How a Construction Ban in Delhi-NCR Would Impact Under-construction Projects

• As many as 5.68 lakh housing units are currently under various stages of construction in entire Delhi-NCR
• Of these, more than 4 lakh units (or 70%) are under construction across the top 10 localities alone
• Localities include Greater Noida West, Yamuna Expressway, New Gurgaon, Noida Expressway, Dwarka Expressway, Central Noida, Sector-150 (Noida), Greater Faridabad Raj Nagar Ext. (Ghaziabad), Sohna & Golf Course Ext. Rd)
• A construction ban due to air pollution could be a serious setback for these projects
• As is, avg. completion time for residential projects in Delhi-NCR is highest among all top 7 cities for projects launched & completed within 2010-2022
• For small projects (100-500 units) the avg. completion time in Delhi-NCR is b/w 6-6.5 years & for large projects (>500 units) it is b/w 7.5-8 years

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 pandemic. Back in Q1 2020-end, the overall unsold stock in Delhi-NCR stood at 1.73 lakh units which has reduced to a little over 1.32 lakh units as on Q3 2022-end.

Deep-dive – Top Localities with Under Construction Homes

Source: ANAROCK Research

As per ANAROCK Research, the areas in Delhi-NCR with 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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