Government of India (GOI) has announced to develop 12,000 new housing units in New Delhi to be rolled out in a time span of 5 years. This will take the total number of government built units in Delhi to 74,000 units. It will be a major boost for the government employees who otherwise have to wait for a very long time.
The project which will cost a total of INR 32,000 Crores will include redevelopment projects in places such as Sarojini Nagar, Nauroji Nagar and Netaji Nagar. Other areas will include, Kasturba Nagar, Thygaraj Nagar, Srinivaspuri and Mohammadpur.
“However, contrary to the lexicon prevalent in the industry circle that it might lead the residential prices to go further down in the Delhi, NCR- we at Square Yards believe that it won’t make a huge impact on the housing prices in the region. This is because, these are built for Government employee & as they are not up for sale, the impact is expected to be minimal in terms of price movement.”
Nevertheless, there could be some impact on rental yields of the places mentioned above, in the times to come. With new units coming into picture, government employees which otherwise stay in private rented accommodation will move into these new units. It will definitely make a downward pressure on the rental demand thereby affecting price.
Commercial space will remain unaffected
GOI has also plans to develop commercial & office spaces in Delhi-NCR. However, once again the impact on the office space would be felt in the close vicinities of the project. In the wider NCR, office market in Gurgaon & Noida will be unaffected. This will be so because the nature of commercial real estate is different, across the three cities.
For instance, in Gurgaon the market is bullish at the moment with prime office space areas such as Golf Course Road, MG Road & DLF Cyber City having very limited space left. In Q1 2015, a total space of 700,000 Sq. Ft. has been absorbed in the market with IT/ ITeS comprising of over 50% of the space.
Similarly, 380,000 Sq. Ft. of office space has been absorbed in Noida driven by IT/ ITeS along with publishing & manufacturing sector. In the coming time, Noida will stay bullish due to upcoming infrastructure & metro project along with economical prices in Noida that is stimulating many IT companies to consider relocating.
In contrast, the nature of the office space is different in Delhi, that is primarily led by the BFSI sector that constitute 72% of the office market. The IT/ ITeS has a relatively lesser role with around 21% of the market share. Given the different nature of the market the impact of new office units in Delhi will be minimal on Noida & Gurgaon.
