Residential property prices in several areas of Delhi having declined by 10-20% in 2013 and then stabilized in 2014. Fence-sitters are watching the market movements to determine if prices will slide further.
Residential prices in established locations of South and Central Delhi such as Vasant Vihar, Defence Colony, Jor Bagh and Golf Links saw a decline of 15-20% in 2013 and remained at those levels in 2014. A correction in prices was also observed in areas like Westend, Shantiniketan, Prithviraj, Aurangzeb Road and Amrita Shergill Marg, but in a lower range of 10-15%.
Unlike the slide observed in areas of Delhi, areas in Gurgaon and Noida saw prices remain stable at Rs 6,500-17,000/sq.ft. and Rs 5,500-8,000/sq.ft. respectively in 2013. These areas remained stable at the above prices throughout 2014. As developers remain under pressure due to excess inventory in Gurgaon and Noida, buyers and investors can expect significant discounts from developers here.
In contrast to the negative market dynamics in areas of Delhi and stagnant prices in Gurgaon and Noida, upcoming NCR investment locations like Neemrana, Sohna and Delhi’s J and L zones saw an increase of 15-35% over the same time period. The only exception to the appreciation observed in these locations was Yamuna Expressway, which remained stable. However, low land prices and development potential continue to help Yamuna Expressway remain an attractive destination for investors.
Pull Factors Behind Upcoming Locations
There are sound fundamentals behind why these emerging locations beat the negative trend and saw very good price appreciation. While Neemrana has massive industrial development along with good connectivity through the NH-8, Sohna promises the next wave of industrial and residential growth in Gurgaon. Delhi’s J-zone has the location advantage of South Delhi and the L-zone is in an area adjoining the upcoming Dwarka-Gurgaon Expressway.
These are, however, locations primarily lucrative for investors or those looking for farmhouses. They do not currently have adequate social infrastructure, and some of them have yet to see any semblance of the good infrastructure visible in the well-established areas. Thorough due diligence is a must for buyers making land purchases in these locations, particularly in Delhi’s J and L zones. The latter have highly speculative valuations. Additionally, in the L zone, there is uncertainty about land reservations / demarcations.
Overall, the Delhi NCR market is under stress, which means that valuations remain attractive for end users. This also points to opportunities for distress sales and bargain buys for investors / buyers.
Developers will be under greater duress by the festive period later this year, during which buyers / investors can expect good bargains. However, buyers should think ahead of the curve.
If interest rates were to come down further, they would be well-advised to make purchases by availing of loans at lower interest rates as in such a scenario, developers will not offer a similar quantum of discounts as they are currently doing. Smart buyers with deeper pockets can also purchase property directly from investors, in projects where the latter price their offerings lower than the developer.
Importantly, buyers should not fall in the trap of waiting too long. If a project meets all their requirements, it is prudent to proceed with the purchase, as it does not take long for reversals to take place in the real estate market.
Tips For Buyers And Investors
• South and Central Delhi: The next six months are likely to witness an increase in developers’ pain; persistent negotiation can result in excellent deals.
• Gurgaon: Apart from corridors such as Sohna Road and Dwarka Expressway, projects on Golf Course Road are hot tickets.
• Noida: Focus on Noida-Greater Noida Expressway and Noida City, focusing squarely on developers with proven delivery track record.
• Neemrana, Yamuna Expressway and Sohna: Townships or plotted projects, group housing projects.
• Delhi-J and L zone: Invest in ownership or development of farmhouses, townhouses. Due diligence highly advised for buyers.
Price changes at a glance:
Authored by: Santhosh Kumar, CEO – Operations & International Director, JLL India
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