Construction Ban In Delhi NCR: Will It Affect Pricing, Cause Delays?

After the capital city's air quality index (AQI) dipped into the "severe" category on Saturday evening, GRAP Stage-3 restrictions were implemented. Here's how the real estate industry reacts to it.
Construction Ban In Delhi NCR: Will It Affect Pricing, Cause Delays?
Construction Ban In Delhi NCR: Will It Affect Pricing, Cause Delays?

Many homebuyers were left wondering about the fate of their under-construction buildings as the government banned construction activities in the National Capital Region (NCR) last week after its air quality index (AQI) dipped into the "severe" category, potentially disrupting the real-estate market.

The Ban

On October 28, 2022, the government banned all construction activities in the NCR region under the stage III Graded Response Action Plan (GRAP) following Delhi's rising pollution levels.

The Central Pollution Control Board's (CPCB) air quality index (AQI) fell into the "severe" category in Delhi at 9.10 am. The reading showed an AQI of 426. An AQI of 401 to 500 is considered severe.

Under the restrictions, construction and demolition activities are prohibited, except for critical tasks like national defence, railroads, metro rail, etc.

Will Construction Ban Delay Projects?

According to real estate company Anarock Group, a month-long ban on construction activities typically delays a project by at least 3-4 months.

Experts said construction delays could jeopardize RERA deadlines for project completion in NCR.

"The projects are time-bound in compliance with RERA, which requires us to adhere to the deadlines," said Pradeep Aggarwal, founder, and chairman of Signature Global, a real-estate developer.

He added, "We will adhere to the directives issued by the Commission for Air Quality Management and wait till it lifts the ban. Also, we hope the government will provide flexibility in the RERA deadlines accordingly if this ban continues longer than a month."

Data provided by Anarock showed at least 132,000 units are under construction in the Delhi-NCR region as of Q3 2022.

Meanwhile, on October 30, 2022, Delhi Environment Minister Gopal Rai said that 586 teams were formed to enforce the ban in the national capital region.

Will Construction Ban Affect Pricing?

Reacting to the order, experts said the prohibition could cause immense loss to the industry as non-polluting sites will also stop working, and labourers might leave the city fearing an extended ban.

They believe the delay in project completion would severely impact developers' margins.

Saransh Trehan, managing director of real-estate firm Trehan Group, said delaying projects would impact developers' margins, who are already "struggling" with rising costs of steel, cement, etc.

Manoj Gaur, chief managing director (CMD) of real estate developer Gaur Group, said since public money is involved in RERA-registered projects, such projects should be considered "essential projects" as they are small compared to metro, railways, defense, central vista, and other exempted projects.

Anarock, however, said the impact on property prices from the ban would be negligible.

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