While property sales in Delhi-NCR have reportedly seen an improvement of over 40% QoQ, property prices and rental rates have remained unchanged.
Delhi-NCR reported a noticeable improvement in property enquiries and sales in the Jul-Sep 2020 quarter, as against April-June 2020 when the nationwide lockdown marred activities in the real estate market. Overall, the quarter closed with transactions numbering at around 3,100 units.
While sales have reportedly seen an improvement of over 40% QoQ, property prices and rental rates have remained unchanged. The city stands with an unsold housing stock of about two lakh units, reveals 99acres.com Insite, which is a quarterly report focusing on capital and rental price trends in the residential realty market across eight major cities of India.
Speaking on the report, Maneesh Upadhyaya, Chief Business Officer, 99acres.com, said, “The Jul-Sep 2020 quarter set the pace for the recovery of Indian residential real estate market. Post an initial lull in sales and new launches in the previous quarter, the current quarter came as a breather as sales resurged by almost 2.5 times of the pre-COVID levels. Both Delhi NCR and Mumbai saw a significant improvement in transactions, QoQ, as end-users flocked to leverage the lucrative deals floating in the market. Price correction, unlike anticipated, remained a far cry; however, with a negotiation window of up to 10-15%, the deals closed in at a reduced price of 2-5% of the pre-COVID levels.”
Note: Rental Yield has been calculated for a 1,000 sq ft apartment.
Average property prices and rental rates have been calculated as per listings posted on 99acres.com in the studied quarter. The range of property prices may vary by 10% depending on the age and furnishing status of the residential apartments.
Post a lull in housing sales and new launches in Apr-Jun 2020, Delhi NCR’s realty landscape showed some fast cropping green shoots of recovery in Jul-Sep 2020, i.e. soon after the gradual lifting of the nationwide lockdown. Brokers and developers reported a marked improvement in the quality of leads during the quarter as serious homebuyers ventured into the market to conduct site visits. Resultantly, monthly sales volume recovered by almost 50% in July. Overall, the quarter closed with transactions numbering at around 3,100 units, which is a nearly 40% increase from 2,000 units in the previous quarter, but a significant dip from 9,800 units last year. The city constituted about 22% of the total property sales across the top eight metro cities in India, second to Mumbai.
The quoted property prices remained unchanged; however, sellers remained flexible to negotiate up to 10-20% in the resale segment. A few distressed sales were also reported in the quarter. Unlike the previous quarter, which went by without any new launches, Jul-Sep 2020 saw a few new projects coming up in Greater Noida, Ghaziabad and Gurgaon. The silver lining is the increased interest of the NRI community, which coupled with the festive season may fasten the process of recovery in the final quarter of the pandemic-hit year.
Property enquires and sales witnessed an upsurge across Noida, Greater Noida and Ghaziabad in Jul-Sep 2020, as against Apr-Jun 2020. In addition to budget housing units priced within Rs 35-60 lakh, demand for low-rise apartments and independent houses went up as buyers sought privacy in the post-COVID-19 world. Ready-to-move-in inventory garnered maximum interest from homebuyers as confidence in under-construction projects continued to dwindle.
The expanding metro network to Greater Noida, Greater Noida West, Ghaziabad and Jewar continues to hold the baton of a healthy investment scenario in the long term. The latest announcement of an ambitious Film City project is expected to benefit both capital and rental markets of Noida-Greater Noida, and establish the region into one of the biggest business hubs in North India. Coupled with the upcoming Jewar International Airport, the area might also attract NRI investments, eventually at par with Gurgaon.
Demand from the tenant community seemed to shift from residential apartments to builder floor units, thus propelling enquiries in the older sectors of Noida. Any impact on rental ‘asks’ was not reported due to muted demand and excess inventory as property owners remained resilient to short-term challenges posed by COVID-19.
The recovery of the property market in Gurgaon was quicker than the other zones in Delhi NCR. Some lucrative offers by reputed developers led the quarter to close with an increased number of sales in comparison to the Apr-Jun 2020 quarter. New launches, too, reported an improvement, since the previous quarter saw no new unit additions. Resultantly, the unsold housing stock shrunk marginally to about 25,000 units.
Golf Course Extension Road remained the prime gainer in terms of traction in Jul-Sep 2020, closely followed by Dwarka Expressway and New Gurgaon. Excess inventory and poor connectivity, however, remained weak points for the latter, thus widening the window of negotiation to up to 15-20 percent in the resale segment. Homebuyers remained primarily interested in ready housing units, which occupy over 80 percent share in New Gurgaon.
NRI demand inched up significantly in the price bracket of Rs 1.5-2 crore. Housing belts along Golf Course Road and Golf Course Extension Road received maximum enquiries from NRIs. Sales, however, remained low due to prolonged travel restrictions. The rental landscape failed to move positively as the majority of offices in Gurgaon continued with the work-from-home format. The segment is expected to remain grim for another one to two quarters, until offices reopen.
The planned metro corridor to New Gurgaon and Faridabad holds the potential to propel property prices and housing demand in the ensuing quarters. For now, the unchanged circle rates played a positive inducer for the market facing severe repercussions of the COVID-19-led slowdown.
The buying and renting markets in Delhi suffered at the hands of the COVID-19 pandemic. While the average weighted property prices maintained status quo, QoQ, a few areas saw prices softening to the tune of 5-10 percent. For instance, category A localities such as Vasant Vihar, New Friends Colony, Shanti Niketan and Anand Niketan saw a dip in prices owing to high disparity in circle rates and market rates and meek interest from homebuyers, as per the report.
Similarly, Mayur Vihar recorded a few deal closures at a 10-15% discounted rate, depending upon the construction quality or the age and legal status of the property. A few distressed sales in East Delhi’s Laxmi Nagar were also reported to have closed at a value almost 20% lower than the quoted price.
Non-conducive market conditions marred sales in the Jul-Sep 2020 quarter across zones, but particularly in South Delhi. Despite the government’s suggestions to reduce stamp duty rates, the South Delhi Municipal Corporation increased transfer duty for women from 2% to 3%, and for other buyers to 4% from 3% percent, for properties with a registered value of Rs 25 lakh and above.
The rental market remained stagnant as demand from students and working professionals continued to be grim. A surge in vacancy rates hit average rentals with little scope of recovery until the next quarter. Some of the prime student housing hubs, which are impacted by the stunted demand, include Model Town, Tilak Nagar, Lajpat Nagar and Hauz Khas.