Surging land acquisitions in Delhi NCR

Developers from across the country are racing for land banks in the national capital region, with the surge in demand supported by infrastructure developments.

February 10, 2023

National Capital Region (NCR) has always been a hotspot for the country’s top developers for land acquisition. Horizontal expansion of the city towards the suburbs has worked out well, with the development of new residential corridors and office business districts. Factors like proximity to the national capital, developing physical and social infrastructure, and growing need for housing and amenities, have attracted developers from all over the country. Various Mumbai and Bangalore-based developers are looking to expand in the North market.

Access to institutional capital and partnership with foreign companies have helped Indian developers with funding. In most transactions, sellers are either state authorities or developers with high indebtedness. In 2022, nearly 745 acres of land was transacted in 23 transactions valued at INR 7,000 crores (USD 875 million). The city of Gurgaon led in the number of deals, with 12 transactions recorded in 2022, followed by Noida with 6 major land deals. Residential development was the top usage, with 15 out of 23 transactions, totalling close to 665 acres, acquired for proposed residential developments.

Figure 1: Proposed developments on the land parcels acquired

Source: JLL Research & REIS
Note: Total Land Area Acquired by Developers is 744 acres (Delhi NCR, 2022)

Residential developments leads

With the heavy population growth, majorly due to increased migration, housing has become a challenge in Delhi. The city started to grow horizontally towards its peripheries, with the suburbs of Gurgaon and Noida leading the housing market. Gurgaon and Noida have been the major residential hubs for the last two decades. However, the change in Delhi’s masterplan in 2013 liberalised height restrictions, which allowed developers to build high-rise buildings. Eventually, the city started to witness multi-storey apartments, with developers like DLF, Godrej Properties, Raheja and Unity Group launching their projects in the city.

With the growing need for housing in the entire NCR and the relevant state governments promoting new housing projects by encouraging developer participation through incentives, the demand for land banks has gone up exponentially. Since 2014 housing sale in NCR was the highest in 2022, with 38,356 housing units sold in the top 5 cities. National players like Godrej and Max Estates, as well as local developers like Elan and M3M, were amongst the top land buyers. Established developers who earlier used to opt for a joint-development model have now shifted to the outright land purchase model.

Non-Core NCR gaining traction

Moving away from the submarkets of Gurgaon and Noida in core NCR, developers are eyeing corridors of Panipat, Sonipat and Bahadurgarh to develop townships. Prominent transactions include M3M buying 350 acres in Panipat, Godrej Properties buying 50 acres in Sonipat and Royal Green Realty buying 42 acres in Bahadurgarh, all for proposed residential developments.

Way ahead

Going forward, a lot more transactions are expected to occur in 2023, with growing demand for housing, developers expanding their landbanks and institutional funds pumping in capital. Upcoming infrastructure developments in the region like Dwarka Expressway, Noida International Airport, Delhi-Mumbai Industrial Corridor and Delhi Meerut Rapid Rail Transit System will act as further demand boosters.