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With the fast-paced development in and around Delhi NCR, real estate market has scaled new heights. The property in Delhi NCR has been in huge demand in the recent years. The region has witnessed tremendous infrastructural development in the form of hospitals, schools, entertainment centers, shopping malls, etc. Not just the infrastructural development with the metro facility the region can boast of excellent transportation amenities. Some of the major factors that have contributed to the property boom in Delhi NCR have been described below. Let’s take a look:

More development better prices
The amazing infrastructural developments and improved connectivity due to the metro rail expansion, which connects regions like Noida, Faridabad and Gurgaon, new employment opportunities have been created. This factor has played a very crucial role in the Delhi Real Estate growth. The demand for Property in Delhi NCR is rising tremendously but the supply is falling short of the demand. Thus demand-supply function has also fueled the property prices in the region.

Fast paced urbanization
Delhi NCR has become one of the most sought after locations in the real estate landscape of the country. Rampant urbanization has played a major role in the tremendous growth of the Delhi Real Estate. The urbanization has resulted in great job opportunities, world class infrastructure, and excellent transportation facilities. All these factors have contributed immensely in the growth of the Delhi Real Estate. With more and more people migrating to the region in search of employment the demand for residential plots is also going up.

Growing investor driven market
Capitalizing on the growing demand for residential complexes, builders have come with numerous real estate projects offering world-class amenities. The high-end lifestyle and facilities offered by these projects pull investors from different parts of the country. This has made Delhi NCR a booming destination for investments that has added to property prices in Delhi NCR.

All these factors have contributed to flourishing costs of Property in Delhi NCR. Investing in Delhi Real Estate is a smart idea with the guaranteed ROI (return on investment).The sky rocketing prices of property is an obstacle for the common man. Builders are coming with numerous budgetary real estate projects to cater to the demands of the middle class segment.

Real estate prices in investor-driven markets such as UP’s Noida, Navi Mumbai, Ludhiana, Chandigarh andGurgaon’s Dwarka Manesar Expressway have seen more than 10 percent pricecorrection due to all-around liquidity squeeze, dearth of buyers and erosion of investor faith in the property market.
In areas like Ulwe outside Mumbai where massive housing projects are coming up or already constructed, prices have remained flat as apartments here are unsold or have been bought by investors hoping to flip it for easy profit. The same is true for highly speculative markets such as Noida and Ludhiana too where there is a dearth of genuine buyers and investors are looking to exit from projects.
Today’s Economic Times notes that the first signs of a bubble bursting in this investor market are finally here as a 1,100 sq ft apartment in Noida Extension that cost around Rs 42 lakh a few months ago can today be bought for around Rs 37 lakh, while a 1,200 sq ft apartment can be had for Rs 77 lakh compared with Rs 86 lakh six months ago near Gurgaon’s Dwarka Manesar Express.
Quoting property agents in Gurgaon and Delhi, the report saysbuilders today are willing to throw in 10 percent discount. With a little bit of push, they are even offering get 5-6% worth of freebies such as free furniture or ACs, free parking or top-notch flooring etc in these investor-driven markets.
ReutersReuters
Apart from investor markets, property prices have plunged across 22 major cities, including Mumbai, Delhi, Bangalore, Chennai and Pune during the April-June quarter as developers battle with low sales and high inventory.
The National Housing Bank’s Residex tracks movement in prices of residential properties on a quarterly basis. According to the index, during the period between April and June 2013 not only the tier I cities, but also the tier II cities witnessed a fall in prices.
” Investor-driven markets, especially in North India, are seeing a 20 percent correction in secondary sales as there is complete panic here since these apartments are not habitable. Developed areas, on the other hand, are seeing a price correction of around 10 percent in terms of discounts and freebies,”said Pankaj Kapoor, MD at real estate research firm Liasas Foras.
As Firstpost noted earlier, residential property in Kochi declined by 3.37%, Patna-3.29%, Coimbatore 3.26%, Ahmedabad 3.13%, Faridabad 2.42%, Chennai 2.26%, Jaipur 1.79%, Delhi 1.49% and Bhopal 1.30% during the June quarter.
And if you were to look at the sales figures, the reality is even more grim.
Data from property research firm Liasas Foras shows Mumbai saw the maximum inventory of unsold homes at 155.27 million square feet or 48 months of unsold inventory during the first quarter of FY14.For NCR, the inventory has more than doubled to 31 months in the first quarter of FY14, while for Mumbai it has risen from 17 months to 40 months.
Inventory denotes the number of months required to clear the stock at the existing absorption rate.
An ideal scenario implies inventory should be in the range of eight to 10 months. But Mumbai would take four years to sell these homes despite a slew of discount schemes, new launches and back-room negotiations.
Even Cushman & Wakefield suggests that more than 30% of houses under construction in Mumbai are priced at more than Rs 1 crore.
“The quarter April-June was subuded for the real estate market and possibly one of the worst quarters in terms of sales across cities. A combination of discounts and flexible pricing is keeping up the sales in the past few months,” noted Pankaj Kapoor of Liases Foras.
Clearly an artificial price rise has been created to accommodate investors at each stage of construction, which is no longer sustainable. Oversupply and overpricing have reached a point that has made it inevitable for the prices to soften.
“More than 40 percent of the buyers in Mumbai’s property market are investors. Noida is even worse and akin to a ghost town. Today, all investors are are looking to cash out as more appreciation is just not possible. But their money is stuck since there are no genuine buyers at this price point and the rupee has tanked to 65 against the dollar from 43-45 when these investments were made,” an industry veteran told Firstpost on condition of anonymity.
In other words, with a depreciating rupee and high inflation,the cost of money has gone up and the chances of making money in the short-term are not very bright, which is why investors are no longer ready to pump in money.
And with 2013 marking the exit of private equity, a distress sale in the real estate industry cannot be ruled out.
Expecting an endgame to speculative real estate prices, Manish Bhandari of Vallum Capital in a recent report titled ‘Valuenomics” says a ‘large increase in asset price is followed by a higher demand, as investors think that further increases in prices will follow. This “super-exponential” acceleration in prices due to a positive feedback (or “pro-cyclicality”) leads to formation and then maturation of a bubble, which has happened in case of the Real Estate prices in India.’
He expectsa price correction of more than 40% and thereafter time correction for another four to five years as during this period banks are likely to deleverage their balance sheet, stomped by losses, while investors will shy away from further investments and genuine buyers would emerge to clear excess inventory.
“The previous deleveraging cycle in 1997-2003 saw real estate prices correct by 50 per cent in Mumbai Metro Region. Add to that the likely exit of PE players. ..Unless government deflates the housing bubble in orderly manner; the aftermath and reverberating effect of collapse by market mechanism will surprise a generations on how a nation was making its way to prosperity by speculating on a piece of land and eventually lost a fortune,” adds Bhandari.

Source: First Post

MUMBAI: Most property markets are expected to see turnaround and start pricing in a volume recovery in second half of 2016 at the earliest, said Bank of America Merrill Lynch in a report. It expects the stock markets to start pricing in a volume recovery similar to 2009, supported by further interest rate cuts by the Reserve Bank of India in future.

Since January, the central bank has reduced interest rate by 125 basis points including 50 basis point reduction in September.

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NEW DELHI: Over 75 per cent of 3,540 live real estate projects with outstanding investments of more than Rs 14 lakh crore remained non-starters as of 2014-15, an Assocham study said.

“Over 75 per cent of total 3,540 live projects with total outstanding investments worth over Rs 14 lakh crore attracted by the real estate sector across India remained non-starters as of financial year 2014-15,” said an Assocham study.

As per the study, while over 2,300 projects in the realty sector remained non-starters, over 1,000 on-going projects have registered significant delays in completion.

With 964 projects, domestic private sector accounted for 95 per cent share in projects facing delays, followed by public sector (49 projects) and foreign private companies (six projects), it said.

“On an average, real estate projects in India are facing a delay of 33 months in completion,” Assocham Secretary General D S Rawat said while releasing the report.
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