If developers offer good pricing and payment plans, housing demand can start reviving in Delhi NCR.

Mudassir Zaidi

- Executive Director - North, Knight Frank India

What are the peculiar challenges of the sector in Delhi-NCR particularly in terms of construction activities/ finance. Your assessment of the Covid induced challenges.

The real estate sector had been reeling under a long bear period since the year 2013. The year 2016 saw a number of interventions like RERA, demonetisation and GST which resulted in the sector further getting affected. Even though the pandemic in 2020 initially ground the sector to a complete standstill due to a stringent lockdown and migrant labour moving back to their villages, the last quarter of 2020 and the first quarter of 2021 saw some hectic buying activity as many investors / buyers saw an opportunity of a lifetime to buy at historically low levels offered with good payment plans by developers.

The increase in sales numbers did give some much needed respite and liquidity to developers. However, the second wave which started in April 2021 has again brought the sector to a halt. Unlike the first wave the lockdowns have not been as stringent and economic activity is being allowed to take place which has given enough confidence for the workers to stay put at the work sites.

The challenge for developers will be to restart the sales as buyers are unwilling to move out of homes till the infection numbers come down significantly. Also, the buyers who wanted to take advantage of the low prices might not be available in large numbers to support the sector again. The availability of finance to most developers is also limited.

How has the challenge of rising pollution levels impacted the real estate development?

Rising pollution levels especially in Delhi ncr is a very serious problem. The authorities have certainly made efforts to bring the levels under control like the GRAP plan, efforts to stop stubble burning, mechanisms to control vehicular traffic through the city etc. however, these measures have been inadequate and the city continues to suffer especially during the early winter months. The real estate sector has tried to introduce mechanisms to bring indoor pollution under control through the use of air purifiers. External pollution by encouraging afforestation, encouraging use of public and shared transport etc have been done but with limited success.

Tell us about the current circle rates and how will that affect the sector in terms of demand and sales.

The Delhi government has introduced a reduction of 20% in circle rates. This will certainly result in a boost to sales. Many areas in Delhi had circle rates which were higher than the prevailing market rates which resulted in transactions not happening. On the other hand authorities in Gurgaon decided to raise circle rates which will further dampen the buying sentiment in a weak market.

There are a lot of stressed properties in Delhi-NCR with little appetite with most of the developers to take over the projects which are either stuck in or under IBC, your views on the same.

In 2018 an 2019 we had seen a number of developers from the west and south of India look at JV/JDs or DMs to help complete projects. However, since the pandemic started in 2020 there have not been many cases of the same.

In the present scenario, how do you see the demand/ supply across asset class in FY 22?

The present second wave of the pandemic has dampened the buyers sentiment, however, incase developers adapt to the time and offer good pricing and payment plans the demand can start reviving again after the infection rates go down significantly.

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