LUCKNOW: The top 3 Uttar Pradesh cities within the National Capital Region (NCR) – Noida, Greater Noida and Ghaziabad – saw the maximum decline in overall unsold housing stock in two years in the state. A joint report by ANAROCK Property Consultants and the National Real Estate Development Council (NAREDCO) – Addressing Challenges & Progressing Ahead in Real Estate – released at the 1st National RERA Conclave in Lucknow finds that the collective unsold stock in these cities of UP had declined by 26% – from 131,150 units in Q3 2017 to approximately 97,270 units by Q3 2019 end.
The report lists the following findings:
- Greater Noida saw the highest reduction of 27% in unsold real estate in two years – from 66,570 units in Q3 2017 to 48,350 units in Q3 2019.
- Noida and Ghaziabad each reduced unsold homes by 24% in the same period; they now have 19,480 and 29,440 unsold homes respectively.
- Gurugram saw unsold housing inventory increase by about 7% and currently has the highest unsold stock in NCR – 55,900 unsold units in Q3 2019, up from 52,460 units in Q3 2017.
- Delhi’s unsold stock increased by 20% in this period – from 10,770 homes in Q3 2017 to 12,960 homes in Q3 2019.
Remarking on the report, Anuj Puri, Chairman of ANAROCK, says, “Noida, Greater Noida and Ghaziabad succeeded in significantly reducing unsold stock primarily because of developers’ conscious restriction of new supply in favour of ongoing project completion. While Gurugram alone saw more than 2,030 units launched in Q3 2019, these three key cities of UP collectively launched a mere 1,610 units. Two years ago, as well, the Millennium City saw new supply of 3,520 houses while the other three cities launched just 1,220 houses in the same quarter.”
UP RERA rewrites rules, clamps down on dilutions
The report underscores that while policies under the Real Estate (Regulation and Development) Act, 2016 – better known as RERA – have been diluted from the Central Act across states, the Uttar Pradesh government proactively revisited its RERA rules to eliminate dilutions and favour aggrieved homebuyers – particularly in Noida and Greater Noida, where several projects are either stuck or delayed.
Parveen Jain, Vice Chairman of NAREDCO says, “The Indian real estate sector continues to face challenges in terms of reduced construction finance and high levels of unsold inventory. However, a slew of reforms and measures introduced by the government in the past few years have started showing positive results. Recovery in sales can already be seen across micro-markets.”
“Real estate regulation and other positive measures by the government have made the market more responsible towards deliveries. This especially reflects in the NCR market, where along with a decline in launches, developers are focused on completion of unsold inventory,” he added.
The new rules, which are expected to bring all ongoing projects for which completion certificates were not issued on or before 1st May 2016 under the purview of RERA, currently await the state government’s approval. Nearly 76% of a total of 17,077 complaints filed with UP RERA till September 2019 relate to promoters and projects in Noida, Greater Noida and Ghaziabad. However, UP RERA has disposed of more cases (over 10,000) since its inception than any other state with active RERA rules in place.
The report also examines the overall macroeconomic environment in India – including FDI inflows, inflation and GDP growth rate – and the challenges the Indian residential real estate sector faces. The major bottlenecks are lack of funds, the fallout of over-dependence on NBFC/HFC funds, and unmitigated burden of delayed/stalled units and lack of interest of PE players towards the residential segment.
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After analysing the most pressing issues, the report suggests short, mid and long-term solutions. For instance:
- The government can address the problem of stalled/delayed units by providing additional FSI to developers willing to execute such projects.
- Another incentive for executing such projects could be to offer the land banks of defaulting developer at preferential rates.
- Additional tax benefits and easy access to funding for developers who undertake the completion of such projects can be considered.
Other major highlights in the report include:
- New Pan-India office supply likely to exceed 43 million sq. ft. by the end of 2019, resulting in a yearly growth of 13% against 2018. Absorption of Grade A office stock likely to cross 37 mn sq. ft. in 2019, recording an increase of 11% against 2018 and reaching 2015 levels.
- India’s organised retail to corner a 13% market share by 2020, potentially reaching a value of US$140-160 billion.
- Indian logistics and warehousing sector drew nearly US$1.1 billion of private equity investments between Q1 2017 – Q1 2019 (against zero investment in 2015 and 2016 combined).
Read the full report: Addressing Challenges & Progressing Ahead in Real Estate