Real Estate Investment Soars in Delhi, NCR Region

Reports from reliable sources reveal that the real estate investment market has picked up pace in Delhi and is today one of the top destinations in India for investment —residential, commercial, retail,et al. Over Rs 10,000 cr of loan disbursement was done by various banks for Delhi in 2005. The figure will well cross the Rs 12,000-cr mark this year Predicts Sanjay Verma, joint MD, Cushman & Wakefield: "Investment interest in Delhi is expected to be robust this year with more confidence towards residential and office property markets. The residential market has seen prices shooting up by 20% to 40% over the last one year. Besides this, retail activity too has received a boost with over 30 malls under way."

A 60% increase in supply over the last 24 months indicates the high level of interest in Delhi. Investments in real estate in this region today yields more returns than that of any other market. The office segment gives a 9-11% return annually, while residential gives 4-6% and retail 8.5-11%.

In Delhi, NCR and the adjoining areas, residential real estate have seen a jump averaging a humonguous 35-60% over the last couple of years. Most action has been on the outskirts of the city. In satellite towns such as Gurgaon and its adjoining areas like Sohna Road and Manesar, property prices have increased by 35-60% in the last six months. In the main Gurgaon town, three bedroom apartments cost between Rs 2800 per sq ft to Rs 3500 per sq ft, a jump of about 40%-45% from the previous financial year. Interestingly, far flung areas like Manesar have also got up on the boom bus, and have witnessed an impressive jump of 35%. At present, three bedroom houses are available in Manesar for Rs 1800 per sq ft to Rs 2200 per sq ft.

Rentals too have had their share of the growth pie. In Gurgaon, the average rent of a two bedroom apartment has increased from Rs 5,000-Rs 6,000 two years back, to the present rents in the range Rs 7,000-Rs 8000. Rents in some far flung locations on the Sohna road has grown by over 50-60%. For two bedroom apartment in these areas, you may have to shell anything between Rs 6,500-Rs 7,000 which was available for just Rs 4,000-Rs 4,500 couple of years back. In the Dwarka area, apartment rents have grown 10-12% per year during 2000-2003. However, in the last couple of years it has grown by a humonguous 40-45%. Experts attribute most of this growth to this locality getting connected to the metro rail network. Noida has had its share of the realty pie too. Over the last two years, most sectors in Noida has seen rents for two bedroom flats jump from Rs 5,000-5,500 to Rs 7,000-8,000.

Despite apartments and built up houses being the flavour of the season, land prices have witnessed one of the fastest growth in the just concluded financial year. In some parts of Haryana, such as Palwal and Rohtak, for instance, land prices have witnessed appreciation to the extent of 65-70%. Slightly further away from the National Capital Region, in places like Jaipur and Bhopal, land prices are up 50-60%.

The real estate boom has reached East Delhi. No longer known as the locality for the less-endowed, every big brand today hastens to have a presence in the region that includes east Delhi, Noida, Greater Noida and Ghaziabad. Ghaziabad on the Delhi-UP border is experiencing a burst of activity on the residential, retail and entertainment front. The residential developments are both in plots as well as group housing categories and the buoyancy in demand offtake has definitely increased the volumes in the residential sector. Three shopping malls like Ansal Plaza, East End Mall by Shipra Group and AEZ East Delhi Mall by Aerens with two multiplexes are set to act like a catalyst in the growth of this belt. According to realtors, property rates in Indirapuram alone have registered a 70 per cent appreciation in the last one and a half years. While one could buy Shipra's prime residential property in Indirapuram for Rs 1,200 per sq ft two years ago, it easily costs over Rs 2,600 per sq ft today.

There has also been a lot of residential activity,including group housing in areas like Vaishali, Vasundhara and Indirapuram. Most of these has been undertaken by UP Awas Vikas and GDA with some participation from private developers like Ansals, Shipra and some local groups. Of late, GDA and UPSIDC have also allowed the conversion of industrial land in some pockets into residential land. These have been mostly done on industrial units which have closed down and have large parcels of undeveloped land.