Newsdetail

Construction ban in Delhi NCR can impact project delivery

By Rishabh Chamoli | 2022-10-12

The air quality in Delhi NCR reaches its worst levels again this time of year, engulfing the entire region in heavy smog. According to industry reports, Delhi NCR currently has more than 5 lakh housing units under construction, of which more than 4 lakh (or 70 percent) are in the top 10 localities.

Delhi NCR could be hit by a construction ban due to high pollution. According to industry reports, if a construction ban is imposed like last year, around one lakh flats in Gurgaon alone will be affected. The ban may delay project deliveries and will also impact the overall cost of housing units. Noticeably, a total of 5.68 lakh residential units are being constructed in Delhi NCR, including Greater Noida West, Yamuna Expressway, New Gurgaon, Noida Expressway, Dwarka Expressway, Central Noida, Greater Faridabad, Raj Nagar Extension in Ghaziabad, Sohna Road, and Golf Course Extension Road. And there are more than 4 lakh units in these areas combined.

What does the report indicate?
The report cites that a construction ban due to air pollution could be a serious setback for these projects since residential projects in Delhi NCR typically take 6 to 8 years to complete. Experts opine that banning construction due to poor air quality might have serious consequences. This can delay a project at least three to four months if construction activity is banned for one month. However, Gurgaons air quality has been good for the last three days due to heavy rain and high wind speeds. And in accordance with the Graded Response Action Plan (Grap), the construction ban on NCR will only be implemented when the air quality reaches very poor levels.

According to Parveen Jain, Chairman, National Real Estate Development Council and Managing Director, Tulip Infrastructure, It is not appropriate for authorities to summarily ban real estate activity, but instead stop external construction activities, such as plumbing, wiring, tiling, and plastering. Rather than banning all construction activities, the ban should focus on those that produce dust pollution. When pollution is curbed, it is important to ensure that the real estate industry is not adversely affected, added Jain.

Will property prices be impacted in the region?
According to experts, construction bans have a negligible impact on property prices. The construction ban, however, could delay project delivery. Currently, Greater Noida West has more than 1.37 lakh units under construction, and a construction ban could affect project deliveries in the future.

Furthermore, real estate prices in most cities are not so much determined by environmental concerns as by access, proximity to city centres and major employment centres, urban mobility, and affordability. And market studies reveal that Delhis homes are no cleaner than motorways when it comes to air quality, but the popular assumption is that residences are pollution free zones. And market sentiment is based on assumptions, no matter how true or false they might be.

In fact, during the monsoon season, Mumbai is also plagued by floods, but property prices remain steady. In terms of Delhi NCR, the region has been very active. Despite a restriction on the new housing supply, housing sales have been strong.