30 Dec 2023

The Revival of Delhi-NCR's Real Estate Market: A Promising Future

Introduction

The real estate market in the Delhi-National Capital Region (Delhi-NCR) has experienced a rollercoaster ride over the past decade. From the rampant duping of homebuyers by major realty firms to a grinding halt in demand and lack of price appreciation, the region has faced numerous challenges. However, recent data suggests that the market is finally on the path to recovery, with sales and new launches reaching pre-2015 levels. This article explores the factors contributing to the revival of the Delhi-NCR real estate market and the promising future it holds.

The Challenges Faced by Homebuyers

Between 2007 and 2011, thousands of residential units were booked under various projects by Jaypee Infratech Ltd (JIL), but over 20,000 of these units remain undelivered even after a decade. The Jaypee Group collected a staggering amount of Rs 13,364 crore from homebuyers in booking amounts and advance payments before going into insolvency in 2017. Jaypee Infratech is not the only offender; other major real estate firms like the Amrapali Group have also faced charges of duping homebuyers.

The fallout from these incidents eroded trust in the real estate market and led to subdued demand, few new launches, and a lack of price appreciation in the Delhi-NCR region. However, the tide is turning, and the market is witnessing a resurgence.

A Resurgence in Sales and New Launches

Data from property consultants Knight Frank India reveals that the residential real estate market in the Delhi-NCR, particularly the micro-markets of Noida-Greater Noida, is experiencing a revival. Sales and new launches have bounced back to pre-2015 levels, with residential sales reaching their highest point in 10 years during the first half of 2023. Developers have responded to the increased demand by launching a significant number of new units, surpassing any previous period in nearly a decade.

The steady demand for homes can be attributed to two key factors. First, the pause in the repo rate hike cycle announced in February 2023 provided relief to homebuyers. Second, the lack of ready-to-move-in inventory created a bottleneck in demand, prompting interested buyers to eagerly snap up any new inventory from credible developers. The revitalization of the Delhi-NCR real estate sector can be attributed to government initiatives and policy reforms, such as the Real Estate (Regulation and Development) Act, 2016 (RERA), which have restored investor confidence. Additionally, significant infrastructure development in the region has played a crucial role in the recent boom.

Infrastructure Development and Rising Prices

Enhanced connectivity and infrastructure development in the Delhi-NCR region have significantly contributed to the revival of the real estate market. Micro-markets like Dwarka Expressway, New Gurugram, and Sohna Road have experienced a surge in demand and a rise in home prices. Between April and June 2023, home prices in Delhi-NCR increased by 6% year-on-year, with Gurugram recording an impressive 12% surge during the same period. The Dwarka Expressway and Golf Course Road in Gurugram witnessed significant price appreciation due to improved infrastructure.