligible for those projects registered with real estate regulatory bodies.

“This special window will concentrate on the projects halted due to the lack of funding. It also explores projects that are NPAs or are facing NCLT proceedings that can start construction immediately following the availability of funds,” said the ministry.

In the last hearing, Dipanker, another homebuyer at one of the Amrapali projects in Noida, requested the SC to also consider disbursement of the stressed fund. Due to the price limit of Rs 1.5 crore, a majority of 20,000 homebuyers of the Jaypee’s projects would not be qualified. Yet they feel it could be done by the NBCC, which was asked to complete the projects. “Jaypee ventures are financially viable because their asset value exceeds liability. So, the stress fund is not needed by them, “Ajay Kaul, a homebuyer of Jaypee said.

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By Santhosh Kumar, Vice Chairman – ANAROCK Property Consultants

Residential Real Estate

The Millennium City of Gurugram has a very prominent place on India’s residential real estate map and is considered a bellwether of the state of the market for NCR. If we study what happened in the city’s housing market in the first quarter of 2018 against the same period in 2017, some interesting changes emerge.

Pricing

• Q1 2018 – The weighted average price for housing properties launched between January to May in 2018 is INR 4580/sft.
• Q1 2017 – The weighted average price for housing properties launched between January to May in 2017 was INR 4,300/sft.

In other words, we are seeing an uptick in pricing for newly-launched housing projects in Gurugram, in line with the returning end-user demand as a result of improving market transparency.

Launches

• In Q1 2018, approximately 4,100 new units have been launched in Gurugram, accounting for nearly 32% of the total stock in entire NCR. Interestingly, out of the total stock launched in Gurgaon during this period, nearly 37% consisted of units in the affordable category (<INR 40 lakh), followed by 33% in the luxury segment (INR 80 lakh –  1.5 Cr) and 28% in the ultra-luxury category (>INR 1.5 Cr). The mid-income housing segment saw very few new launches in 2018.
• In Q1 2017, approximately 5,600 new units were launched in Gurugram, accounting for nearly 43% of NCR’s total stock. Out of the total stock launched in this period, a whopping 83% comprised of units in the affordable category (<INR 40 lakh), followed by 16% in the mid segment (INR 40 – 80 lakh). The luxury and ultra-luxury categories saw minimal launches during the period.

While the new launch units in Gurugram have declined in 2018 as against 2017, particularly because builders are focusing on completing their previously launched projects, it is interesting to note that the new supply in the luxury and ultra-luxury segments have seen a major uptick this year on the back of renewed buyer confidence. The government’s focus on affordable housing had somewhat taken the sheen off other segments (luxury and ultra-luxury) in the previous years.

Unsold Inventory

• In Q1 2018, out of the total unsold housing stock in NCR (approximately 2,00400 units), nearly 26% were unsold in Gurugram
• In Q1 2017, out of the total unsold stock in NCR (approximately 2,15,000 units), nearly 24% were unsold in Gurugram.

The burden of unsold housing in entire NCR is quite evidently reducing, although absorption in Gurgaon was marginally faster last year.

Commercial Real Estate

Gurgaon is a prominent commercial office market of Delhi-NCR as well as India, and the dynamics of its commercial office market in Q1 2018 as against the same period last year are worth noting. The data indicates that the city is holding its own on the commercial office front.

• In Q1 2018, the city saw significant demand from IT-BPM as well as manufacturing and engineering companies. In this period, there were 68 million sq. ft. of good quality office stock in Gurugram’s CBD and other areas. While the CBD has a limited vacancy of 2-3%, there is a vacancy rate of 35-37% in other areas. The CBD areas ofGurugram command rentals of INR 118-122/sq.ft./month, which is lower than CBDs of many other cities. However, in other areas of Gurugram, one can lease an office property at INR 65-70/sq.ft./month.
• In Q1 2017, Gurugram’s commercial office sector witnessed significant absorption from BFSI, engineering and manufacturing companies. In this period, the city had around 66 million sq. ft. of good quality stock altogether in its CBD and other areas. The vacancy in CBD areas was around 5-6%, while in other areas it was around 35-40%. Gurugram’s CBD areas commanded rentals of INR 118-120/sq.ft./month, while other areas of the city saw office rentals at INR 68-70/sq.ft./month.

With improving business conditions and rising ease of doing business, global companies are now flocking back to India and Gurugram is a priority destination for many of them. While lease rentals in the CBD and non-CBD areas have not changed significantly over the last one year, the vacancies have dropped marginally – largely on the back of rising demand.

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By Realty Quarter Bureau

FDI-funded realty firm Brahma group is entering commercial real estate space and will invest Rs 1,700 crore to develop an office-cum-retail project at Gurugram.

New York-based Brahma group is an asset management company focusing on the Indian real estate sector.

The company is developing over 200 acre township project at Panchkula in partnership with real estate major DLF. About 1,800 villas have already been delivered in this project.

Brahma group has also tied up with Adani Realty to develop a housing project ‘Samsara’ on 141 acre land in Gurugram.

“We are entering commercial real estate project. We are developing a mixed-use project on over 12 acre land parcel at Gurugram comprising 1.3 million sq ft of leasable area,” Brahma Centre Development Vice President Puneet Khullar told. The project, which is located on Delhi-Gurugram expressway, will have 4 lakh sq ft of office space and rest would be retail, food and entertainment.

The construction work is going on in this project and completion is expected by the end of next year, he said.

Asked about investment, Khullar said the project cost is around Rs 1,700 crore and the same is being met through internal accruals and debt. The company has not yet started the leasing process and will soon appoint property consultants for this purpose, he added.

Unlike housing sector, the commercial real estate is doing fairly well and has been attracting huge investments from both domestic and foreign players. Recently, DLF promoters sold 40 per cent of their stake in rental arm DLF Cyber City Developers (DCCDL) for Rs 12,000 crore. This deal included the sale of 33.34 per cent stake to Singapore’s sovereign wealth fund GIC for Rs 9,000 crore.

To boost investment in the commercial real estate space, the government has introduced a new instrument called the Real Estate Investment Trust (REITs) through which developers can monetise their rent-yielding assets.

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By Prashant Thakur, Head – Research, ANAROCK Property Consultants 

Project delays are one of the most alarming issues historically dogging the Indian real estate sector. The dearth of effective planning and execution of construction activities, escalating construction costs, approval delays, diversion of allocated funds to other projects and tepid sales are some of the predominant factors resulting in project delays. The homebuyer is, of course, at the losing end.

To put it in numbers, during 2017, out of the total 5.8 lakh residential units slated to be completed across the top 7 cities in India, only 1.5 lakh units were actually delivered until December 2017. This indicates that around 4.3 lakh units actually missed their stipulated completion deadlines.

The National Capital Region (NCR), one of the country’s largest residential markets, was seriously wounded by sudden policy changes, structural reforms – and the dubious practices of unscrupulous developers. As a result, it topped the list of cities with maximum project delays. Around 1.5 lakh units in NCR missed the 2017 deadline. The story in Mumbai Metropolitan Region (MMR) was no different with nearly 1.1 lakh units missing the said deadline.

NCR: Where project delays are the order of the day

In NCR, out of the total 1.9 lakh units expected to be delivered in 2017, only 42,500 units were given for possession as promised. Approximately 49% (~73,000 units) of the undelivered residential units were in Greater Noida, followed by 17% (~25,300 units) in Ghaziabad, 13% (~19,400 units) in Gurgaon and 11% (~16,000 units) in Noida.

• Greater Noida: A deeper analysis of the construction activity scenario in Greater Noida reveals some glaring issues. Developers in Greater Noida were expected to deliver around 84,200 units in 2017, of which only 13% were delivered and an additional 39,000 units (46%) are committed for completion by 2018 year-end. Due to the National Green Tribunal (NGT) directive, projects in Greater Noida have been stalled for years due to land litigations between farmers and the developers.
• Ghaziabad: Of the 29,300 units which were to be delivered in 2017, nearly 86% failed to meet their deadline. Only 14% have been handed over to buyers, and around 8,100 units (32%) are envisaged to be completed by year-end 2018. While a few projects have been sealed for recovering the Ghaziabad Development Authority’s (GDA’s) development charges, others face difficulties in obtaining completion certificates.
• Gurgaon: The Millennium City was also not able to deliver around 19,400 units in 2017; the delivery of these units was shifted to future dates. Out of 27,300 units committed for delivery in 2017, only 29% were handed over to buyers and around 14,400 units (53%) are being pushed for completion by year-end 2018. The good news is that most of the delayed units are likely to be completed in 2018, and the delivery of only limited units is being pushed to the subsequent years.
• Noida: Barring of construction activity within a 10-km radius from Okhla Bird Sanctuary between 2013-15 has stalled a large number of projects in Noida region. Out of the 23,900 units committed for delivery in 2017, 67% were unable to meet the deadline. Around 7,900 units (49%) of the delayed units are projected to be completed by December 2018.

In addition, a severe cash crunch due to syphoning of funds by developers for other projects, tweaked project details to bypass environmental/regulatory clearances, changing norms, water/sand crisis and red-tapism became some of the common causes of the long-delayed projects of NCR. Consumer sentiment was severely shaken by these delays and finally brought the sector to a standstill. Developers’ profits took a massive hit and their negative cash flows increased the delays even more.

Can NCRs developers beat the odds in 2018?

The above analysis talks only about the delayed projects that are anticipated to be delivered by the end of 2018. There is more to the story – namely the actually planned deliverables for the year 2018. Besides the delayed 79,400 units whose revised possession timelines are now December 2018, there are actually planned deliveries of around 86,600 units for this year. Altogether, NCR developers are expected to deliver around 1.66 lakh units (3.9 times the units delivered in 2017) by this year-end.

Will developers in NCR be able to deliver such a large number? That is certainly something that bears watching closely. With RERA expected to streamline residential real estate, homebuyers are hopeful that projects that have been stalled or slowed down over the years will pick up momentum and finally be delivered.

The Government authorities are certainly scrutinizing the issue by auditing long-delayed projects to chalk out initiatives and ensure their completion. All-in-all, with a massive number of residential units due for completion, year 2018 is a tough one for the NCR property market.

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By Santhosh Kumar, Vice Chairman – ANAROCK Property Consultants

Despite being hit by the overall slowdown in the real estate market and seeing price corrections up to 10% in most areas, Delhi-NCR continues to be attractive to end-users and investors. Being the national capital, Delhi attracts migrants from all across the country. In fact, as per the Economic Survey of 2017, Delhi, Noida, Greater Noida and Gurugram saw the maximum influx of migrants between 2001 and 2011. Obviously, there is a dire need to fulfil the housing needs of these migrants.

As per ANAROCK data, the housing supply in Delhi over the last two years has been fairly low as compared to its counterparts – Gurugram and Noida. This is essentially due to demand-supply mismatch; there is massive demand for affordable housing in the city, while property prices in most pockets of the city have skyrocketed.

Consequently, the pockets that offer affordable or mid-segment projects have been performing relatively better than the expensive ones – such as Greater Kailash II,Panchsheel Park and South Extension II, to name a few. In 2018 as well, it is the affordable micro-markets which are driving real estate growth in the city. Besides affordable prices, improved metro connectivity in these areas will also attract prospective home buyers.

Let’s take a closer look at Delhi’s most vibrant affordable housing hotspots:

• L-Zone (Dwarka):  Strategically located between Dwarka, Gurugram and IGI airport, L-Zone is among Delhi-NCR’s most preferred property hotspot in 2018. Proposed to be developed as a Smart City, the area will have all modern facilities including solar power stations, rainwater harvesting and camera surveillance – all very much needs of the hour in Delhi. In fact, as per ANAROCK data, nearly 2,050 units have been launched in the L-Zone over the past two years, with the maximum supply being in the mid-range segment (Rs. 40 – 80 lakh), followed by the affordable segment (< Rs. 40 lakh). The weighted average price of properties here is Rs. 3,454/sq. ft.

• UttamNagar: Located in West Delhi, Uttam Nagar has shown massive real estate growth over the last few years. Affordable property prices have kept the momentum going here, with the current capital values ranging between Rs. 3,150 – 6,050/sq. ft.  The monthly rentals for a 1BHK are as low as Rs. 5,000, thereby luring several existing homeowners to redevelop their old standalone properties and build more floors for good rental returns.

Another factor driving real estate growth here is its easy connectivity to all major areas, including Dwarka, Vikaspuri, and IGI airport via the multi-nodal transport system. The combination of affordability and accessibility makes Uttam Nagar a good option for those looking to invest in Delhi-NCR.

• Rohini:Home to two metro stations, Rohini in north-west Delhi continues to be a popular housing destination for end-users and investors alike. The locality boasts of excellent connectivity to other major areas via metro. Additionally, its proximity to the Bawana Industrial Area has triggered developments along Rohini’s Phases 4 and 5. Capital values range anywhere between Rs. 7,300-12,500/sq. ft., which is far cheaper than several other localities in the vicinity.

Despite traffic and woes, rising pollution level and safety concerns, people still find Delhi to be a favourable place to live in because of the ample job opportunities it offers. However, neighbouring Gurugram has not lost its magnetism, either.

Gurugram Real Estate – A Hotspot Check

An on-ground check post recent infrastructure developments like flyovers, underpasses, etc. reveals that quite a few localities in and around the Millennium City are expected to gain real estate momentum. Significantly, the state government’s move to reduce the circle rates in most localities in 2017 has made it easier for developers to gradually clear their unsold ready-to-move-in stock in Gurugram.

Let’s examine which micro-markets are witnessing maximum activity in 2018:

• Sohna:AKA ‘South Gurugram,’ Sohna has found favour among affordable housing seekers due to its proximity to various office and industrial hubs. Backed by well-planned infrastructure, Sohna saw the most real estate activity in Gurugram from January 2017 onward, with a fresh housing supply infusion of almost 4,600 units. Almost 50% of this new supply was in the affordable housing category (< Rs. 40 lakh), followed by an equal mix of mid-segment (Rs. 40-80 lakh) and luxury segment (Rs. 80 lakh – 1.5 cr) flats.

ANAROCK data further reveals that out of the overall supply, close to 2,350 units will be ready for possession in the next couple of years as developers are taking RERA’s stringent penalties with regards to delivery delays quite seriously. The weighted average price of residential properties during this period has been Rs 4,370 per sq. ft.

• Sector 65: Proximity to key office hubs, convenient access to HUDA city metro station and its well-defined social infrastructure qualify Sector 65 as a bona fide Gurugram real estate hotspot in 2018. Located on Golf Course Extension Road, Sector 65 witnessed the launch of close to 1,600 units from January 2017 till date, with the supply comprising of homes priced between Rs. 6,900 – 10,000/sq. ft. All the projects in question are fairly large with over 500 units, which means that their final completion can be pegged to within a timeframe of 3 years or more.

• Sector 68:A preferred locality for both office and housing developments, Sector 68 continues to be attractive to developers, end-users and investors. Sound social infrastructure and good connectivity via the Golf Course Extension Road and NH 248A are added advantages for Sector 68. ANAROCK data indicates that this micro-market saw the launch of close to 1,500 housing units from January 2017 till date, with their completion pegged at within 2-3 years. With the weighted average price here being Rs. 4,090/sq. ft., its affordability factor makes Sector 68 score quite well over other localities.

With the dust of new policies like RERA and GST finally settling, 2018 is definitely seeing Gurugram’s realty market heading northward. Among many other factors, the increased economic activity of 2017 and a number of key infrastructure upgrades such as the widening of NH 8, expansion of Sohna Road and rapid metro connectivity have served the city’s realty market well. As it always is, infrastructure development has been a key market driver for Gurugram and has convincingly vouchsafed its future growth potential.

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