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 and Noida, has been favourable for its realty 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.
Average ticket size for apartments
The average ticket size for apartments in Faridabad is about Rs.
3000 to Rs. -4000 sq. ft. 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 around 8-10%.
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| Mr. Santhosh Kumar, JLL India |
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. Many 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
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