Will construction ban in Delhi-NCR impact property prices or delay deliveries of under-construction flats?

If you have booked an under-construction property in Delhi-NCR, its delivery may be delayed if construction is banned to battle air pollution in the region in the coming weeks. Real Estate experts say that the construction ban would delay under-construction projects, real estate experts say. However, the impact of such a ban on prices of the residential units will be negligible.

The air quality in Delhi-NCR reaches its worst levels at this time of the year as heavy smog engulfs the entire region. To battle pollution this year, an action plan has been rolled out in advance, mandating that if the pollution levels breach certain levels (i.e. Stage III or ‘severe’) authorities will have to enforce a ban on construction and demolition activities in NCR, except on essential projects (like railways, metros, airports, ISBTs, national security/defence-related projects of national importance).

“As per ANAROCK Research, there are currently as many as 5.68 lakh housing units under various stages of construction in the entire Delhi-NCR region. Periodic construction bans by the NGT, government or the apex court in response to poor air quality have serious consequences. On average, a one-month ban on all construction activity delays a project by at least 3-4 months,” said Prashant Thakur, Sr. Director & Head – Research, ANAROCK Group.

Will the construction ban impact residential prices?

Experts say that the impact of construction bans on overall property prices is almost negligible. However, the construction ban could delay project deliveries. It is a seasonal phenomenon when air quality worsens during the onset of the winter season every year, coinciding with agricultural stubble burning in nearby states.

Moreover, real estate prices in most cities are not so much a function of environmental concerns as of accessibility, proximity to the city centres or major employment hubs, urban mobility via various modes of public transport, and affordability.

It has been proved that air quality in Delhi’s homes is no less polluted than on motorways. However, the common assumption is that residences are a refuge from pollution. Assumptions, whether true or false, are the basic essence of market sentiment.

In Mumbai too, the city perennially experiences floods during the monsoons, yet property prices remained steady. In fact, in the last two and half years since the pandemic, MMR has been the most active region in terms of both new supply and new launches.

As for Delhi-NCR, the region has been very active. While developers restricted new supply, housing sales have been significant. In fact, the region has shed at least 23% of its unsold stock in the last 2.5 years since the pandemic. Back in Q1 2020-end, the overall unsold stock in Delhi-NCR stood at 1.73 lakh units which have reduced to a little over 1.32 lakh units as on Q3 2022-end.

Areas with maximum under-construction units

As per ANAROCK Research, the areas in Delhi-NCR with the maximum under construction units presently include Greater Noida West, Yamuna Expressway, New Gurgaon, Noida Expressway, Dwarka Expressway, Central Noida, Sector 150 (Noida), Greater Faridabad, Raj Nagar Ext. (Ghaziabad), Sohna and Golf Course Ext. Road. These areas together have more than 4 lakh units that are currently under various stages of construction.

Greater Noida West alone has more than 1.37 lakh under-construction units currently, and a construction ban could impact project deliveries eventually.