India’s new residential launches in Q1 2021 surpass 2020’s full-year totals
A total of 1,912 units were launched in New Delhi during the quarter.
Delhi NCR recorded new unit launches of 1,912 units in Q1 2021 after a prolonged period of relatively low launch activity. According to Cushman & Wakefield, launches in Q1 surpassed the total units launched in the entire 2020. More than half of these units were by renowned developers with a strong brand presence in the city.
Customer preference for projects and developers with a robust execution track record can be attributed to this trend in a market that has a very high number of stalled projects. Mid segment accounted for 63% of the units launched while the rest were in the high-end segment.
Here’s more from Cushman & Wakefield:
Dwarka Expressway, Golf Course Extension Road and Sushant Lok were the micro-markets that saw new launch activity in Gurugram, while Noida Expressway and Greater Noida West recorded launches in Noida. Overall launch activity improved by 73% on a year-on-year comparison as developers decided to go ahead with some of the projects that were kept on hold in 2020.
The city also saw the launch of 726 units in Sector 93, Gurugram under the Haryana Affordable Housing Scheme as developers continued to see an opportunity in this space that has received a significant policy impetus from the government, such as extension of tax deduction on home loan interest and tax holidays for developers. The policy was recently amended to increase the scope of affordable housing projects by increasing the thresholds of minimum and maximum land area (from 5 - 10 acres earlier to 4 – 30 acres).
The city is also seeing a higher interest in plots, especially in Gurugram, with the increased FAR for residential plots in licensed colonies as a major attraction for the buyers. With limited available inventory for this format compared to the spike in demand, some developers are planning to launch more plots in the coming quarters. West Delhi micromarket will also record significant new supply addition in the upcoming quarters by a prominent developer.
SWAMIH fund to revive stalled projects augurs well for the sector, particularly buyers of stressed assets
Disbursements under the government-sponsored SWAMIH fund for last mile funding of stalled projects will lead to the completion of several projects during the quarters ahead and bring respite to the homebuyers. This will bode well for the sector and the overall market sentiment. There have been issues highlighted in several projects covered under the state government’s affordable housing scheme where customer payments are time-bound.
There have been cases where construction has not yet started even after half the payment by customers has been made, compelling authorities to make amendments to the affordable housing policy by linking payments with the stage of construction (instead of time-linked payments). Such interventions to aid homebuyers will play an important role in building up consumer confidence in the sector. The construction activity of ongoing projects in both Gurugram and Noida has been gradually pacing up as sites are now fully functional, though project delays are evident with the disruption induced by COVID.
Market pricing largely stable; opportune time for property purchase
Sales activity has been gradually improving as serious buyers are able to negotiate sweetened deals with some discounts (including inaugural discounts) as well as incentives from developers. The low home loan rates are also attracting fence-sitters to close their property purchase decisions. A prominent project launched in Noida during the quarter received an extremely positive response with offtake of a large portion of the launched units, signaling the buyers’ appetite for quality projects at prime locations.
Sales momentum is likely to improve further as consumer preferences are bound to increase in favor of property ownership. In a measure to boost sales activity, Delhi government notified a 20% reduction in circle rates till 30th September 2021, though this is bound to impact a very limited number of properties in the city. Rental rates witnessed a further correction of 4 – 5% across all submarkets for both mid and high-end segments as demand for rental properties remained tepid during the quarter, with many corporates continuing with the remote working arrangement amidst the evolving situation of the pandemic.