Buyers must grab DISCOUNT OFFERS
It is not advisable for end users to postpone their buying decision in the hope that prices will fall; they must grab the discounts that developers are offering and buy their long-cherished home.
The slowdown in the economy has led to sluggish demand in almost all the sectors including real estate. However, consultants say that this is the right time for end users to buy their longcherished home. As builders are in a tight position, many of them are offering huge discounts, even up to 15%—this is not reflected in their official rate chart, though, but the offer holds for the customers who pay cash down. A builder said that as soon as the demand starts looking up, they will withdraw this discount; thus, once the economy looks up, we can expect the prices to automatically go up. In fact, the emerging trend is also suggesting that developers are not cutting the price, but they are ready to pass on the holding cost to buyers. As the rate of interest at which a builder can raise fund is very high, they find it attractive to give a discount of around 15%, which is their cost of fund, to their customers. At the same time, a customer can borrow a home loan at around 10%. In fact, to attract the borrowers, many banks are offering home loans at less than 10%. Not only this, some of them are even waiving off the processing fees.
Taking all these market dynamics into consideration, a consultant said that if someone wants to buy a house for his personal use, this would be the right time to enter the market. He argued that home loan rate is not likely to fall further from the current level, and also that builders would find it difficult to lower the prices of houses further down. In fact, developers and consultants argue that prices of apartment or plotted development in the NCR are not likely to fall.
They argue that to beat the slowdown in demand, developers cut down on new launches. This will reflect in the availability of apartments in the near future in many submarkets like Noida, Greater Noida, Gurgaon, Ghaziabad, Indirapuram, Crossings Republik, and Sonipat. Knight Frank, a global realty consultancy firm, says in its report that despite falling demand, the capital value appreciation in Gurgaon and Noida could be explained due to a steeper fall in project launches, thereby putting an upward pressure on prices.
The report says: “As per the current trends, the NCR residential market is showing a slowdown in terms of project launches. However, this bodes well with the current market sentiment as absorption has picked up, which will further help in bridging the supply-demand gap. At the same time, liquidity constraints coupled with the increase in construction costs will continue to pose a challenge for developers leading to a further slowdown in project launches. This may put upward pressure on prices, which will certainly attract investors.” The report says that the longterm and short-term moving average of launches confirm a plummeting trend.
A similar analysis of residential sales velocity highlights that the long-term moving average of absorption in the NCR market has recently stabilized after a falling trend.
In fact, demand has significantly improved in the last few quarters leading to a substantial improvement in the shortterm moving average. During January-June 2013, the NCR residential market registered a total absorption of 35,000 unitsshowing an increase of 18% over the first half of 2012. This increase in sales can be ascribed to the high number of project launches in the affordable category.
It is important to note that the Knight Frank report says this upward trend in absorption with limited launches clearly indicates that the NCR market is striving to reach a better equilibrium. In case this trend continues for a couple of quarters, the supply-demand gap will taper further leading to an upward pressure on property prices. Over the past two years, project launches have fallen by nearly 40% compared to the peak levels of 2010, the report said. Despite favourable absorption levels in recent quarters, NCR’s residential market displays a high quarters-to-sell (QTS) ratio as the volume of unsold inventory has been building.
Noida registered a steep dip of 72% in newly-launched projects in the first half of 2013, compared to the same period last year, reflecting the cautious sentiments of developers to not oversupply the market, the report said. The report said absorption in Greater Noida, which includes Greater Noida West (formerly known as Noida Extension), the newly-launched projects rosealmost four times compared to the same period in 2012, suggesting a strong demand for affordable options, which is easy on the buyer’s pocket. Absorption levels dipped in Gurgaon and Noida, largely due to increasing un-affordability of the housing options in these markets. In these conditions, it is not advisable for end users to postpone their buying decisions in the hope that prices would fall. In fact, developers, in order to increase their sales volume, are offering huge discounts on their available projects.
The NCR has seen a slowdown during 2012. Massive delays in project deliveries coupled with the economic slowdown have affected demand, as consumers have become cautious and are delaying home-buying decisions. Taking cue from this trend, developers have begun focusing on project execution and are deferring new launches. Greater Noida and Noida account for more than half of the units under construction in the NCR market. Both these micromarkets are backed by robust infrastructural developments.
Noida is perceived to be a prime end-user market in the NCR due to the presence of good physical and social infrastructure; its proximity to south Delhi and the abundant job opportunities it offers are also an attractive proposition. The main developers in this part of the city are Jaypee, Unitech, Amrapali, Supertech, Gaursons, Ajnara, Paramount, ATS, Antriksh, Mahagun, etc.
Greater Noida, on the other hand, enjoys the presence of large contiguous land parcels that are ideal for group-housing projects. However, compared to Gurgaon and Noida, the residential market in Greater Noida has been somewhat cautious because of the lack of commercial presence to support the residential supply.
Gurgaon is the second largest contributor to the NCR residential market. This micromarket accounts for 24% of the units under construction. New infrastructural developments and the presence of prominent builders like DLF, Tata, Unitech, IREO, M3M, Rahejas, Emaar, etc, have made Gurgaon one of the favoured residential markets in the NCR, with primarily mid- to highsegment projects. The primary developing areas in Gurgaon are Golf Course Extension Road, Southern Peripheral Road, Dwarka Expressway, Manesar, and Jaipur Highway.
Bhiwadi and Dharuhera are the developing residential hubs catering to the affordable-housing demand, which has been created by the continual industrial development in these locations.
Ghaziabad and Faridabad account for nearly 20% of the units under construction in the NCR market. Both these markets are backed by industrial growth. Faridabad’s areas like Old Faridabad and sectors on NH-2, Neharpar, and Surajkund Road have seen ample residential project launches during the last few years. On the other hand, Indirapuram, Crossings Republik, and Raj Nagar Extension are some of preferred locations within Ghaziabad.
Preferred locations in the affordable ranges are Yamuna Expressway, TechZone IV, and Jaypee Sports City—in the price range of Rs 2,500-3,500 per sq ft. Availability of huge land parcels and reasonable prices help developers in launching projects in the affordable and mid-segment range with a ticket size of less than Rs 5 million. The fact that developers have been focusing on affordable and mid-segment housing accords well with an increase in project launches in Ghaziabad, which is another market having similar offerings.
A majority of the projects launched in Ghaziabad are in Raj Nagar Extension, mainly a mid-segment residential area that boasts of good connectivity and infrastructure, with highways under construction and a proposed Metro line. Most of the units launched in Ghaziabad are below the Rs 5 million bracket, with an average unit size of 1,000-1,500 sq ft.
Source: Times of India
Posted on November 25, 2013, in Real Estate and tagged Builder in Delhi NCR, Real Estate Developers & Builders In Delhi NCR, Sanjay Rastogi, Sanjay Rastogi Builder. Bookmark the permalink. Leave a comment.