The recommendations of the Delhi Urban Arts Commission (DUAC) to exclude eight premium residential areas in Delhi from the Lutyens Bungalow Zone (LBZ) is not likely to affect the real estate market. Exclusion of Golf Links, Jor Bagh, Sunder Nagar, Chanakyapuri, Panchsheel Marg, Sardar Patel Marg, Ashoka Road and Bengali Market from the zone will neither create a huge housing supply nor lead to price appreciation, say real estate experts.
There are currently only about 400 to 500 homes in the areas that have been excluded. Out of this only 30% (around 100 to 120 units) can be redeveloped provided the owners construct more floors once the new norms kick in. Thus, the new housing stock created will be very small.
Also, the biggest challenge in these areas is that majority of ownerships are inherited and there are very few ‘sorted titles’ Hence, one is not likely to see too much supply coming in at one go.
According to DUAC chairman P S N Rao, “As of now only the draft report is ready. Nothing has been finalised. It will take another two months. The supply that will be created in these areas is immaterial as these are scattered in different parts of the city and, therefore, will not have a major impact on infrastructure or the skyline. Also, not much housing stock will be created as not everybody would want to add houses or build new units.”
Snipping off 5.13 sq km from the LBZ, however, will make fresh development possible in these areas. “Building rules that are applicable in other areas of Delhi will also apply here. Guidelines as per the Delhi Master Plan 2021 and the Delhi Building Bylaws 1983 will not be applicable. Since these areas will still have the locational advantage of being close to the seat of power, they will continue to command a premium. However, capital values will now be within the reach for many more individuals, depending on the number of units that will come up,” says Samantak Das, chief economist and national director research, Knight Frank (India) Pvt Ltd.
New supply of apartments is expected to come up only after the specified areas are officially de-notified from the LBZ and will happen only if the owner of a bungalow or villa wants to opt for redevelopment. Though new housing units are likely to be more affordable than the current properties in these areas, they will certainly not be cheap. If the prevailing capital values are any indication, a new unit is likely to be priced in excess of `15 crore. These will largely be for 3 and 4 BHK apartments, with a super built-up area of about 2,200 to 3,000 sq ft, he says.
Shweta Jain, executive director – residential services Cushman and Wakefield India, says that only some parts of Jor Bagh or Sardar Patel Marg are a part of the Lutyens Zone. They were not part of the original LBZ and were only included later. This is only an attempt to rectify that mistake. Limited construction is currently allowed in the excluded areas.
This will unlock that opportunity, but supply will not be excessive as demand will be limited. Also the impact on pricing will be limited as supply will be slow. The other challenge is that there are too many title related complexities in these areas. Hence, one will not see too much supply coming at one go, she says.
The move will allow people with smaller budgets to buy a floor in these areas. They will be able to get a 1,700 sq ft to 2,000 sq ft apartment for around `15 crore to `35 crore. The current value is around `50 crore to `140 crore. Land value will not change drastically. With supply of units increasing, prices may come down by 10%.
On the challenges arising from ownership problems, Arvinder Pal Singh, a Golf Links resident says, if owners, say two siblings, are allowed to construct additional floors, one sibling who has inherited the ground floor will not get any benefit as the other one owning the first floor will be allowed to construct the additional floor.
Also, if the owner has built a unit seven years ago, he may not want to construct a new basement, stilt parking and three-floor structure as per the new norms, he says.