Does Demand For Real Estate Remains Unaffected Due To The Rise In Pollution Level in Delhi-NCR?

  • @kw
  • 18 Dec 2019

Delhi National Capital Region is experiencing deteriorating air quality with severe pollution levels. Delhi has been declared as the most polluted city of the world during Oct-Nov of 2019. It has also been stated by leading environmental research agencies that six of the ten most polluted cities in the world are in India. It may be logical to say that air pollution impacts a region’s property market adversely, but in reality pollution impact on property market is quite negligible in India. This is mainly due to the adaptability of people in cities.

It has been evident year after year that the pollution spiking in Delhi-NCR is a seasonal phenomenon and surges during the onset of winter, burning of agricultural waste and rest of the year the pollution lever lowers. This is an amazing fact that people in the cities have got accustomed. Similarly we can see that in Mumbai every year there is a flood situation during monsoon but that does not have any deterrent effect on property prices. It is also surprising to note that environmental research agencies estimate that a part of Mumbai coastal chunk will permanently perish due to rising level of sea by 2050 but even this does not affect the investment in real estate market in Mumbai. This shows that Indians are more adaptable to adverse situations. Chennai though experienced in sudden loss of value for many aspirational properties in beach front due to tsunami. However dangerous is air pollution, it is less obstructive factor with no immediate destructive implications.  

Economic Considerations

Delhi is the hub of vast economic activity being the National Capital, administration and political power is concentrated generating large employment opportunities. The influx of people from across the country raises demand for real estate in and around Delhi in Delhi National Capital area. Therefore Delhi NCR continues to attract multifold investments in Gurugram, Noida, Ghaziabad etc. The slowdown in residential sale is primarily due to the delay in project handover by many builders and not really for pollution effect. Despite of the adverse report on pollution level, the demand for real estate in NCR, across segments and sectors -- office, retail, industrial, logistics and warehousing and housing – is strong and getting stronger. Real estate prices in most Indian cities are not dictated by environmental factors as much as by affordability and their ability to provide employment.

 Buyer’s Choice

To counter the effect of pollution, builders are providing air purifiers, green open space and other sustainable features. To attract buyers, builders are providing air purification systems and green open spaces with large number of additional features to counter pollution effects. The concepts of integrated township on well connected locations are gradually gaining relevance and demand. These projects are mostly in new development areas of Delhi NCR. However, demand for homes in congested city centers are not loosing out on demand due to the proximity from their work place. The second home buyers prefer to buy a house in the less polluted area of Delhi NCR.

The Delhi government’s various measures to tackle pollution are important - but other than the periodic ban on construction, they have no pertinence on the real estate market. Currently, property prices in most parts of Delhi-NCR are at their lowest best and are very unlikely to see any further downward trend -- certainly not as fallout of rising pollution levels in the region. Presently buyers are choosing to take advantage of price of flats which are in the verge of completion and pose very little risk in delayed possession. This logic is also contributing to rising demand and there seems to be no consideration for pollution level in their decision process. Multinational and domestic companies, government institutions and the whole support infrastructure system of schools, colleges, hospitals, shopping and recreation facilities will not relocate to less polluted areas. People employed in the city centers will certainly look for housing in emerging locations which, apart from lower pollution, are well-connected to the central workplace hubs. However, the detriments of development and massive inhabitation eventually follow wherever we go.


KW Group's Anthem.

Recent Post

Latest Updates