NCR sees subdued growth in residential segment
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The year 2012 began on a sluggish note for the residential real estate market due to the convergence of multiple factors. The segment suffered on account of pressure being exerted both on the demand and supply side.
On the demand side, buyers were increasingly reluctant to enter the market given the increase in cost of borrowing, thereby impacting demand levels; particularly for end users of affordable residential projects.
With banks tightening their fund baskets and reluctant to lend to developers, the cost of construction also suffered due to higher borrowing costs for developers. Adding to these woes was the increasing cost of cement and steel, further pressurising the already high development costs. This impacted project construction, thereby resulting into delays in completion of projects in various cities, including Delhi-NCR — especially in Gurgaon, Noida and Greater Noida.
A stagnating economic climate, poor investor confidence and slow pace of policy reforms contributed towards the creation of a negative investor and buyer sentiment in the market. Buyers deferred their purchase decisions, adopting a wait and watch approach in anticipation of a reduction in interest rates by the central bank and some confidence rebuilding measures by the government.
NCR Market Trends
In the NCR, capital values have either remained stable or appreciated despite widespread anticipation of market correction in the coming months.
Speculation led investor interest continues to drive price movement in the region. This has impacted end-users in markets such as Gurgaon, wherein prices in newly-launched projects have appreciated significantly over the previous 6-8 months.
Prime markets such as those of South Delhi (New Friends Colony, Defence Colony, Greater Kailash-I & II, Maharani Bagh) and South West Delhi (Vasant Vihar, Anand Niketan, West End, Shanti Niketan) were resilient to fluctuations in demand and continued to be priority destinations for premium residential investment. There was an increase in demand for independent plots and high end property in the Delhi market.