New Delhi: Delhi has consistently ranked as the most polluted city in the world in the last several years and about half residents of Delhi NCR in a recent poll preferred leaving the city due to the problem. So the questions arises-Can the pollution knock down real estate prices in the region?
“The issue would surely impact the “Quality of Living” Index for the major cities across North India,” says Ashutosh Kashyap, Associate Director, Valuation & Advisory at Colliers International India.
Even Mani Rangarajan, Group COO, Elara Technologies ( the company that owns Proptiger.com) says that real estate prices might get affected in the scenario when there is constant high alert throughout the year.
Some of the property types may get impacted more than others.
Certain segments of real estate industry, like prices of luxury properties, will get affted due to the high levels of pollution in Delhi NCR, points out Rangarajan. “People would think before spending big amount on a project (for a property) in areas which have high impact of pollution, he says.
Even commercial property prices may become slightly less lucrative in the mid to long term.
“The impact of pollution on property prices, if any, would be on commercial spaces off-take, primarily on account reduced lucrativeness in evaluation matrix of corporations seeking India market entry. In mid to long run, this might result in some impact on property sentiments,” says Kashyap, but adds that it will not be significant.
But real estate as a whole may not be effected since property prices are based on a number of factors and not just pollution.
“Property price is a function of many variables and if a weightage is to be assigned, pollution and air quality, even in the present context is an insignificant determinant of prices,” says Kashyap. However, if at all there is any impact, the same would be very gradual and would only be ascertained over a span of 5- 10 years, he adds.
Pirojsha Godrej, MD and CEO, Godrej Properties, too thinks there will not be any major impact on prices and the problem will be resolved by concerted efforts by the government. “I think it’s going to require a lot of intent from the government, and I am sure there will be potential short-term disruptions like the construction ban currently in place, but I am quite confident this will be resolved,” he said while replying to an investor query about the risk pollution bears on the business prospects of Godrej Properties.
One reason for Delhi NCR not losing its charm or being hit in term of real estate prices is its ability to lure workforce all parts of North India. “Delhi/NCR is the single largest economic hub in the Northern India, which is a major employment hub and therefore it will always draw population from all parts of North India,” says Kashyap.
But he admits that the new companies that currently do not have an office in a metropolitan but aiming to have one may opt for Mumbai, Bengaluru or Hyderabad because of deterioration of ‘Quality of Living’ aspect in Delhi owing to perennial issue of poor air quality.