Delhi NCR - Real State of Realty

As we end the year 2011, here is the Real State of Real Estate in India.

Absorption in NCR at 10msf has reduced considerably from 15-20msf witnessed six months back. However, it is significantly higher than the lows of 3-5msf attained in 2008-09.

The dearth of investor demand has pushed new launches to as low as 8msf, compared to 20-25msf a year back. We do not see any possibilities of this demand coming back in the next six months primarily owing to high property prices and the uncertain economic scenario which will in turn keep a check on NCR months, new launches.

The inventory level at 132msf is higher than other cities; however, it has come down from the peak of 150msf in 2010, due to the slower pace of newer launches. Inventory in months of sales at 12 is higher than the two years average of 9, which is a concern.

In nutshell, inventory level at 132msf is high and in months of sales. It is at 12, higher than the two years average of 9 months. However, a micro analysis suggests that the Gurgaon and Noida markets are well placed with just seven months of sales each. New Delhi has an inventory as low as 2.3msf and being land scarce region, doesn’t have pressure on price. Greater Noida has seen new launches at an aggressive pace, but without adequate absorption. We believe Greater Noida is set to witness price correction, which is unlikely for Gurgaon, Noida and New Delhi.