Delhi NCR Luxury Real Estate Sector: Is a Price Correction on the Horizon?
As the luxury residential real estate market in Delhi NCR faces a slowdown, developers and investors are bracing for a potential price correction.
Delhi NcrLuxury Real EstatePrice CorrectionInvestorsDevelopersReal EstateJun 26, 2024
The initial boost was driven by NRI investments and India's growth story, which attracted investors to the luxury segment. But with prices reaching unsustainable levels, end-user home buyers are no longer able to afford further price increases. This has resulted in a decline in sales queries, and developers are now offering back-door discounts to keep the sales momentum going.
The luxury segment was initially driven by domestic home buyers and affluent individuals migrating from tier 2 cities to metros. However, by mid-2022, the segment entered a phase of high price escalation driven by the NRI segment and investor bubble. With prices increasing by 30%-40% in the last two years, it has become challenging to find genuine home buyers willing to purchase units at Rs 20,000 per square foot.
Many projects located 20-30 km away from city centres like Gurugram or NOIDA are still fetching high premium prices, despite being far from the city centre. This raises questions about the true value of these projects and whether they will remain peripheral locations for an extended period.
The luxury segment is also facing a challenge from ready-to-move inventories in the secondary market, which are selling for less than the primary prices of newly launched luxury projects. End-users are likely to gravitate more towards ready-to-move inventories in the coming days, further depressing luxury segment prices.
It may be time for NCR developers and investors to recalibrate their strategies and products in the luxury segment. A pause in price escalation will lead to higher capital costs for developers sourcing funds from different sources. In a buyer-driven market, more rational price points and selection of end-users who can avail bank finance can help developers sail through projects in turbulent times.
Information
Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.
The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.
Frequently Asked Questions
What has caused the slowdown in the luxury residential real estate market in Delhi NCR?
The market has priced itself out of reach of end-user home buyers, leading to a decline in sales queries and a slowdown in the market.
What drove the initial surge in the luxury residential real estate market in Delhi NCR?
The initial boost was driven by NRI investments and India's growth story, which attracted investors to the luxury segment.
What is the challenge facing the luxury segment in Delhi NCR?
The luxury segment is facing a challenge from ready-to-move inventories in the secondary market, which are selling for less than the primary prices of newly launched luxury projects.
What can developers do to sail through the current turbulent times in the luxury segment?
Developers can recalibrate their strategies and products in the luxury segment, offer more rational price points, and select end-users who can avail bank finance.
Is the luxury real estate crisis in Delhi NCR similar to China's real estate crisis?
No, the luxury real estate crisis in Delhi NCR is not expected to be as severe as China's real estate crisis.
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Delhi NCR Luxury Real Estate Sector: Is a Price Correction on the Horizon?
As the luxury residential real estate market in Delhi NCR faces a slowdown, developers and investors are bracing for a potential price correction.
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