NCR sees fall in real estate projects
New housing project launches in the national capital region (NCR) slumped by 20% during January-June 2008. This is explained by the slowdown in demand due to appreciation in real estate prices and rising interest rates for borrowers.
The first half of this year also saw a marked shift in developers strategy towards mid-income houses, as the high-end segment witnessed increased resistance from buyers.
Project launches in the high-end category fell by two-third to just 5, while mid-income housing project launches rose by over 20% to 37.
As per a report by international property consultancy firm DTZ, the absorption of mid-income houses in July at 76% had overtaken that of high end houses (68%). This means that high end houses are selling at a slower pace than the mid income segment. The report says that the share of mid-income housing in the overall residential supply is expected to rise to 62% in three years, compared to 22% currently.
This translates into a CAGR of 131% for mid income housing units.
"Affordability is the single biggest factor that influences a home buyer's decision," says DTZ director (consulting and research) Abhilash Lal, adding that a series of interest rate hikes has almost doubled the equated monthly instalment (EMI) outflow for a home buyer in the past few years. "Buyers are increasingly shifting to mid-income homes as they can't afford a higher EMI."
Lately, several developers, including India's largest real estate firm DLF, Ansals, Parsvnath, Omaxe, BPTP, Raheja and Gaursons have been actively building mid-income homes.
At present, Ghaziabad is the most favoured destination for mid-income housing, accounting for 68% of the total mid-income homes in NCR. Its contribution is likely to fall to 40% by 2011 with fresh supplies coming up in other suburbs.
Mid-income homes account for 71% of all homes in Ghaziabad and only 6% in Gurgaon. Ghaziabad is followed by Faridabad (64%) and Greater Noida (53%).
The report says a shift towards mid-income was prompted by developers' need to keep their profit growing as high-end market stagnated after property prices went up almost three times in several NCR micro markets.
The ability to procure cheap land has been critical in launching mid-income projects. Most of the mid income projects are located far away from developed areas or in places where land parcels were procured cheaply by developers long back.
Interestingly, the report also highlights high investor interest in mid-income projects. It says 90% of the investors surveyed wanted to put their money in two mid-income flats rather than one high end flat when both attracted the same investment.
The first half of this year also saw a marked shift in developers strategy towards mid-income houses, as the high-end segment witnessed increased resistance from buyers.
Project launches in the high-end category fell by two-third to just 5, while mid-income housing project launches rose by over 20% to 37.
As per a report by international property consultancy firm DTZ, the absorption of mid-income houses in July at 76% had overtaken that of high end houses (68%). This means that high end houses are selling at a slower pace than the mid income segment. The report says that the share of mid-income housing in the overall residential supply is expected to rise to 62% in three years, compared to 22% currently.
This translates into a CAGR of 131% for mid income housing units.
"Affordability is the single biggest factor that influences a home buyer's decision," says DTZ director (consulting and research) Abhilash Lal, adding that a series of interest rate hikes has almost doubled the equated monthly instalment (EMI) outflow for a home buyer in the past few years. "Buyers are increasingly shifting to mid-income homes as they can't afford a higher EMI."
Lately, several developers, including India's largest real estate firm DLF, Ansals, Parsvnath, Omaxe, BPTP, Raheja and Gaursons have been actively building mid-income homes.
At present, Ghaziabad is the most favoured destination for mid-income housing, accounting for 68% of the total mid-income homes in NCR. Its contribution is likely to fall to 40% by 2011 with fresh supplies coming up in other suburbs.
Mid-income homes account for 71% of all homes in Ghaziabad and only 6% in Gurgaon. Ghaziabad is followed by Faridabad (64%) and Greater Noida (53%).
The report says a shift towards mid-income was prompted by developers' need to keep their profit growing as high-end market stagnated after property prices went up almost three times in several NCR micro markets.
The ability to procure cheap land has been critical in launching mid-income projects. Most of the mid income projects are located far away from developed areas or in places where land parcels were procured cheaply by developers long back.
Interestingly, the report also highlights high investor interest in mid-income projects. It says 90% of the investors surveyed wanted to put their money in two mid-income flats rather than one high end flat when both attracted the same investment.