The realty sector, which had been badly hit during the downturn, is on its way of recovery , as expression of interest convert into sales and the revenue flow becomes more steady. Even though the all-India picture is looking up in general, the degree varies with regions.

While in the western part of India, which includes Bombay, Pune and Goa, the footprint of activities may be small, but in value terms this region is growicng the fastest. In the south (which mainly consists of cities like Bangalore, Chennai and Kochi) the footprint is small and the market here is comparatively slower. Northern India offers a different scenario. With many satellite towns coming up in this region along with Delhi NCR, which is an important centre of activity, the footprint is larger and the volume movement is higher here. In fact, experts feel that most of tier-II and tier-III cities in northern India are on their way to becoming tier-I cities in the future. Some of these cities are Noida, Greater Noida, Lucknow, Jaipur, Kanpur, Indore, Bhopal, Dehradun, Mohali and Chandigarh.

Like in the rest of India, the residential sector is on a faster growth track here than the rest of India. However, for most developers, the focus is on execution and delivery of projects rather than new launches. These projects are mostly in the mid-level segment as this is the segment which is moving the fastest. The mid-income segment is the flavour of the season but not without reason. Post-Lehman disaster, liquidity, which was easily available to the realty sector, dried up completely. While banks became more and more averse to lending to this sector, private equity players started playing a wait and watch game. The takers for luxury segment dropped sharply, as a result the realtors had no option but turn to mid income housing as there was already a built-up demand here.

Till now the developers were busy launching luxury housing as the margins were higher and transaction costs were lower. Since mid-income housing had a ready demand from end users launching more projects in this segment helped them tackle their liquidity crisis better. In order to make these projects more affordable, developers not only reduced the unit size but also the unit price.

With more and more projects being launched in this segment, the supply is expected to go up. The Delhi NCR region alone is expected to experience over 650% increase in stocks to around 250,000 units in the next four years from the 33,000 units at present. While around 224,000 units are going to be added to the stock of NCR, around 137,000 units would be added to Noida and Greater Noida region alone.

Of the total housing stocks in the entire north, the share of the mid-income range is going to see a sharp rise as compared to the high-end segment. Analysts believe that this stock is expected to bring the prices down in the short term but once the market stabilises developers will start launching high-end projects which will in turn lead to costlier mid income housing.

However, right now, the mid income housing market is stable. During the last couple of quarters every new launch has met with a similar offering by a competing developer in the same price band .In an effort to sell more and more inventory, developers are stressing on construction, quality and location. This trend is clear in most NCR region, including Noida, Greater Noida, Ghaziabad and Faridabad. Cities like Manesar will experience such trends very soon.

Another interesting trend that can be noticed is that mid-income housing will dictate pricing for other segments. This segment will decide pricing for the entire north India. Till sometime ago the luxury segment set the benchmark for pricing which other segments followed. The scenario is different now. With mid-income housing stocks going up and market share increasing to more than half of the market this segment will decide on the price movement of other segments.

As developers are currently concentrating on the execution and delivery of projects, a lot of actual supply will take place in the forthcoming quarters. But all projects may not come to the market at the same time because many of them will be rolled over by a few months or even a few quarters. In the NCR region Gurgaon has had the highest completion rates in the past year and a half. However, in the next year, Noida and Greater Noida are expected to see a huge flow of inventories. The other markets, including Ghaziabad and Faridabad, will also supply mid-income housing in the near future.

Most of the time developers do not risk with the pricing of mid-income housing as this is a price-sensitive segment. Even though increasing home loan rates could decrease the affordability of this segment, the end user is likely to go ahead and invest for his lifetime asset creation. Speculators are few and far between in this segment, as a result its growth is mostly propelled by the genuine buyer. Because of this, unnecessary spiralling of prices is not very likely.

The commercial space is also picking up in this market but developers are cautious about not creating too much of it. This space is being developed mainly for IT/ITeS, only where and when there is a demand.

For major realty firms like DLF, Parsvnath and Omaxe, north India is a success story right now because all of them have tweaked their business model in the right direction. They are constructing all that sells more. DLF claims that all their northern projects, which may be at the construction or completion level, are completely sold out. These include Capital Greens in Delhi, Magnolia, Park Place and Ballaire in Gurgaon and plots and independent floors in Panchkula. With the festive season approaching malls are also doing well. As far as office space is concerned DLF is planning to deliver 4 million sq ft by the end of this fiscal. Of this it has already delivered 1 million sq ft in the last quarter.

Another Delhi-based developer Parsvnath is developing 80 million sq ft. Of this the majority of development is taking place in northern India and in the residential space. Parsvnath is developing in most cities in the north, which include Noida, Greater Noida, Kanpur and Lucknow, and the response has been good. While the south Indian market is very slow, business potential is very high in the north, developers say. u