The National Capital Region (NCR) has some locations that buyers are best advised to avoid. Various issues like delays in delivery, oversupply, speculation and infrastructure deficit have been plaguing these markets, rendering them unsuitable for first-time home purchase.
While Faridabad is a duly plotted area, its younger neighbour – Greater Faridabad – has become notorious for litigated land parcels, delayed delivery issues and a high incidence of broken promises by developers. Everything that can possibly go wrong in a buyer-developer relationship has done just that in this area of NCR.
Although property prices here were always affordable, this market has seen the lowest appreciation in entire NCR. The main reason behind this trend could be Faridabad’s overall ‘industrial town’ ethos. Also, the infrastructure deployment has not kept pace with the considerable residential development in this region. Neither the improved connectivity to Delhi via the national highway nor the under-construction metro or new highway to Gurgaon have changed the realty fortunes of this corridor.
Many instances of fly-by-night operators (and even some established developers) reneging on their commitments to buyers have been evident in Greater Faridabad. There have even been cases of developers absconding altogether after selling as many flats as they could without finishing the projects.
On other cases, buyers have been allotted / shown plots on a map or in a particular location but getting physical possession of plots altogether different from the ones initially agreed upon. In a variant of this scam, buyers were not allotted any plots at all or were saddled with plots not included in any master plan, and bereft of the authorities’ approvals.
In most of these cases, buyers had made partial or full payments against their plots. Between Faridabad and Greater Faridabad, most of the speculative and new residential development has happened in the latter, but very few projects have been delivered so far. This poor track record throws up cause for high caution for end-users – for all and any faith put in location and the developers active here, caveat emptor (‘let the buyers beware’) applies. As far as investors are concerned, this area has fallen off their radar.
The primary issue impacting this location’s viability as an investment destination is the oversupply of residential units. With 1.5-2 lakh units slated to hit this market, prices are unlikely to appreciate much. Many land acquisition issues involving local farmers have sullied the market here over the last few years. The ensuing delays and litigations, resulting higher compensation being paid to farmers for their land, has also decreased overall affordability.
The government has decided to compensate developers for their losses by allotting them higher floor area ratio (FAR). However, this will result in far greater development congestion than was originally envisaged for this area. Delays in completion of projects are another concern.
Despite its disproportionate housing supply, Noida Extension has lost much of its earlier attractiveness. Houses are available at similar prices in areas like Ghaziabad because Noida Extension’s erstwhile key differentiator – its affordability – no longer exists.
Even though the planned metro and a wide main road connecting Noida Extension to Noida are on the anvil, congestion will turn this area into an uninspiring concrete jungle. Also, in light of the recent earthquakes in Nepal whose tremors were felt across NCR, the issue of earthquake resistance has come into sharp focus. Rampant construction is also observed in neighbouring Noida. As both these areas are situated on the Yamuna river belt, they have more river soil than areas like Gurgaon. With increased seismic activity, it is important for buyers to additionally check if zoning and structural laws are being properly followed here and if the project is earthquake-resistant.
Delhi’s L & J zones
With the new land pooling policy in place, peripheral areas like Delhi’s L & J Zone have become highly speculative markets for land. Retail buyers should stay away from these and certainly not fall for land pooling options or related schemes. There is nothing lucrative for smaller buyers in going for land purchases here. These locations are mainly lucrative for investors or those interested in having their own farmhouses. Neither of these areas currently have adequate social infrastructure, and are yet to see any semblance of good civic infrastructure. Additionally, in the L-Zone, there is uncertainty about land reservations / demarcations.
Home buyers and investors are advised to be cautious when considering options in the following locations:
The NH-24 stretch in Ghaziabad
Although Ghaziabad has several launches lined up and good options in affordable housing and township projects are available, price appreciation will largely be driven by its future industrial growth. Also, its viability as a residential destination will depend significantly on infrastructure deployment.
A six-lane expressway has been proposed, but that can easily take more than five years to be built. Currently, there is a major bottleneck for traffic at Indirapuram, and residents commuting here will have to face daily traffic congestion. End-users should only consider moving here if commuting under such conditions is acceptable, and investors should factor in a protracted investment horizon for any appreciable payoff.
A general advisory for end-users and investors interested in this area:
· Check the status of construction in the identified project, as delays in delivery are commonplace – and it is not only smaller, anonymous developers who are involved;
· Keep away from pre-launches. Instead, look for bargain buys when investors exit. At that point of time, construction will be closer to completion or completed, and Gurgaon is witnessing distress sales from investors;
· Several subvention schemes popular these days actually require payment of more money upfront, and the prices per square feet are also higher if one opts for these. The agreements tend to be restrictive, and there is risk of getting stuck with one developer and project. The interest rates as also the terms and conditions of the developer’s chosen bank must be agreed upon;
· The Gurgaon market is already over-priced, pace of infrastructure development is slow and the incentive for quick appreciation has disappeared. A longer investment horizon will have to be considered.
Authored by: Santhosh Kumar, CEO – Operations & International Director, JLL India
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