How a construction ban in Delhi-NCR would impact under-construction projects

How a construction ban in Delhi-NCR would impact under-construction projects

New Delhi, 7 October 2022: It’s that time of the year again when the air quality in Delhi-NCR reaches its worst levels and heavy smog engulfs the entire region. Various construction projects, including residential projects, get impacted in most parts of Delhi-NCR when a construction ban is imposed to battle air pollution.

This year too, to battle pollution, an action plan has been rolled out in advance, mandating that if the pollution levels breach certain levels (i.e. Stage III or ‘severe’) authorities will have to enforce a ban on construction and demolition activities in NCR, except on essential projects (like railways, metros, airports, ISBTs, national security/defence-related projects of national importance).

Prashant Thakur, Sr. Director & Head – Research, ANAROCK Group, says, “As per ANAROCK Research, there are currently as many as 5.68 lakh housing units under various stages of construction in the entire Delhi-NCR region. Periodic construction bans by the NGT, government or the apex court in response to poor air quality have serious consequences. On an average, a one-month ban on all construction activity delays a project by at least 3-4 months.”

Impact on Residential Prices

Being periodic, the impact of these construction bans on the overall property prices is almost negligible. It is a seasonal phenomenon when air quality worsens during the onset of the winter season every year, coinciding with agricultural stubble burning in nearby states.

Moreover, real estate prices in most cities are not so much a function of environmental concerns as of accessibility, proximity to the city centres or major employment hubs, urban mobility via various modes of public transport, and affordability. It has been proved that air quality in Delhi’s homes – even in the verdantly green Lutyens’ Zone – is no less polluted than on motorways. However, the common assumption is that residences are a refuge from pollution. Assumptions, whether true or false, are the basic essence of market sentiment.

In Mumbai too, the city perennially experiences floods during the monsoons, yet property prices remained steady. In fact, in the last two and half years since the pandemic, MMR has been the most active region in terms of both new supply and new launches.

As for Delhi-NCR, the region too has been very active. While developers restricted new supply, housing sales have been significant. In fact, the region has shed at least 23% of its unsold stock in the last 2.5 years since the pandemic. Back in Q1 2020-end, the overall unsold stock in Delhi-NCR stood at 1.73 lakh units which have reduced to a little over 1.32 lakh units as on Q3 2022-end.

Deep-dive – Top Localities with Under-Construction Homes

City Micro Market Under Construction Units as on date
Greater Noida Greater Noida West 1,37,490
Greater Noida Yamuna Expressway 47,220
Gurgaon New Gurgaon 44,370
Noida Noida Expressway 32,990
Gurgaon Dwarka Expressway 32,650
Noida Central Noida 26,170
Noida Sector-150 23,500
Faridabad Greater Faridabad 20,310
Ghaziabad Raj Nagar Extension 16,940
Gurgaon Sohna 13,150
Gurgaon Golf Course Ext. Road 12,170

Source: ANAROCK Research

As per ANAROCK Research, the areas in Delhi-NCR with the maximum under construction units presently include Greater Noida West, Yamuna Expressway, New Gurgaon, Noida Expressway, Dwarka Expressway, Central Noida, Sector 150 (Noida), Greater Faridabad, Raj Nagar Ext. (Ghaziabad), Sohna and Golf Course Ext. Road. These areas together have more than 4 lakh units that are currently under various stages of construction.

Greater Noida West alone has more than 1.37 lakh under-construction units currently, and a construction ban could impact project deliveries eventually.

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