Why so many housing projects are being launched in Delhi NCR?
NEW DELHI: Real estate developers hope to kick start residential sales in the national capital region with a flurry of new project launches on the back of a buoyant job market and anticipation of more rate cuts ahead.
The Delhi NCR market, which is expected to take more than three years to clear its current housing inventory, has suddenly witnessed four project launches in the new financial year from companies like Supertech, M3M India and Mahindra Lifespaces in Gurgaon, and Mahagun in Noida, with many others in the pipeline.
Developers are trying to enthuse the market and provide impetus for fence sitters, according to Rajat Gupta, executive director, transaction services at CBRE South Asia.
“Builders are mainly targeting mid-segment home buyers who are sensitive to interest rate correction, as they anticipate further cuts by the year-end,” he said.
Also, buoyant office space take-off in major cities point to better job market and more earnings, which are expected to perk up home buying sentiments. “There’s money in the system. Supernatural returns from stock market and an exponential rise in e-commerce and back end businesses will improve home sales in times to come,” Gupta added.
The Reserve Bank of India (RBI) has lowered interest rates by a total of 50 basis points since January 2015 outside the policy cycle this year. However, in its latest policy review on April 7, the apex bank kept repo rate unchanged.
But, this has pushed top banks like SBI, HDFC Bank, HDFC, ICICI Bank and Axis Bank to finally reduce their home loan rates.
Santhosh Kumar, chief executive officer – operations and international director at property advisory firm JLL India, feels sales are expected to improve in the NCR market in the coming years, especially after the announcement of the real estate regulatory bill.
“Real estate regulatory bill will create positive sentiments among the buyers as they will be safeguarded against inordinate delays in completion of projects,” he said.
The Delhi NCR market has been affected the most by the real estate slowdown, with sales volume declining by 43% year-on-year in 2014, registering lowest housing absorption in a decade.
Slow sales along with cautious stance by banks on lending to over-leveraged developers have created a critical liquidity crunch in the market for quite some time. So, from where would the money to fund projects come from?
Private equity funds are returning to the market and there is always money available for good projects, according to Gupta of CBRE. “If the development is noted and all the fundamentals are in place, PE players are interested to put money,” he said.