With no sign of turnaround, NCR real estate market on tight belt

Rewind to January 2013, when the Gurugram-Manesar region seemed like an ultimate real estate destination for fortune hunters. A broker, sitting in a non-descript room with his multiple mobile phones ringing non-stop, had told Business Standard about how the value of land was getting unlocked in this part of the national capital region of Delhi. 

On an average, a land-lot acquired for Rs 25 lakh an acre in 2003 was valued at anything from Rs 6 crore to Rs 15 crore an acre in 2013, he had pointed out while explaining the interest in several unsung and unknown areas beyond the glitzy malls and skyscraper corporate offices in Gurugram. He was not alone; the entire stretch was dotted with such broker-dealer offices doing brisk business and selling dreams.

Seven years later, the brokers’ offices have shrunk in number, not just in Gurugram but the entire NCR stretching to Noida and Greater Noida much beyond the Yamuna river. Those that have survived have no fairy tale figures to offer anymore for either land or apartments in NCR — a hotbed of delayed projects.


While demonetisation along with the overall economic slowdown altered the real estate landscape, the narrative has changed even further with the government taking over the management of debt-laden builder Unitech, some big brands such as Jaypee going into insolvency and many more including Amrapali, Supertech and Ansals coming under criminal proceedings. Market estimates suggest some 150 real estate promoters had to go to jail over some violation or the other in the past couple of years. 

That doesn’t mean, however, there’s no competition left in the market, DLF CEO Rajeev Talwar pointed out. Besides DLF, there are developers such as Godrej Properties, Mahindras and Tata Housing spreading out in NCR across various price range including luxury. Then there are others such as Vatika, M3M and ATS doing reasonably well, according to an analyst. 

To a question on whether the bloodshed was over in the Delhi-NCR real estate, Talwar’s prompt response was, ‘’definitely not.’’ He believes the property market, across the country, requires guidance and help from the government, regulatory authorities, judiciary and financial institutions so that the decline of the past decade is not repeated. While the introduction of Real Estate Regulation & Development Act (RERA ) has been a confidence-building measure, there’s ample opportunity still, Talwar added.

It has been a moment of caution for everyone including DLF, said Talwar, listing out the steps the developer had to take to beat the financial stress and cut its piling debt. ‘’We offloaded everything that was not core, we curtailed expansion where announcement wasn’t made, we concentrated on completing projects, and focused on leasing.’’ His advice is that companies shouldn’t splurge while observing that most realtors who had to go belly down didn’t exercise caution. 

Coming to numbers, Mumbai Metropolitan Region (MMR), NCR and Bengaluru together accounted for 80 per cent of the share of the total real estate loan of $93 billion (Rs 6.63 trillion), consulting firm Anarock said in a report. According to Anuj Puri, chairman, Anarock Property Consultants, multiple factors are responsible for the current state of Indian residential segment. 

‘’Demand-supply mismatch coupled with unscrupulous activities of some developers (that duped homebuyers) were the foremost reasons.’’ In a bid to cash in on the growing residential demand from the migrant population across top cities, developers added massive supply into the market during 2013-2014 time periods. But this new supply didn’t match demand, thus hampering sales and construction timelines, Puri said. 

Also, the government focus on affordable homes took the sheen away from luxury housing, he argued. Liquidity continues to be a major pain point in the residential segment. Amidst slow sales, funding to developers from banks, non-banking finance companies as well as housing finance companies is literally frozen, according to Puri. 

Unsold inventory pile-up is a logical follow-up, with Delhi-NCR having the second highest unsold stock of close to 1,60,700 units, numbers from real estate research firm Propequity show. Add to that the steep fall in new launches in NCR to 35,900 units in 2019 from a high of 197,240 units in 2010, to get the complete picture of the once booming property market. 

In this gloomy backdrop, some are seeing signs of a turnaround in 2020. Pradeep Aggarwal, chairman of Assocham national council on real estate is one of them. ‘’Several things went wrong during the initial years of the decade but in the past few years, dynamics of the market have begun to settle,’’ he said. 

Not everyone is that optimistic though. Sanjay Sharma, managing director, Quebrex, a Gurugram-based consultancy, said there’s been a pick-up only in the builder plot market. What was selling at Rs 60,000 per sq yard a year ago is now valued at Rs 75,000 per sq yard in some of the well-located areas in Gurugram, for instance. But, the business is lacklustre in ready to move apartments, Sharma said. The most problematic segment is the high-end at over Rs 5 crore a unit in NCR, according to analysts, as investors have moved away. 

‘’There’s just no money to invest. There’s blood in the market and people are digging into their savings,’’ Sharma said. He’s clear that there’s no way investors would come back in 2020. And until investors return, real estate won’t revive. DLF’s Talwar, however, is looking out for that inflexion point, when buyers would feel empowered with the knowledge that there’s no possibility of being cheated. 

That will be the moment of revival, and that can come in the near future. 

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel