Acquiring land in the national capital region is becoming increasingly difficult for real estate developers with the involvement of lenders, growing legal issues, and high fee levied by some state authorities in the micro-markets.
This comes at a time when demand for new homes has picked up after the Covid-19-led slump and most units in under-construction and completed projects have already been sold.
Experts working with international property consultants said absence of clean title is making it hard for big developers to buy land.
Shalin Raina, managing director and head, residential service, Cushman & Wakefield, said Gurgaon is one of the most sought-after markets in India from a real estate perspective and many large developers are keen to launch their projects there and are on the lookout for land parcels in key micro-markets like Golf Course Road Extension and SPR.
In Noida, most of the land is with the lenders of stuck projects.
“While developers want to be in the upcoming Noida market, the lack of the right land parcels is pulling them back,” said Mudassir Zaidi, executive director – north, Knight Frank India.
In the past few months, large builders have been actively scouting in NCR for new land parcels.
The Max Group is also in talks to acquire land in Noida and Gurgaon, while other major developers from Mumbai and Bengaluru are also looking for land to expand in the north Indian market.
Recently, Gurgaon-based Elan Group acquired 40 acres of land from Indiabulls Real Estate for Rs 580 crore in Sector 106, Dwarka Expressway Gurgaon, in one of the biggest land deals in the country in recent times.
The company is on the lookout for more land but is unable to close a deal.
The growth in sales means developers are left with no inventory and have healthy cash flow to acquire land.
“In the past few quarters, new launches in the NCR have been muted, primarily because of the limited land supply,” said Vikas Wadhawan, Group CFO, Housing. “Several developers, who own large tracts of land in this region, are currently facing a cash crunch or insolvency scenario. Such builders can neither launch new projects nor sell the land because of the legal restrictions.”
The problem is acute in Noida. While land is mostly available in regions that are yet to be developed, large developers want to launch projects in the city centre.
“In Noida, most of the land has dues from the authorities, making the process of acquiring land difficult. As a result, most of the developers have no land launch projects, “said Manoj Gaur, CMD, Gaurs Group and Vice-President, North, CREDAI National. “However, sales momentum continues to go up.”
But on the other hand, established developers who own prime land in parts of these markets are in a wait and watch mode to gauge the region’s demand dynamics amid the pandemic-induced uncertainty.
Housing sales reached a new high in the January-March quarter with the sale of 70,623 units, the highest in a quarter since the Covid outbreak, according to a report by Australia’s REA backed PropTiger.
Source : ET