CommonFloor Survey Delhi-NCR: Investing in Current Scenario
Introduction The year 2014 began with a new fervor and lot of expectations for the entire nation. And why won t it be! This was the year when the country hosted its 16 th Lok Sabha elections and got a stable government at the Centre. This was followed by the introduction of new policies and initiatives by the government in the recent Union Budget. Overall, the economy now displays signs of revival and the realty market is also painting a vibrant picture. wait-and-watch mode are finally taking a plunge in the market. Though government was the torch-bearer, even developers are not far behind in turning the cherished dream of Housing for All into a reality. Post-budget, several major developers have launched projects for the affordable segment. All these measures have encouraged consumers to buy a home. Invest in this city for good returns On the contrary, the ailing economy in 2013 resulted in a topsy-turvy ride for the Indian realty market. Low GDP, double digit inflation, high interest rate coupled with soaring property values had a cascading impact on the market. However, with political stability, events in the second quarter have managed to infuse positive sentiments among the consumers. This was clearly reflected in a recent survey conducted by CommonFloor.com. To capture the pulse of the National Capital Region, a survey titled Delhi-NCR: Investing in Current Scenario was run recently which brought forth thought-provoking facts. People are planning to invest! Are you? Interestingly, as per the survey, nearly 64 per cent respondents are planning to invest in real estate in the next six months. And if you think, rest of the respondents have no plans to invest, then think again! About 18 per cent respondents plan to invest in the next 6 months to 1 year and 7 per cent beyond a year. (Fig 1) Fig 1: When do you plan to invest in Real Estate? The incentives announced in Modi s maiden budget coupled with a plethora of sops by RBI are doing their magic. As market show signs of revival, investors who were in the Fig 2: Which city in NCR would you want to invest? So which city in Delhi-NCR are people most interested to invest? Well, Noida has been crowned as numero uno. As per the survey, nearly 41 per cent home buyers want to invest in Noida, followed by Gurgaon and Greater Noida. (Fig 2) Realising the immense potential of the area, even HNIs have started showing keen interest in Noida s market. Clearly, it has become the first choice of both end-users and investors. So, what has helped Noida clock this position? Interestingly, connectivity has worked in favour for Noida. Located in Gautam Buddha Nagar, the area enjoys smooth accessibility to other parts of the region. Through DND Flyway, commuting between Noida and Delhi has become just a matter of few minutes. Further, since the inception of Yamuna Expressway (2012), which connects Noida to Agra via Mathura, the area has also caught the fancies of investors from Mathura and Agra. Additionally, the metro connectivity has further enhanced the area s connectivity considerably. 1
appreciation. As per the survey, proximity to workplace and robust social and physical infrastructure has also acted as catalyst in boosting Noida real estate market. (Fig 3) Fig 3: Reasons for buying a property in Noida Earlier this year, a budget of Rs 8,000 crore was also drafted for infrastructure development by the Noida Authority. Apart from setting up of the Noida Metro Rail Corporation (NMRC), it envisaged ambitious plans to build flyovers, footoverbridges and parking spaces. All these measures are expected to give Noida another face-lift in terms of infrastructure. Healthy Returns on Investment (RoI) is the second factor driving realty market in Noida. As per industry stalwarts, on a yearly basis one can expect about 10-15 per cent Reiterating the same, Sushant Muttreja, CMD of Cosmic Group says, over the years now, Noida has emerged as a very well planned and established region in all possible parameters; be it infrastructure, return on investment or public amenities. With property prices soaring at a rapid pace in Delhi, buyers are now looking towards Noida for the purpose of investment. The city has a well-built infrastructure and its proximity to Delhi has made it an ideal destination for all forms of property buying. With the inception of Metro rail and DND, the travel from Delhi to Noida and vice versa has been a very smooth one. The city is also well equipped with all major lifestyle amenities. The survey result shows a very accurate response from the public as Noida stands out amongst every other region for investment purposes in NCR, adds Muttreja. 2
But does Noida have enough supply? Yes! As per data with CommonFloor, out of total ongoing projects in NCR, 25 per cent projects are located in Noida. And interestingly most of these projects are slated for delivery in next one to two years. To be more precise, about 39 per cent projects will be ready for possession in 2014, followed by 33 per cent in 2015 and 18 per cent in 2016. While connectivity made Noida secured the first position, Good returns on investment was the major reason for investing in Gurgaon and Greater Noida. Interestingly, planned upcoming infrastructure has also helped people to select Greater Noida. At present, Greater Noida has several major infra-upgrades in the pipeline. These include Noida- Greater Noida Metro Link, Greater Noida Ganga Water Project, and Integrated Transport Hub, to name a few. There has been a huge rush for affordable houses, and fortunately developers have realised this. Not to forget that the definition of affordable has been tweaked recently. As per the updated norms by RBI, home loans up to Rs 50 lakh in metropolitan cities are now being considered affordable as opposed to Rs 25 lakh earlier. Have you decided your finance option? Apartments, Builder Floors or Plots? As per the property type, nearly 65 per cent respondents preferred multi-storey apartments. This can be mainly attributed to the ease of renting and re-selling and the fact that apartment come decked with all the amenities. The survey also revealed that for 51 per cent people the decision to buy a property is driven by a genuine need for a home, which also explains the popularity for apartments. As 40 per cent respondents want to buy property for investment purpose, residential plots clocked the second position on the preferred property type, which was also shared by builder floors. Affordable segment tops the ladder Fig 5: What are the finance options you are looking for? Apart for finalising a property, arranging the finance is another herculean task. From bank loans to personal options to selling an existing property- though there are several options, home loan from a bank got maximum clicks. As per the survey, nearly 73 per cent buyers would take a home loan route to buy a property. (Fig 5) And why won t they! With slew of measures announced in the Union Budget 2014, buying a home just became much easier. The tax deduction for home loans that was raised from Rs 1.5 lakh to Rs 2 lakh was a widely celebrated move. They are not ready to invest! But why? Fig 4: Your preferred property type Budget being the most important criteria in buying a property, as per the market segmentation, in line with expectations, affordable segment tops the ladder. (Fig 4) Fig 6: Why would you not buy a home now? 3
However, despite several measures announced in the budget, about 13 per cent respondents did not want to invest now or in next six months to one year. And the reason quoted for this is interestingly the anticipation of price depreciation. As per the survey, 41 per cent potential buyers, who did not want to invest anytime soon, are waiting for prices to drop. (Fig 6) But will the prices really drop? Answering the question, Arun Gupta, CEO of Propertree Real Estate Services says, The real estate sector of Delhi NCR is currently witnessing an upsurge in demand along with rapid infrastructural development. And such rise in demand and development of a region makes sure that prices keep on going north. Thus, for an asset like real estate to see drop in prices is a rare sight because of the ever-growing demand and continuously developing infrastructure. Price Correction: A myth or a reality? That s not all! Nearly 51 per cent respondents firmly believe that property values in Delhi NCR will undergo price correction. (Fig 7) On this Kushagr Ansal, director, Ansal Housing says, Although, it has become pretty visible that the prices of properties in few semi-urban regions of Delhi are becoming stationary because of people looking for options in NCR; but price correction might always remain a myth for a real estate destination like Delhi. Fig 7: Do you think Delhi NCR market will undergo price correction? Reiterating the same, Aman Nagar, director of Paras Buildtech says, the market has already undergone enough price correction and with sentiments picking up and festive season round the corner, it is highly unlikely for market to repeat it. On the contrary, the market is witnessing price appreciation in both primary and secondary markets." The last word CommonFloor survey clearly indicates that the market is getting back on track. While consumers are coming forth to invest, developers are launching several projects to meet this increasing demand. So, is this is the right time to invest? Though there could be no specific answer to this, but with festive season around, this surely looks a great time to invest. As festive season is marked by freebies, who knows, you might just strike a great deal! ---------------------------------------------------------------------------------------------------------------------------------------------------------------- 4