Some 3,000 potential buyers have applied for 1,354 apartments in just four days.
Promising Start to New Housing Scheme in India, Despite Sluggish Economy
NEW Delhi — Despite the economic downturn in India, a new housing scheme for 2021 has generated interest from 3,000 potential buyers for 1,354 apartments in just four days.
The Delhi Development Authority (DDA) launched the scheme on Jan. 2 for apartments in various parts of the city.
In 2019 the DDA had offered 18,000 new apartments and received 45,012 applications, but it cut the number of flats for sale to 10,294 due to poor response. It ultimately sold only 8,438 units.
DDA’s housing scheme 2021 is linked to a subsidy program under the Pradhan Mantri Awas Yojana, or Housing for All (Urban).
Though there is an acute housing shortage in Delhi, a large inventory of unsold houses prompted the government to cut back on the number of units for sale under this year’s mega housing scheme.
“The DDA failed to get a good response for its previous housing schemes as most of the apartments were located in remote areas and the construction quality was poor,” said Samir Jasuja, founder and CEO of Propequity, a real estate research firm.
Developers in nine residential markets had nearly 739,000 unsold housing units — half of which were affordable homes — at the end of March 2020, according to a report by PropTiger, a property consultant.
The outskirts of Delhi, Noida and Gurugram, alone have close to 55,000 unsold affordable homes, the report states.
The economic slowdown in India over the past couple of years and the recent impact of the pandemic are seen as major factors behind the declining demand.
“As prices of properties in Delhi have come down due to the pandemic-hit market, subsidies given by the DDA do not weigh much. As there are a lot of options available in similar price points and better construction quality in Noida, Gurgaon, NCR (National Capital Region), and other preferred locations, people are opting for private developers. So, it is difficult to predict the expected response to DDA’s new scheme,” said Jasuja.
“The muted demand for affordable homes is indicative that even while several measures were launched by the government to achieve its ambitious dream of housing for all by 2022, more time may be needed, to yield the desired results, especially in the wake of the Coronavirus outbreak and its adverse impact on residential real estate,” PropTiger reports.
This year, the DDA is offering fewer flats but better locations. While the previous program offered houses only in Narela and Vasant Kunj, buyers this year have a number of well-connected areas to choose from, including Dwarka, Rohini, Vasant Kunj and Mangalpuri.
In other incentives, the central government has increased the tax deduction on home loan interest, and as of last year, the Goods and Services Tax on affordable housing was reduced.
Under eligibility requirements in this year’s scheme, citizens may buy one- two- or three BHK (bedroom, hall, and kitchen) flats depending on their annual household income. Income parameters range from a high of INR 1.8 million (about $25,000) to a low of less than INR 300,000 ($4,100).
The costliest flat is priced at INR 19.7-21.4 million ($269,000 to $292,225) and is located in Jasola, The cheapest flat is available for INR 800,000 ($10,924) at Narela.
“All the procedures will be carried online, right from application to possession,” said Bijay Shankar Patel, a DDA spokesperson. “To enforce more transparency, we are providing a tour of our sample flats at various locations.”
Online registration for the apartments will continue through Feb. 16. A computerized draw of applications will decide the final list of buyers.
According to the Delhi Master Plan, 2021, nearly two million new housing units will be required in the capital city to accommodate the growing population, states a report published in 2018 by Housing.com.
Formed in 1957, the DDA oversees projects in urban housing, commercial facilities, sports complex, industrial and institutional development in Delhi. Since 1967 the authority has been offering apartments at subsidized rates.
Housing demand began to pick up at the end of 2020 as home developers sweetened deals with discounts and perks.
“To revamp the business, private builders are not bringing down the basic selling price but offering a couple of freebies like free stamp duty registration, car parking, club membership, and many more. Property registrations in Mumbai spiked as builders reduced stamp duty charges to 2 percent. In Delhi, the usual charges are around 5 to 6 percent,” said Jasuja.
“The real estate scenario in Delhi is slowly picking up, but the demand is still 25 percent lower from that during the pre-pandemic quarter — January to March 2019. However, compared to the April-June quarter, the demand is up by 30 percent,” he said.
(Edited by Uttaran Acharya and Judith Isacoff. Map by Urvashi Makwana)