Delhi-NCR’s Ascent in The Real Estate Market
When reflecting on the March quarter of 2024, the luxury real estate sector seems to be raising the bar. According to a recent report by the real estate firm Cushman and Wakefield, Delhi-NCR is at the forefront of residential projects compared to other major cities in India. Delhi-NCR has contributed 61% of all new residential projects offering luxury homes at a minimum price of Rs 15,000 per sq. ft. This upward shift indicates a growing trend among affluent purchasers seeking more prominent and luxurious homes.
The ongoing trend in the high-end residential housing market has a twofold effect: it boosts market sentiment and fosters developer strategies. With an increasing number of developers targeting the high-end segment of the market, they strive to create projects that are tailor-made for the exquisite tastes of the buyers, making them feel understood and appreciated.
This upward trend not only sets a standard but also leads to the belief that Delhi-NCR is one of the most preferred residential destinations, offering significant investment options to investors. Noida has also been part of the premium housing segment through the FNG and DND expressway, which have brought a new growth outlook and hence redefined the real estate map not only in Delhi but in the entire NCR.
Moreover, the report indicated that in the March quarter, capital values in the NCR appreciated by 1-2 % on a q-o-q basis and jumped by 12-15% on a YoY basis. The dynamic markets of Gurugram and Noida are the main drivers of this phenomenon. With the expectation of more launches in premium submarkets in Gurgaon and Noida, the capital value is also expected to rise in the next few quarters.
The Surge in NCR’s Land Deals
During FY2023–24, property consultant Anarock stipulated that around 101 different land deals were closed by companies and other entities, totalling 2,989 acres. In the first three months of 2024, the volume of land deals increased 61% annually in January–March 2024 and 58% annually in 2023–24.
In the first three months of this year, land deals for at least 26 plots amounting to 449 acres were completed during January–March 2023, while the figures for the entire 2022–23 fiscal stand at 88 land deals of 1,886 acres.
Among the cities, Delhi-NCR made the maximum land deals for 160 acres in the first quarter of January–March 2024 and 313 acres throughout the 2023–24 fiscal year.
Land deals in the NCR are at their highest due to urbanisation, infrastructure, and investment opportunities. Besides capital gains, the future development of the land should also be considered a contributor to land deals.
According to the experts, the growth of land deals is a sign of the housing market’s buoyancy. The demand is high for all kinds of properties, not only in the mid-segment but also in luxury, and this is the reason behind huge land deals across the country, including Delhi-NCR.
As per the Anarock data, the total land deals for the 2023–24 fiscal year were around 80 deals for 2,252 acres, which are proposed for residential, plotted development, & township projects.
The commercial and retail real estate development had 4 separate deals totalling over 42 acres included in the closed transactions. However, at least 79 acres in 4 separate deals are targeted for mixed-use developments.
In addition to this, 5 deals were closed for approximately 164 acres to develop industrial, IT, and logistics parks, and 3 land deals of 411.75 acres were for establishing manufacturing facilities.
Demand For Commercial Spaces in Noida
According to a Knight Frank report, the Indian market has moved up the ladder of major occupiers in office space, with its leasing exceeding 46 percent of office space in 2023. GCCs have become the most prominent overseas occupiers. India has reported offshoring market growth of 26% in FY23 at an overall leasing volume of 27.3 million square feet (msf).
The report depicts that GCCs have been on the lookout for growth opportunities by harnessing the potential of offshoring. This has led to growth in the office real estate market, specifically in India. The country’s market share in GCC’s leasing transactions has risen from 25 to 35% since January 1 this year, as compared to last year, due to establishing 1580 new centres across the country.
There has been a strong increase in office space in Noida, and until now, about 10 msf of office space has been rented out. The expert states that 10 msf of office spaces were on lease between 2010 and 2020. However, interestingly, 10 msf was signed up in three years between 2020 and 2023, equivalent to what was leased out in the last decade. This mirrors the growth of Noida with respect to office real estate as well as the demand for office spaces in Noida.
Significant Growth in Sales and Real Estate Supply
Consistent with the supply, record sales were made in 2023, surpassing all previous benchmarks. One of the most remarkable indicators of the growing interest in the housing industry was the fact that 4.76 lakh units were sold across the leading seven cities, even though there was an intensification of the prices of the properties and an increase in the interest rates of housing loans at the beginning of the year.
Average home prices across the top 7 cities exhibited the most significant growth in the last 10 years,appreciating by 15% Y-o-Y from INR 6,150 per sq. ft. in 2022 to nearly INR 7,080 per sq. ft. in 2023.
Owing to the high selling volumes and launching of new projects throughout the year, prices have also increased significantly in the range of 10%–24% Y-o-Y, and, among the top 7 cities, Hyderabad led the chart, growing 24% Y-o-Y. NCR experienced a 15% growth in the average price of the property, similar to the MMR growth rate.
Having said that, NCR proved to be the star in 2023 that had purposely withheld new supply to 36,730 units but recorded steady housing sales of 65,620 units, hence reducing unsold inventory by a massive 23% yearly. This is the first time since 2013 that NCR’s unsold stock has been less than 1 lakh units.
The NCR market observed that the prime lead in supply was taken up by Gurgaon, which took up 63% of the share, with the majority of the launches on Golf Course Road Extension, followed by Sohna Road and the NH8 region. Meanwhile, Noida and Greater Noida, managed 20% of the total supply of NCR during 2023.
Most of the sales were also found in Gurgaon, with a 56% share, and Greater Noida and Noida, with a combined 25% share.
Noida’s upward trajectory in the real estate market offers investors and buyers confidence to purchase and invest in in-demand properties. Considering the upcoming infrastructural developments in the city, we can expect more positive outcomes from the real estate sector of Delhi-NCR, especially in Noida.