Know About The Real Estate Market of Delhi NCR

The Delhi NCR region has been the preferred choice of real estate developers and buyers for more than a decade. The saturation of Delhi in terms of real estate and subsequent spiraling property prices in Delhi made many move to the capital’s peripheral areas.

Nearly two decades ago Gurgaon witnessed a real estate boom. Now, it seems that Noida, Greater Noida and Ghaziabad are undergoing a similar transformation. Numerous real estate companies are investing in these places with an aim to tap the huge potential of this market.

According to reports, the Greater Noida Industrial Development Authority (GNIDA) plans to connect Greater Noida and the Indira Gandhi International Airport via a metro link. There are also widespread reports of the Delhi Metro Rail Corporation planning to extend the Blue Line from Noida City Centre to cover parts of Greater Noida. These are clear signals that Noida and Greater Noida are all set to become the most popular destinations for people looking for dream homes and lavish lifestyles at affordable prices. The well-connectivity factor makes up the jewel in the crown.

Having sensed the residential and commercial opportunities that places like Noida, Greater Noida and Ghaziabad are teeming with, major and minor real estate companies are expanding or launching their projects in these areas to attract customers from varying strata of society. Such projects include sprawling mansions spread over acres of lush green lawns, luxury condominiums housing clubs, swimming pools and gyms, modest housing complexes with 2 and 3 BHKs or entire townships provided with all the amenities of a world-class city. The many well-known construction companies based in Noida and Ghaziabad are diversifying into all kinds of real estate ventures. While many of such condominiums and apartments have already been constructed and even occupied by respective owners, dozens more are under construction and scores still in the planning stage.

Noida and Greater Noida have especially witnessed an increase in the supply and demand of luxury condominiums and housing units, the reason being their relatively affordable prices as compared to apartments provided with the same amenities in the heart of Delhi. Several big names in the Delhi NCR real estate industry are investing in projects like these, hoping to cash in on their surging popularity.

The year 2013 has been somewhat disappointing in terms of investment for the real estate market in India. All the same, the coming of an industry-friendly government at the centre this year coupled with an economic slowdown in the recent past ignite hope that the government will rouse the real estate industry from its current dormant state. There is also the hope of the inevitable that a gloom shall be followed by a glut in the market. Indeed, the hopes and spirits of real estate companies are justifiably high as the future of this industry looks bright and sanguine.

As Real Estate Market Sours, Courts Punish Delayed Projects, Relieving Buyers From Contracts

Back in the September 9, 2008 edition of The Wall Street Journal, as knowledge of the global financial crisis was both broadening and deepening, I predicted that of the myriad lawsuits being filed by real estate buyers in hopes of recovering their initial preconstruction deposits, among those with the highest probability of success were scenarios in which the developer failed to deliver the project on time.

While there is no sure way of testing this forecast, my sense is that for the most part, it is proving itself true. Take, for example, a recent opinion from the Eleventh Circuit — the highest federal appellate court with jurisdiction over Florida, and one which has been instrumental in setting the tone for the latest wave of real estate litigation. In Harvey v. Lake Buena Vista Resort, LLC, 2009 WL 19340 (11th Cir. Jan. 5, 2009), the Eleventh Circuit upheld the lower court’s order refunding deposits paid toward the purchase of an Orlando condominium, finding that the developer had breached the purchase contract by failing to deliver the unit in a timely manner. Notably, the Eleventh Circuit left the developer zero room for deviation from the promised two-year construction schedule. While the developer obtained a certificate of occupancy just five days after the two-year deadline, the court held that this was too late as a matter of law, even though the defendant testified that the extra five days were attributable to a matter outside of its control –the unusually slow processing of a necessary road permit.

Tellingly, in reaching its conclusion, the Eleventh Circuit sidestepped another issue on which the purchasers had prevailed in the lower court — that is, whether the developer had violated the disclosure provisions of the federal Interstate Land Sales Full Disclosure Act (ILSA) in failing to both register the condo with the U.S. Department of Housing and Urban Development (HUD) and furnish a federal Property Report to the buyers. As I have written previously, federal courts have been noticeably reluctant to rule for buyers on claims brought under ILSA, violations of which are often viewed as hyper-technical and immaterial in instances where a project is otherwise delivered according to a developer’s stated promises.

In contrast, it is easy to see why courts might have more sympathy for buyers in cases where construction has been unjustifiably delayed. The calculus is simple: the longer a building goes unfinished, the more time a buyer’s deposits will have been tied up in an unlivable and unsaleable project. And every day the real estate market remains mired in a historic slump only serves to exacerbate the downside to the buyer. The recent but unsurprising rash of lender foreclosure actions against developers tell a general tale of builders without funds to pay off loans, contractors, or subcontractors. This means that the many yet-to-be-finished projects around the country will miss the completion deadlines set forth under contract –if they get finished at all, that is.

As a practical matter, those buyers with potential construction delay claims who have decided that they are without the patience of Job are well-advised to assert their legal claims as quickly and decisively as possible. While construction delay may be a pathway to successful rescission of a purchase contract, generally speaking, the longer one waits to take legal action, the greater the chance that the developer will be able to argue that the buyer — by his or her own delay — has waived any legal claims.

Future of Real Estate Market in India

According to the real estate experts, the prospect of getting superior returns in the U.S combined with less asset price distort the risk-reward balance in opposition to upcoming realty markets of India. Thus, there is a high probability of foreign investors avoiding the Indian real estate market.

According to another expert retardation of general growth and low interest rates have served as a double blow to the real estate developers even as the alleged risk-reward ratio for India is going downhill. For instance, the pension funds in US have the opportunity to invest in India or other markets. They opt for other option because of better level of available information. According to another expert in real estate, there is no developmental liability in other markets as these are existing properties. Further, the absence of political or currency risk and the prospect of approximately 18-20% returns in the US make it very attractive for investment and, they are not particularly eyeing for additional 5% they may gain coming to India.Considering the elevated risk that the investors have to take in India, this minor extra return seems to be rather inadequate.

This might be an early phase but, for investments, it may result in investments decisions against Indian market. Investors have plenty of doubts and asking many questions and deals are getting cancelled. Term-sheets are deferred. Citi Venture and AIG backed out of a proposed investment of Rs 1500 crore to be made in Mumbai-based real estate developer Akruti City in April. There is a hold-up or delay because of slow decision-making by the PE majors. According to the experts, this is happening because PE majors are not sure. However, developers are commencing to recognize the actuality and coming with better terms and condition. This is clear from the financing terms that they are accommodating nowadays with the growing demand of economy.

If a developer and a PE major invested in a ratio of 75:25, the profit-sharing was partial to promoters by the ratio of 60:40 beyond a specific interest rate of 15-16%. This has now become almost 20-22%. The coming year could lead to more confusion, as inflation would elevate the rates of interest rates. Deficit financing for oil subsidy would also place the economy in much strain. And thus real estate in India is all set for a hard time. This indicates an end of the days of extraordinary profits, and real estate developers would be forced to price their products affordably. Further, the passion to purchase lands would slow down and consequently India property prices would be corrected. The aggressive land purchasers, having a tendency to acquire lands in large scale will definitely be in a restrained mode for inadequacy of fund. A rectification in this regard will be good option.