The rising curve
Hindustan Times, HT Estate, November 21, 2009, Page 1
Santosh Kumar Rai bought a house in Gurgaon in the first quarter this year for Rs 2,000 per sq ft. When his brother, Gangadhar Kumar Rai, decided to get off the fence and buy into the same project this month, he was in for a shock. The prices had gone up 20 per cent.
Yes, the market is definitely looking up, with new launches leading the rising curve in the residential realty segment.
About 33 per cent of projects in this category have recorded a price increase at the panIndia level, suggests data by real estate research firm PropEquity. Talking about Delhi-NCR, the report says the city that showed the maximum price increase between March and October 2009 at 11.1 per cent, was Gurgaon (see table). Faridabad came next at 8.5 per cent, Noida and Greater Noida at 6.5 per cent and Ghaziabad at 5.1 per cent.
According to Samir Jasuja, CEO of PropEquity, Gurgaon and Noida prices had reacted to the slowdown and fallen much lower than established base prices (in the market) when compared to other NCR hubs. Also, out of the four markets, Gurgaon had the maximum number of new launches and since the price correction is led by this category, it has logged the highest price increase too.
The gap between the launch price of new offerings post-slowdown and the established base price in the market was also the widest in Gurgaon. As a result of this influx of supply at lower prices, the established base price underwent downward revision. With markets picking up, the base price in the city is headed towards earlier established levels. And that is why one can see Gurgaon logging the maximum price rise, explains Jasuja.
There was hardly any difference between new launch prices and the established base price in Ghaziabad, and thus there wasn't a significant increase in prices.
Also, in terms of price decline in existing projects due to the downturn, Noida recorded a sharper fall as compared to other NCR hubs, leading to higher prices of old projects there. These were seen as leading the overall increase in Noida instead of the new launches.
But is the increase sustainable? For the new launches it is, because these were launched at corrected price levels post-slowdown, with thin margins for developers.
Projects that were launched before September 2008 (at a high price and equally high margins for the developer) may not be able to sustain any increase in pricing, says Jasuja.
According to Kumar Gera, chairman, Confederation of Real Estate Developers' Association of India (CREDAI), the tightening of the monetary situation, which led to negative sentiments in the market, seems to have improved over the past few quarters. Though prices are nowhere near the 2007-2008 levels, these are gradually inching up. It is hard to say, however, how long these will take to reach the 2007-2008 levels.
The price increase was seen primarily in case of new projects as older projects remained stalled and no sales happened unless clear dates of possession were indicated, points out Vineet Singh of realty portal 99 acres.com.
The quarter also witnessed relaunches of some old projects with around 12 to 18 months handover period. Prices were competitive as builders wanted to sell fast, Singh adds.
Price vs discounts A close analysis of some affordable housing projects data in Delhi NCR region launched in March throws up some interesting facts. A random check of prices across the four hubs shows a minimal 3 per cent hike.
However, if the discounts initially offered to buyers is included, then this rise will add up to 9 per cent.
From the select set of projects within Delhi NCR, Gurgaon has seen an impressive 11 per cent appreciation (inclusive of discounts) and Noida-Greater Noida has seen a mere 3 per cent corresponding increase. Though all projects might not have been studied, it shows that Gurgaon and Ghaziabad markets have seen a better response, points out Priyankar Bhikshu, Associate Director - Consulting and Research, DTZ.
The other side Where ready-to-move-in and secondary residential projects are concerned, Gurgaon again witnessed the highest growth in capital values over the last quarter. According to Cushman & Wakefield's quarterly Marketbeat, the city saw an increase of 19 per cent followed by Noida at 16 per cent.
According to Shweta Jain, head (residential), C & W, "Market sentiment is buoyant right now.
Projects that are available off the shelf and are ready to be occupied are clearly seeing an inching up of capital values. One may see a 5-7 per cent increase in the next few months in this category. One may also see some new projects being launched in established locations at a slightly higher price. But, future launches in emerging locations may not be able to sustain an increase in price."
The future Realty experts, however, are quick to point that a price rise of more that 25 per cent may upset the applecart and the positive momentum that has been building up over the last three quarters.
Concurs Bhikshu, "Going forward, we expect the real estate residential prices in affordable projects to see a steady (approximately 3-5 per cent) increase in prices till April 2010 in the suburban locations of Delhi NCR.
Beyond that, a lot will depend on the macroeconomic and business environment for financial year 2010-11."
However, warns Jasuja, "If developers fail to show progress on the construction front in case of new projects, it may upset the investor's confidence and will have a negative impact on the sales velocity. Besides, a price rise beyond 25 per cent in that scenario would impact the absorption/demand and present considerable challenge to developers catering to the price sensitive market segment."
Clearly, the writing on the wall is: Developers have to keep a check on the prices and deliver on time.
Santosh Kumar Rai bought a house in Gurgaon in the first quarter this year for Rs 2,000 per sq ft. When his brother, Gangadhar Kumar Rai, decided to get off the fence and buy into the same project this month, he was in for a shock. The prices had gone up 20 per cent.
Yes, the market is definitely looking up, with new launches leading the rising curve in the residential realty segment.
About 33 per cent of projects in this category have recorded a price increase at the panIndia level, suggests data by real estate research firm PropEquity. Talking about Delhi-NCR, the report says the city that showed the maximum price increase between March and October 2009 at 11.1 per cent, was Gurgaon (see table). Faridabad came next at 8.5 per cent, Noida and Greater Noida at 6.5 per cent and Ghaziabad at 5.1 per cent.
According to Samir Jasuja, CEO of PropEquity, Gurgaon and Noida prices had reacted to the slowdown and fallen much lower than established base prices (in the market) when compared to other NCR hubs. Also, out of the four markets, Gurgaon had the maximum number of new launches and since the price correction is led by this category, it has logged the highest price increase too.
The gap between the launch price of new offerings post-slowdown and the established base price in the market was also the widest in Gurgaon. As a result of this influx of supply at lower prices, the established base price underwent downward revision. With markets picking up, the base price in the city is headed towards earlier established levels. And that is why one can see Gurgaon logging the maximum price rise, explains Jasuja.
There was hardly any difference between new launch prices and the established base price in Ghaziabad, and thus there wasn't a significant increase in prices.
Also, in terms of price decline in existing projects due to the downturn, Noida recorded a sharper fall as compared to other NCR hubs, leading to higher prices of old projects there. These were seen as leading the overall increase in Noida instead of the new launches.
Projects that were launched before September 2008 (at a high price and equally high margins for the developer) may not be able to sustain any increase in pricing, says Jasuja.
According to Kumar Gera, chairman, Confederation of Real Estate Developers' Association of India (CREDAI), the tightening of the monetary situation, which led to negative sentiments in the market, seems to have improved over the past few quarters. Though prices are nowhere near the 2007-2008 levels, these are gradually inching up. It is hard to say, however, how long these will take to reach the 2007-2008 levels.
The other side Where ready-to-move-in and secondary residential projects are concerned, Gurgaon again witnessed the highest growth in capital values over the last quarter. According to Cushman & Wakefield's quarterly Marketbeat, the city saw an increase of 19 per cent followed by Noida at 16 per cent.
According to Shweta Jain, head (residential), C & W, "Market sentiment is buoyant right now.
Projects that are available off the shelf and are ready to be occupied are clearly seeing an inching up of capital values. One may see a 5-7 per cent increase in the next few months in this category. One may also see some new projects being launched in established locations at a slightly higher price. But, future launches in emerging locations may not be able to sustain an increase in price."
The future Realty experts, however, are quick to point that a price rise of more that 25 per cent may upset the applecart and the positive momentum that has been building up over the last three quarters.
Concurs Bhikshu, "Going forward, we expect the real estate residential prices in affordable projects to see a steady (approximately 3-5 per cent) increase in prices till April 2010 in the suburban locations of Delhi NCR.
Beyond that, a lot will depend on the macroeconomic and business environment for financial year 2010-11."
However, warns Jasuja, "If developers fail to show progress on the construction front in case of new projects, it may upset the investor's confidence and will have a negative impact on the sales velocity. Besides, a price rise beyond 25 per cent in that scenario would impact the absorption/demand and present considerable challenge to developers catering to the price sensitive market segment."
Hindustan Times, HT Estate, November 21, 2009, Page 1
Santosh Kumar Rai bought a house in Gurgaon in the first quarter this year for Rs 2,000 per sq ft. When his brother, Gangadhar Kumar Rai, decided to get off the fence and buy into the same project this month, he was in for a shock. The prices had gone up 20 per cent.
Yes, the market is definitely looking up, with new launches leading the rising curve in the residential realty segment.
About 33 per cent of projects in this category have recorded a price increase at the panIndia level, suggests data by real estate research firm PropEquity. Talking about Delhi-NCR, the report says the city that showed the maximum price increase between March and October 2009 at 11.1 per cent, was Gurgaon (see table). Faridabad came next at 8.5 per cent, Noida and Greater Noida at 6.5 per cent and Ghaziabad at 5.1 per cent.
According to Samir Jasuja, CEO of PropEquity, Gurgaon and Noida prices had reacted to the slowdown and fallen much lower than established base prices (in the market) when compared to other NCR hubs. Also, out of the four markets, Gurgaon had the maximum number of new launches and since the price correction is led by this category, it has logged the highest price increase too.
The gap between the launch price of new offerings post-slowdown and the established base price in the market was also the widest in Gurgaon. As a result of this influx of supply at lower prices, the established base price underwent downward revision. With markets picking up, the base price in the city is headed towards earlier established levels. And that is why one can see Gurgaon logging the maximum price rise, explains Jasuja.
There was hardly any difference between new launch prices and the established base price in Ghaziabad, and thus there wasn't a significant increase in prices.
Also, in terms of price decline in existing projects due to the downturn, Noida recorded a sharper fall as compared to other NCR hubs, leading to higher prices of old projects there. These were seen as leading the overall increase in Noida instead of the new launches.
But is the increase sustainable? For the new launches it is, because these were launched at corrected price levels post-slowdown, with thin margins for developers.
Projects that were launched before September 2008 (at a high price and equally high margins for the developer) may not be able to sustain any increase in pricing, says Jasuja.
According to Kumar Gera, chairman, Confederation of Real Estate Developers' Association of India (CREDAI), the tightening of the monetary situation, which led to negative sentiments in the market, seems to have improved over the past few quarters. Though prices are nowhere near the 2007-2008 levels, these are gradually inching up. It is hard to say, however, how long these will take to reach the 2007-2008 levels.
The price increase was seen primarily in case of new projects as older projects remained stalled and no sales happened unless clear dates of possession were indicated, points out Vineet Singh of realty portal 99 acres.com.
The quarter also witnessed relaunches of some old projects with around 12 to 18 months handover period. Prices were competitive as builders wanted to sell fast, Singh adds.
Price vs discounts A close analysis of some affordable housing projects data in Delhi NCR region launched in March throws up some interesting facts. A random check of prices across the four hubs shows a minimal 3 per cent hike.
However, if the discounts initially offered to buyers is included, then this rise will add up to 9 per cent.
From the select set of projects within Delhi NCR, Gurgaon has seen an impressive 11 per cent appreciation (inclusive of discounts) and Noida-Greater Noida has seen a mere 3 per cent corresponding increase. Though all projects might not have been studied, it shows that Gurgaon and Ghaziabad markets have seen a better response, points out Priyankar Bhikshu, Associate Director - Consulting and Research, DTZ.
The other side Where ready-to-move-in and secondary residential projects are concerned, Gurgaon again witnessed the highest growth in capital values over the last quarter. According to Cushman & Wakefield's quarterly Marketbeat, the city saw an increase of 19 per cent followed by Noida at 16 per cent.
According to Shweta Jain, head (residential), C & W, "Market sentiment is buoyant right now.
Projects that are available off the shelf and are ready to be occupied are clearly seeing an inching up of capital values. One may see a 5-7 per cent increase in the next few months in this category. One may also see some new projects being launched in established locations at a slightly higher price. But, future launches in emerging locations may not be able to sustain an increase in price."
The future Realty experts, however, are quick to point that a price rise of more that 25 per cent may upset the applecart and the positive momentum that has been building up over the last three quarters.
Concurs Bhikshu, "Going forward, we expect the real estate residential prices in affordable projects to see a steady (approximately 3-5 per cent) increase in prices till April 2010 in the suburban locations of Delhi NCR.
Beyond that, a lot will depend on the macroeconomic and business environment for financial year 2010-11."
However, warns Jasuja, "If developers fail to show progress on the construction front in case of new projects, it may upset the investor's confidence and will have a negative impact on the sales velocity. Besides, a price rise beyond 25 per cent in that scenario would impact the absorption/demand and present considerable challenge to developers catering to the price sensitive market segment."
Clearly, the writing on the wall is: Developers have to keep a check on the prices and deliver on time.
Santosh Kumar Rai bought a house in Gurgaon in the first quarter this year for Rs 2,000 per sq ft. When his brother, Gangadhar Kumar Rai, decided to get off the fence and buy into the same project this month, he was in for a shock. The prices had gone up 20 per cent.
Yes, the market is definitely looking up, with new launches leading the rising curve in the residential realty segment.
About 33 per cent of projects in this category have recorded a price increase at the panIndia level, suggests data by real estate research firm PropEquity. Talking about Delhi-NCR, the report says the city that showed the maximum price increase between March and October 2009 at 11.1 per cent, was Gurgaon (see table). Faridabad came next at 8.5 per cent, Noida and Greater Noida at 6.5 per cent and Ghaziabad at 5.1 per cent.
According to Samir Jasuja, CEO of PropEquity, Gurgaon and Noida prices had reacted to the slowdown and fallen much lower than established base prices (in the market) when compared to other NCR hubs. Also, out of the four markets, Gurgaon had the maximum number of new launches and since the price correction is led by this category, it has logged the highest price increase too.
The gap between the launch price of new offerings post-slowdown and the established base price in the market was also the widest in Gurgaon. As a result of this influx of supply at lower prices, the established base price underwent downward revision. With markets picking up, the base price in the city is headed towards earlier established levels. And that is why one can see Gurgaon logging the maximum price rise, explains Jasuja.
There was hardly any difference between new launch prices and the established base price in Ghaziabad, and thus there wasn't a significant increase in prices.
Also, in terms of price decline in existing projects due to the downturn, Noida recorded a sharper fall as compared to other NCR hubs, leading to higher prices of old projects there. These were seen as leading the overall increase in Noida instead of the new launches.
Projects that were launched before September 2008 (at a high price and equally high margins for the developer) may not be able to sustain any increase in pricing, says Jasuja.
According to Kumar Gera, chairman, Confederation of Real Estate Developers' Association of India (CREDAI), the tightening of the monetary situation, which led to negative sentiments in the market, seems to have improved over the past few quarters. Though prices are nowhere near the 2007-2008 levels, these are gradually inching up. It is hard to say, however, how long these will take to reach the 2007-2008 levels.
The other side Where ready-to-move-in and secondary residential projects are concerned, Gurgaon again witnessed the highest growth in capital values over the last quarter. According to Cushman & Wakefield's quarterly Marketbeat, the city saw an increase of 19 per cent followed by Noida at 16 per cent.
According to Shweta Jain, head (residential), C & W, "Market sentiment is buoyant right now.
Projects that are available off the shelf and are ready to be occupied are clearly seeing an inching up of capital values. One may see a 5-7 per cent increase in the next few months in this category. One may also see some new projects being launched in established locations at a slightly higher price. But, future launches in emerging locations may not be able to sustain an increase in price."
The future Realty experts, however, are quick to point that a price rise of more that 25 per cent may upset the applecart and the positive momentum that has been building up over the last three quarters.
Concurs Bhikshu, "Going forward, we expect the real estate residential prices in affordable projects to see a steady (approximately 3-5 per cent) increase in prices till April 2010 in the suburban locations of Delhi NCR.
Beyond that, a lot will depend on the macroeconomic and business environment for financial year 2010-11."
However, warns Jasuja, "If developers fail to show progress on the construction front in case of new projects, it may upset the investor's confidence and will have a negative impact on the sales velocity. Besides, a price rise beyond 25 per cent in that scenario would impact the absorption/demand and present considerable challenge to developers catering to the price sensitive market segment."
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