The NCR real estate market in the new fiscal year is expected to be cautiously optimistic.

Prashant Thakur,
Regional Director & Head – Research, ANAROCK Group

How do you view the prevailing real estate market trend in the Northern region?

Data from ANAROCK Research reveals a vibrant residential real estate market in the NCR between 2018 and Q1 2024. Nearly 1,80,900 units were launched, with robust demand leading to the absorption of 2,99,500 units. As of Q1 2024, approx. 86,400 units remain available.

Significantly, 2023 saw record highs in both new supply and absorption of residential units. within the timeframe analysed. This trend suggests a gradual return to pre-2016 levels, which marked the peak of activity in the NCR housing market.

The graph illustrates an increase in the supply of residential units alongside their absorption rate. Consequently, the amount of available inventory is steadily declining.

An in-depth analysis by ANAROCK reveals Gurugram and Greater Noida as key contributors, leading in both new housing supply and absorption.

Property prices across NCR have risen by 37% between Q1 2018 and Q1 2024, with Greater Noida witnessing the highest jump of 48%. The average property price in NCR now stands at Rs 6,200/sft.

What are the major buying trends in residential and commercial segments in Delhi-NCR and the north region in general?

Residential market: There’s a strong demand for affordable housing driven by a growing middle class, young professionals, and government initiatives like PMAY promoting homeownership among lower-income groups. Due to past delays in project completions and the risk of unfinished projects, buyers in the NCR region increasingly prefer ready-to-move-in properties. Additionally, there has been a noticeable uptick in demand for larger homes or those with extra rooms that can double as office spaces.

Office market: The office leasing activity in NCR is steady and there’s a growing trend towards flexible workspaces. The office space market is stable, with healthy leasing activity, particularly in Gurugram’s prime sub-markets like Cybercity and Golf Course Road.

How is the market dynamics in the new fiscal year 2024-25? What are the key trends to look for in residential and commercial segments?

The NCR real estate market in the new fiscal year is expected to be cautiously optimistic. While challenges persist, there are signs of potential growth, especially in affordable housing and commercial office space.

Residential market trends:

Infrastructure fuelled growth: The ongoing and upcoming infrastructure projects such as Delhi-Mumbai Industrial Corridor (DMIC), the expansion of metro networks, and the development of expressways continue to play a crucial role in driving real estate demand and value.

Focus on affordable housing: Government schemes and initiatives promoting affordable housing are likely to see continued focus.

Rise of co-living spaces: With changing lifestyles and an increasing number of young professionals and students migrating to urban areas, there’s a growing demand for co-living spaces. Developers and operators are likely to capitalize on this trend by offering shared accommodation with modern amenities and flexible lease terms.

Focus on sustainability: Environmentally sustainable features such as green building materials, energy-efficient designs, and water-saving technologies are becoming more prevalent in residential projects. Buyers are increasingly conscious of sustainability and are willing to pay a premium for eco-friendly homes.

Demand in peripheral areas: There might be increased interest in residential properties in peripheral areas of NCR, driven by affordability and improved infrastructure.

Office market trends

Demand for Grade-A office spaces: Despite the hybrid work model, there's likely to be a steady demand for high-quality office spaces as companies prioritize better amenities, infrastructure, and locations to attract and retain talent.

Office space consolidation: Companies may continue to optimize their office space requirements, potentially leading to a rise in co-working spaces and flexible workspace options.

Rise of REITs: Real Estate Investment Trusts (REITs) are becoming a popular investment, providing investors with an opportunity to invest in prime commercial real estate assets with potentially lower risks and regular dividends.

Focus on sustainability:  There could be an increased focus on developing sustainable and energy-efficient office spaces, catering to environmentally conscious businesses.

What are the challenging factors of the real estate market in North region?

The real estate market in the NCR faces the below challenges:

Project delay issues: The NCR market has a history of project delays and buyer disputes and regaining buyer confidence required continued transparency and timely project completions by developers. Interestingly, regulations like RERA and increased new supply by national-level and other large and listed developers has improved transparency in the market here but some lingering scepticism persists.

Inventory overhang: While the overall market is reviving, there’s still a significant amount of available inventory. NCR has the second highest inventory overhang among the top 7 cities – of 16 months by the end of Q1 2024.

Construction slowdowns: Adding to the challenges is the recurring issue of construction bans imposed to combat air pollution in NCR. These bans, typically targeting non-essential construction activities, can cause delays in project timelines. This disrupts project schedules and can lead to cost escalations for developers. Ultimately, these delays can impact delivery timelines for buyers.

What are your findings in the luxury and affordable segments in the region?

The launch of new affordable housing units (under Rs 40 lakh) has been shrinking. Their market share dropped from 41% in 2022 to 24% in 2023, and further down to 19% in the first quarter of 2024.

In contrast, luxury (Rs 1.5 cr-2.5 cr) and ultra-luxury (> Rs 2.5 cr) segments saw significant growth in their year-on-year (Y-o-Y) market share between 2022 and 2023. The luxury segment new supply share grew by 9%, while the ultra-luxury segment’s share increased by 4%. Interestingly, the ultra-luxury segment has experienced a substantial surge in its share of new residential launches. The segment’s share skyrocketed from 21% in 2022 to a whopping 55% in Q1 2024.

What is your market outlook for real estate in northern region? 

The future outlook for the NCR real estate market appears positive with continuous growth in infrastructure, an influx of global corporations setting up offices, and a stable demand for residential properties. However, the market's dynamics could shift with economic changes, interest rate fluctuations, environmental regulations and policy adjustments.