Construction Ban & Projects Delays

With more than 5.68 lakhs housing units currently under various stages of construction in Delhi-NCR including Gurgaon, Sohna, Faridabad, Noida, Greater Noida and Ghaziabad, a likely construction ban as an emergency measure of GRAP (Graded Response action Plan) to combat air pollution  could pose a serious setback to these projects. Especially as the completion time for residential projects in Delhi-NCR is highest among all top 7 cities.  

 Once again, it’s that time of the year when the air quality in Delhi-NCR reaches its worst levels and heavy smog engulfs the entire region. During this time, various construction projects, including residential projects, get impacted in most parts of Delhi-NCR when a construction ban is imposed  as an emergency measure to control high  air pollution levels. 

This year too, to battle pollution, an action plan has been rolled out in advance, mandating that if the pollution levels breach certain levels (i.e. Stage III or ‘severe’) authorities will have to enforce a ban on construction and demolition activities in NCR, except on essential projects like railways, metros, airports, ISBTs, national security/defence-related projects of national importance. 

 As per Anarock Research, there are currently as many as 5.68 lakh housing units under various stages of construction in the entire Delhi-NCR region. According to Prashant thakur, Senior Director and Research Head, Anarock, periodic construction bans by the NGT, government or the apex court in response to poor air quality have serious consequences. On an average, a one-month ban on all construction activity delays a project by at least 3-4 months. 

Being periodic, the impact of these construction bans on the overall property prices is almost negligible. It is a seasonal phenomenon when air quality worsens during the onset of the winter season every year, coinciding with agricultural stubble burning in nearby states. 

Moreover, real estate prices in most cities are not so much a function of environmental concerns as of accessibility, proximity to the city centres or major employment hubs, urban mobility via various modes of public transport, and affordability. It has been proved that air quality in Delhi’s homes – even in the verdantly green Lutyens’ Zone – is no less worse than on motorways. However, the common assumption is that residences are a refuge from pollution. Assumptions, whether true or false, are the basic essence of market sentiment.  

 Delhi-NCR, has seen  at least 23% of its unsold stock getting shedded in the last 2.5 years since pandemic as developers took to restricted supply amidst healthy sales. Back in Q1 2020-end, the overall unsold stock in Delhi-NCR stood at 1.73 lakh units which has reduced to a little over 1.32 lakh units as on Q3 2022-end. 

 Top locations in Delhi-NCR with under-construction homes 

 Anarock  Research suggests that the areas in Delhi-NCR with maximum under construction units presently include Greater Noida West, Yamuna Expressway, New Gurgaon, Noida Expressway, Dwarka Expressway, Central Noida, Sector 150 (Noida), Greater Faridabad, Raj Nagar Ext. (Ghaziabad), Sohna and Golf Course Ext. Road. These areas together have more than 4 lakh units that are currently under various stages of construction. 

Greater Noida West alone has more than 1.37 lakh under construction units currently, and a construction ban could impact project deliveries eventually.