by Mr.
Santhosh Kumar, JLL India
Faridabad began as a pure
industrial town, with the majority of employment opportunities emerging from
the industrial sector. There is now a gradual shift in trend, and the service
sector is now picking up in the area.
Faridabad's improved
connectivity with key cities in NCR, primarily Delhi & Noida, has been
favourable for its real esate market. Lots of new residential developments have
come up; importantly, there has been a spurt in new group housing society
projects.
Here, Omaxe, BPTP,
Puri Construction, Eros Group and Ansals are some of the major developers with
noticeable presence.
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| Santhosh Kumar, JLL India |
The average ticket
size for flats in Faridabad is about Rs. 3,000 to Rs. - 4,000 per square feet.
In most of the group housing projects, appreciation has been sluggish of
late. The annualised appreciation over the last couple of years for housing
projects in this region stands at about 8% to 10%.
This is consistent
with the overall trend seen in the NCR market, which has been significantly
affected by negative economic sentiments, political uncertainty, high inflation
and cost of borrowing and the liquidity crisis. The region mainly has
affordable housing in low ticket-size projects, with a few luxury projects.
Faridabad is
currently an end-user/buyer market. Still among the most affordable markets in
the NCR belt, unit prices and apartment sizes available in Faridabad suit the
requirements of average households.
Going forward, this
region's real estate market is going to witness additional impetus on account
of the improved connectivity brought by the KMP Expressway, FNG flyover and the
Badarpur flyover.
It can be said that
developers have been somewhat over-enthusiastic when it comes to launching
projects in Faridabad. In fact, demand for housing in Faridabad has been on the
slower side because of the absence of an inherent 'pull' factor. Faridabad has,
for the longest time, been a small industrial town.
Unlike Noida and
Gurgaon, it could never create appeal for corporates, so there was little
demand for office spaces. Modes of employment other than industries were
limited. Also, it is only in recent times that Faridabad's connectivity with
other key areas such as Delhi, Gurgaon and Noida improved.
All these factors
resulted in average traction of residential projects launched in the region.
Besides this, Faridabad has always been an end-user driven market, and
therefore off the radars of investors. This has resulted in limited activity in
the real estate market of the region.
Several builders
operating in Faridabad tend to have limited bandwidth, experience and resources
to execute large-scale developments. This has resulted in delays in some of the
projects; but then, we have also seen projects by Mahindra and BPTP approaching
completion.
The quality of
construction in Faridabad's residential projects has so far been largely
mid-grade. Since a majority of the projects are primarily aimed at mid-income
consumers, maintaining affordability has been a priority for most developers
with projects in this belt. For low-margin budget housing projects, it is
inevitable that builders will compromise on construction quality so as to
safeguard their margins.
Delays in approval,
increased interest rates and construction cost take a further toll. That said,
the construction quality of most of the projects launched by BPTP and other
leading developers is definitely average to above average.
The high incidence of
consumer complaints emanating from the region is primarily due to the fact that
Faridabad is end-user driven. In such a market, timely delivery of project,
allotment of the right units, construction quality and other such issues become
critical. There have been delays in delivery of projects by leading developers
in Noida and Gurgaon as well.
However, these have
not drawn much press since the investor interest in those projects was
substantial, and investors are usually not very perturbed by such issues.
In an instance that
has caused some negativity in the Faridabad market, BPTP - the largest real
estate developer in the Faridabad region, with a land-bank of around 1500 acres
- has started selling constructed units as well as plots. There have been
reported cases of consumers being allotted plots different from the ones they
were originally shown.
This has impacted the
credibility of the project, despite the fact that there are no concerns when it
comes to quality of construction and completion timelines for the projects.
About the author
Mr. Santhosh Kumar is CEO (Operations) at JLL India
For Media Contact
Arun Chitnis
Head – Corporate
Communications & Media Relations
JLL India
Level 6, Amar Avinash
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Pune 411001.
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