NCR real estate in focus

Property show puts Delhi's capital region in focus

21 Jan 11

Cluster led rest of market in terms of home supply and absorption during second quarter of 2010 accounting for 59% of residential supply

Dubai: For better or otherwise, Delhi and its developers have been in the spotlight right up to and during last October's Commonwealth Games. Two months down the line, they still can't shake off being the centre of attention.

An Indian property exhibition opening today in Dubai profiles many developments from Delhi's National Capital Region (NCR), and with good reason too. The NCR-Delhi cluster led the rest of the market in terms of residential supply and absorption during the second quarter of 2010 for which data is available.

In fact, Delhi-NCR accounted for 59 per cent of the residential supply in India during this period, according to the consultancy Jones Lang LaSalle. Average capital values in NCR's residential space started to recover from the last quarter of 2009 after dropping by as much as 10 per cent during 2008.

Based on anecdotal evidence nothing much has happened since to disrupt its perch at the top. But the quality of build — especially at the Commonwealth Games Village — had become a hot potato ahead of the actual opening.

"Quality concerns are there at all times, but the Games' buildings were not that bad either," said Surpreet Suri, director at The 3C Company, which has extensive interests in the NCR region. "Also, when the media gets involves, things get magnified."

According to him, there are still valid reasons at work for NCR to retain top billing in investor interest. "The market started to pick up serious investor interest only in the last two to three years, and prices in NCR still offer room for a lot better appreciation.

"In comparison, values in the upscale areas of Delhi and certain parts of Gurgaon have travelled a little too far already. In Noida, there are still apartments that are available for varying budgets."

The developer is making a case for its premium Rs6.5 billion Lotus 300 project — located in Sector 107 in Noida — at the India Home Property Exhibition. Priced from Rs17.5 million to Rs25 million, more than 100 units of the 300 available have been acquired by investors in India. They are now being offered to prospective NRI buyers.

"The drawings have been approved and we are ready to start construction in a month to two months," said Suri. Until Lotus 300 came along, Suri's company had been concentrating on mid-priced residential offerings.

Recently, India's central bank issued a requirement that mortgage lenders in the country should not go beyond certain limits in their offers. It was believed that this would have an impact on lending activity targeted at the luxury end of the housing market.

Suri said: "There are few restrictions on money flowing in, but really not to the extent it becomes cumbersome for investors to raise finance from banks at those levels. On our projects, banks' loan-to-values average 80 per cent and we have more than ten banks tied up with us."

Privately held, The 3C Company is looking to change its status in a year or two. It's also intent on acquiring a land bank beyond the NCR region. "Up to NCR is like home town for us, and beyond that, whether it's Amritsar or some city in south India, there's not much of a difference."

Interest rates may drop

There is a chance that interest rates on lending would come down in India, which should work well to the advantage of property buyers.

"We don't see any major changes in the [federal] budget 2011-12, expect may be on the direct tax law," said Sujeet Ahuja, the international business development manager at Coldwell Banker UAE. "But we do expect interest rates to come down which would make home loans cheaper for Investors."

Coldwell Banker UAE has partnered Indian developers such as Tata Housing, Unitech and RNA Corp under which it will exclusively market and sell prime developments across the country. "We have properties pan India and will keep bringing what we believe would be a value buy for investors," Ahuja added. "India is growing at 8-9 per cent annually — when the growth is so high, it always escalates prices, primarily in real estate."