by Mr. Santhosh Kumar, CEO –
Operations & International Director, JLL India
The National Capital Region (NCR) has
some locations that buyers are best advised to avoid. Various issues like
delays in delivery, oversupply, speculation and infrastructure deficit have
been plaguing these markets, rendering them unsuitable for first-time home
purchase.
Greater Faridabad
While Faridabad is a duly plotted area, its younger
neighbour - Greater Faridabad - has become notorious for litigated land
parcels, delayed delivery issues and a high incidence of broken promises by
developers. Everything that can possibly go wrong in a buyer-developer
relationship has done just that in this area of NCR.
Although property prices here were
always affordable, this market has seen the lowest appreciation in entire NCR.
The main reason behind this trend could be Faridabad’s overall ‘industrial
town’ ethos. Also, the infrastructure deployment has not kept pace with the
considerable residential development in this region.
Neither the improved
connectivity to Delhi via the national highway nor the under-construction metro
or new highway to Gurgaon have changed the realty fortunes of this corridor.
 |
| Santhosh Kumar, CEO – Operations & International Director, JLL India. |
Many instances of fly-by-night operators
(and even some established developers) reneging on their commitments to buyers
have been evident in Greater Faridabad. There have even been cases of
developers absconding altogether after selling as many flats as they could
without finishing the projects.
On other cases, buyers
have been allotted / shown plots on a map or in a particular location but
getting physical possession of plots altogether different from the ones
initially agreed upon. In a variant of this scam, buyers were not allotted any
plots at all or were saddled with plots not included in any master plan, and
bereft of the authorities’ approvals.
In most of these cases, buyers had made
partial or full payments against their plots. Between Faridabad and Greater
Faridabad, most of the speculative and new residential development has happened
in the latter, but very few projects have been delivered so far. This poor
track record throws up cause for high caution for end-users – for all and any
faith put in location and the developers active here, caveat emptor
(‘let the buyers beware’) applies. As far as investors are concerned, this area
has fallen off their radar.
Noida Extension...!
The primary issue impacting this
location’s viability as an investment destination is the oversupply of
residential units. With 1.5-2 lakh units slated to hit this market, prices are
unlikely to appreciate much. Many land acquisition issues involving local farmers
have sullied the market here over the last few years. The ensuing delays and
litigations, resulting higher compensation being paid to farmers for their
land, has also decreased overall affordability.
The government has decided to compensate
developers for their losses by allotting them higher floor area ratio (FAR).
However, this will result in far greater development congestion than was
originally envisaged for this area. Delays in completion of projects are
another concern.
Despite its disproportionate housing
supply, Noida Extension has lost much of its earlier attractiveness. Houses are
available at similar prices in areas like Ghaziabad because Noida Extension’s
erstwhile key differentiator - its affordability - no longer exists.
Even though the planned metro and a wide
main road connecting Noida Extension to Noida are on the anvil, congestion will
turn this area into an uninspiring concrete jungle. Also, in light of the
recent earthquakes in Nepal whose tremors were felt across NCR, the issue of
earthquake resistance has come into sharp focus.
Rampant construction is
also observed in neighbouring Noida. As both these areas are situated on the
Yamuna river belt, they have more river soil than areas like Gurgaon. With
increased seismic activity, it is important for buyers to additionally check if
zoning and structural laws are being properly followed here and if the project
is earthquake-resistant.
Delhi’s L & J
zones
With the new land pooling policy in
place, peripheral areas like Delhi’s L & J Zone have become highly
speculative markets for land. Retail buyers should stay away from these and
certainly not fall for land pooling options or related schemes. There is
nothing lucrative for smaller buyers in going for land purchases here.
These locations
are mainly lucrative for investors or those interested in having their own
farmhouses. Neither of these areas currently have adequate social
infrastructure, and are yet to see any semblance of good civic infrastructure.
Additionally, in the L-Zone, there is uncertainty about land reservations /
demarcations.
Home buyers and
investors are advised to be cautious when considering options in the following
locations:
The NH-24 stretch in
Ghaziabad
Although Ghaziabad has several launches
lined up and good options in affordable housing and township projects are
available, price appreciation will largely be driven by its future industrial
growth. Also, its viability as a residential destination will depend
significantly on infrastructure deployment.
A six-lane expressway has been proposed,
but that can easily take more than five years to be built. Currently, there is
a major bottleneck for traffic at Indirapuram, and residents commuting here
will have to face daily traffic congestion. End-users should only consider
moving here if commuting under such conditions is acceptable, and investors
should factor in a protracted investment horizon for any appreciable payoff.
Gurgaon
A general advisory for end-users and investors
interested in this area:
·
Check
the status of construction in the identified project, as delays in delivery are
commonplace – and it is not only smaller, anonymous developers who are
involved;
·
Keep
away from pre-launches. Instead, look for bargain buys when investors exit. At
that point of time, construction will be closer to completion or completed, and
Gurgaon is witnessing distress sales from investors;
·
Several
subvention schemes popular these days actually require payment of more money
upfront, and the prices per square feet are also higher if one opts for these.
The agreements tend to be restrictive, and there is risk of getting stuck with
one developer and project. The interest rates as also the terms and conditions
of the developer’s chosen bank must be agreed upon;
·
The
Gurgaon market is already over-priced, pace of infrastructure development is
slow and the incentive for quick appreciation has disappeared. A longer
investment horizon will have to be considered.
For media contact
Arun Chitnis
Head – Corporate Communications & Media Relations
JLL India
Pune 411001.
Twitter: @JLLIndia
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