With the Real Estate (Regulation and Development) Act (RERA) and other reforms coming into force, developers are rushing to complete partially completed projects and obtain their completion certificates, to avoid falling under the purview of these laws. The National Capital Region (NCR), is one such region, where this trend is likely to result in an increase in the supply of units.
RK Arora, chairman, Supertech Limited, says “RERA was introduced to bring transparency, accountability and standardisation of the unregulated real estate sector. It has resulted in a change in the mindset of buyers, as they are more confident now and expect timely deliveries and continuous update on their projects. This will certainly help to bridge the demand and supply gap.”
All cities and the states falling within the NCR, have a working real estate authority. At a national level, almost 30 states have their regulatory machinery in place, to register projects. Most however, are doing it manually. These include Rajasthan, Delhi and Haryana, which are working to put in place their online registration mechanisms.
RERA and project supply status in the NCR
So far, more than 70 projects have been registered in the NCR alone. Uttar Pradesh has already extended the deadline for registration of projects once, to incorporate ongoing projects. Haryana too may extend the deadline. The rush among developers, now, is to complete their projects. “The RERA effect is visible in almost all markets. Developers are rushing to register their projects or obtain the completion certificates for projects that are near completion stage. In any case, buyers are likely to benefit, in the medium to long term. The projects that were nearing completion were almost fully sold. Thus, we may see a surge in properties for sale and rent, in the secondary market, especially in micro-markets like New Gurugram, Dwarka Expressway and Noida Expressway, where a significant number of apartments were sold to Investors,” explains Surabhi Arora, senior associate director, research, Colliers International.
Areas such as Noida Extension, Noida-Greater Noida Expressway, Indirapuram in the east and Golf Course Road, Golf Course Road Extension, Dwarka Expressway and Sohna Road towards the west of the NCR, are gradually going to witness fresh supply, in the coming quarters. This is likely to further put pressure on inventory levels.
Increased supply: What it means for property buyers
Most of this supply, according to estimates, is likely to be in the mid and affordable housing segments. With the government announcing various policies for the benefit of the affordable housing sector, development firms are also launching more such projects. “With the upcoming festival season, we are expecting sales to pick up, especially in the affordable segment where launches have also increased,” maintains RK Arora.
The rental market could witness some pressure on rents, on account of the rise in supply. “The impact of new supply is already visible in the rental market, especially in Noida, where rents have reduced by 15-20 per cent in established micro markets, as tenants prefer new buildings with modern amenities,” adds Surabhi Arora. The rates have also decreased on account of the existing inventory overhang.
For prospective home buyers, the prevalent low rates, may offer an ideal widow to buy a home. Nevertheless, buyers should be cautious and preferably, opt for completed or near-complete projects that are RERA-compliant.