Buying a house still remains a distant dream for thousands of buyers. On the other hand, the continuous slump in the housing sector has resulted in a severe blow to the property developers. However, once the general elections are over, things might turnaround.
Talking to Reema Sharma of Zee Media Corp, Ms. E Jayashree Kurup, Content and Research Head Magicbricks.com shared her views on the current trend in housing project.
What is the current scenario of the housing market (Delhi/NCR)?
The delay in projects has pushed demand for ready-to-move-in projects significantly, primarily due to the increasing pressure of EMI plus rental values. Resale projects have become significantly more affordable. Because of slow transaction rates, the property purchased from the broker and the market is cheaper than the same property purchased from developers. There is an active search indicating intense interest among buyers. As soon as sentiments change, probably after the upcoming general elections in 2014, buyers will be ready with information and there may be a quick turnaround of sales.
In the residential sector across the Delhi NCR, there have been many project launches. However, the actual transactions were small, say brokers. The festive season of 2013 was one of the most muted in the last 5- 6 years, as sales remained sluggish despite the advertised discounts, festive offers and new projects.
Will the housing sector take a turnaround after the General Elections are over?
The current real estate slowdown has largely been because consumers expect residential property prices to fall, according to the Housing Sentiment Index produced by Magicbricks.com and the Indian Institute of Management – Bangalore. The recent HSI report showed that this trend is slowly dropping with consumers now understanding that the prices have reached the lowest values and are preparing to buy. However, a stable political environment could be a trigger for enhanced transactions.
Are Tier II cities better off as compared to the housing sales data in the metro cities? What is the potential of Tier II cities?
Well there is definitely some good traction being seen in all the Tier II and III towns in the last few months. One of the main factors is the availability of affordable housing in good locations as compared to Tier I cities where the property cost has gone beyond the budget of the middle class. The Super Corridor in Indore, the OMR and Sriperambadur in Chennai are typical examples of this.
What is the infrastructure development vis-a-vis completion of housing projects in areas like Noida Extension, Noida/Yamuna Expressway?
The Noida authority has several plans for infrastructural development on this stretch, according to the new master plan; the recently approved Metro alignment will be developed to link Noida with Greater Noida, and later on at the Yamuna Expressway. The Metro line that will begin from Sector 32 will caters to residential sectors lying along the expressway.
The Noida authority has a plan to build a 3.9 km Metro line between Kalindi Kunj and the Botanical Garden crossing through Noida Expressway.
A 6.6 km line is planned from Sector 32 to Sector 62.
The authorities are also planning to provide Ganga water to the residents of this area.
In terms of infrastructure, the authority plans to develop a road network of over 20 km, sewage treatment plants with a total capacity of 30,000 kilolitres per day, 126MW captive power generator.
According to the new master plan, 70 per cent of the total area along the Noida and Yamuna Expressways will be kept for green spaces.
Also, the authority has approved and allotted the land in the master plan for 40 educational institutions and retail development projects.
Planned Export Promotion Zones, together with the Taj Economic Zone along the Yamuna Expressway, are likely to push the economic development of this region.
A proposal to extend two bridges - one over the Shahdara Drain near the Film City and the other just before the Okhla Barrage, has been set on fast track.
Which areas (Noida Extension, Dwarka Expressway, Yamuna Expressway, and Greater Noida) are in greater demand as far as buying property is concerned?
There is a large amount of stock in Noida that is coming up for possession in the year 2014-2015. This will make the area a robust market for home buyers especially end-users. It has emerged as a well-developed micro market having substantial office and retail space, with commercial activity deepening in its various sectors. This will lead to future growth in rental markets.
Yamuna Expressway is becoming a hub for the real estate investors; the projects here are available at affordable prices. The fact that the land prices are still low as compared to Noida and Greater Noida makes it an ideal location for long-term investment. However, one has to keep a minimum five year horizon to see the appreciation in prices.
Greater Noida (West) is closer to Noida than the Yamuna Expressway. The real estate prospects here suffered a dampener when Noida real estate released a large quantity of residential stock. Noida Extension or Noida (West) is preferred by those who have limited and smaller budgets. Good infrastructure, metro connectivity and good road network are the major reasons that have attracted the buyers and investors to this area.
The real estate market here is expecting the completion of various projects that were launched during 2009 to 2010 and which have already been delayed one or two years. This additional supply will keep the capital and rental values stable across all micro markets.
Should there be more price correction in the realty sector? Is there any artificial boom in the housing rates?
There is robust demand at all levels. Sentiments have held back consumers from investing. However, there is an active search happening across Magicbricks.com, indicating a propensity to buy in the near future.
What are the major headwinds facing the realty market currently?
Weak consumer sentiment and political upheaval is primarily responsible for the slowdown. Increased stock is expected to bring end-consumers back to the property market. Rental values have risen across markets and this enhances the prospects of real estate market yields.