Covid-19 impact: NCR housing market in a downward spiral

The slowdown in demand, which got accentuated with the pandemic, has hit the real estate sector hard because of which residential properties have seen a decline in prices of up to 15% in the national capital region. While the Delhi market, which is largely a resale market as there are hardly any new projects, has seen a decline of 10-15%, the NCR, which comprises Noida, Gurgaon and Ghaziabad, may not have seen much decline in quoted prices, but for serious buyers the drop is almost in the same range.

Real estate consultants, developers and analysts told FE that generally Delhi prices depend on location, demand-supply, construction quality, etc. In NCR, primary sales are higher because of new and higher inventory.

President of Association of Property Professionals Kshitij Nagpal said, “The real estate market in Delhi has been seeing tough times in the past few years and Covid has exacerbated the pain. Property prices have softened in past few months in the range of 5-15% depending on area and property.”

For instance, areas like Vasant Vihar, New Friends Colony, Shanti Niketan and Anand Niketan have seen a drop in prices. These are all Category A localities where prices are depressed due to high circle rates and lower market rate, he explained.

Buyers are holding on to cash and delaying purchasing decisions and the market is expected to take much longer to revive than the next six-12 months. Besides, Delhi is set to hike stamp duty, which is another dent on the buyer’s pocket, Nagpal added.

Bhushan Kapur, a real estate consultant in Mayur Vihar, said, “Prices corrected around 10% on an average, but there are specific cases where discount was higher. It depends on how the property is developed or is in a dispute, etc. For instance, in east Delhi, some distress sale happened in Laxmi Nagar where the discount was about 20%,” he added.

The prices have witnessed a decline in the national capital region also.

According to Knight Frank’s India real estate H12020 report, Delhi-NCR witnessed a 6% Y-o-Y decline in weighted average prices during January-June 2020 to Rs 4,145 per sq ft, which is the lowest in last three years. It also said that there is no change in quoted prices but cash discounts at negotiation stage are in the range of 10-20%. Also possession-linked payment plans like 10:90 ratio offer indirect discounts and surety, especially in these challenging times.

Analysts say that developers in Ghaziabad, Noida, Greater Noida and Gurgaon are also giving special offers to lower overall cost by 10-15%. “They are giving 5-8% flat discount, then many offer to pay registration charges, waive one year’s maintenance costs, offer to cover three-months EMI, etc,” a senior executive with a leading developer explained.

Developers are also offering discounts and incentives as consumer interest is gradually reviving and they expect it to drive sales. Mani Rangarajan, group COO of property listing sites Housing.com, Makaan.com and PropTiger.com, said recently PropTiger organised a two-day online event with individual property consulting sessions and spot offers from more than 30 developers, including Godrej, Brigade and Lodha. More than 15,000 buyers registered during the event.