AS prices of homes spiral out of reach for the middle class and is becoming pricey for the upper class too in Delhi, builders are exploring the nooks and crannies of the city to extract additional supply of residential properties. The one segment where it is coming through is that of builder floors. Take a drive through some of the best localities of Delhi city and you will find patches of land enclosed each of which point to construction activities. Many of them are bungalows while most others are one or two floor plain vanilla building being redeveloped into low-rise apartments.
The supply demand mismatch in especially Delhi has fuelled this development of privately-owned land. It also makes sense for the land owners as the prices have turned exorbitant. After the emergence of Dwarka sub-city, Delhi over the past decade, has seen only a handful of group housing projects that are currently under various stages of development. Since there is virtually no new supply entering the market, there is a windfall gain awaiting the land holders if the plot converts into an apartment.
“It is essentially true that there is limited new supply hitting the Delhi real estate market. Whatever supply has been seen in recent times has been scattered across various pockets. Due to limited availability of land and exorbitant land prices, group housing residential projects have been off the radar of the Delhi realty industry,” says Santhosh Kumar, CEO – Operations, JLL India.
Surabhi Arora, associate director-research, Colliers International adds, “Typically, the developer enters into a joint development agreement with the landlord and develops the plot with one or two units on each floor. Based on pre-agreed terms a down payment and some units are offered to the landlord as his share, while the rest of the units are sold by the developer in the open market.”
“The redevelopment model is more widely prevalent, since it involves lower investments as well as lower risk exposure to the builder. Also, this arrangement permits the builder to enter into multiple ventures of similar kind,” says Kumar.
This concept has gained momentum mainly in the tony neighbourhoods as land that is privately held or on long lease duration can only be found here. The prominent localities of south Delhi such as Vasant Vihar, Anand Niketan, Shanti Niketan, Greater Kailash – I and II, Safdarjang Enclave have all seen a spike in builder floor constructions.