New Delhi: Anxious to find takers for the more than 40,000 flats that are reportedly lying vacant in its inventory, the Delhi Development Authority (DDA) has, in a first since its inception in 1957, roped in a private real estate consultancy to help re-establish itself in the city’s housing market.
The mandate for the consultant, put simply, will be to study and analyse the data provided by the DDA regarding the performance of its housing schemes, housing norms and pricing mechanisms.
The agency will give its findings in a report to the DDA, which will include crucial recommendations that the latter can consider for implementation.
While the DDA’s approach might seem out of the box, the rationale — and urgency — behind the move seems to be fuelled by two factors: a below-par response from homebuyers to all of its “regular” housing schemes since 2014, and a change in leadership within the authority after the entry of its latest vice-chairperson Subhasish Panda, in January.
A regular DDA housing scheme is one that involves certain pre-conditions for prospective buyers to be eligible to apply, starting from not already owning a house or plot in Delhi to getting their choice of housing through a draw of lots.
The DDA once used to be a big player in Delhi’s housing market charged with the mandate of providing affordable housing. But the charm of its housing schemes has been withering away.
Speaking to ThePrint, a senior DDA official, who did not wish to be named, pinned the reason behind this on the agency’s “business-as-usual approach” — one that depended on its past popularity.
Elaborating on the shortcomings that were pointed out by applicants who have surrendered DDA flats in the past, the senior official said that in flats in far-off locations such as Narela and Rohini, high pricing, lack of connectivity and quality, and inadequate size of dwellings were among the reasons behind the gradual decline in popularity of DDA flats.
“The housing market has changed, and homebuyers have options to choose from private players. So, our business-as usual-approach will not work any longer. We have to implement changes to establish ourselves as crucial players in the housing market,” the official added.
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Dynamic pricing
In December 2021, the DDA launched a special housing scheme with 18,335 flats up for sale in the Jahangirpuri, Jasola, Narela, Dwarka and Rohini areas of Delhi, among others. The category of housing was spread across the economically weaker sections (EWS), lower income group (LIG), middle income group (MIG) and higher income group (HIG).
All of the housing inventory consisted of flats that had found no takers in previous housing schemes, and the latest result was no different. Only about 1,800 flats could find takers, according to DDA officials.
It was a continuation of the trend observed in DDA’s regular housing schemes since 2014 in which the housing inventory found very few buyers — for instance, in the 2019 scheme, 88.72 per cent of DDA flats remained unsold.
The real estate firm consulting for the DDA will be provided with data points such as these in order to address the steep gap in supply and demand, explained the senior DDA official.
He noted that a few ideas were already being mulled over, one in which the DDA might look to experiment with the option of dynamic pricing — such as charges for preferential location.
Put simply, a ground floor apartment or a “corner flat”, he said, saw more demand and could be priced accordingly. The same may not be the case for flats located higher above the ground floor due to lack of facilities such as elevators.
“For example, some flats in Rohini were located in a tower where there was no elevator. Had we subsidised the prices a bit, perhaps the flats on the second and third floors would have found takers,” the senior DDA official told ThePrint.
Further, he noted that the authority might look at cross-subsidisation, where the DDA provides certain flats — in areas where there is less demand — on subsidised rates and recovers that cost through its premium housing inventory, such as duplex penthouses that are being constructed in Dwarka.
Currently, the DDA follows a uniform costing method — which is according to the land rates, plinth area rates and administrative costs — and is looking to reduce various charges in areas where demand is less, such as Narela and Rohini, in order to implement the dynamic pricing model.
DDA flat prices, according to the brochure of the 2021 special housing scheme, ranged from Rs 10 lakh for an EWS flat — one bedroom, hall and kitchen (BHK) — in Narela to Rs 29.50 lakh for an EWS flat in Dwarka.
In the LIG category, which also consists of one BHKs, the prices ranged from Rs 14.15 lakh in Rohini Sectors 34 and 35 to Rs 41.11 lakh in Rohini Sectors 16, 20 and 21, among others.
In the MIG category, all of which consisted of two BHK flats, the price range fluctuated from Rs 59.50 lakh in Narela to Rs 1.24 crore in Dwarka.
In the HIG category, which offers two as well as three BHK flats, prices varied from Rs 1.35 crore (two BHK) in Vasant Kunj up to Rs 2.14 crore in Jasola.
The DDA official noted that the authority had also allotted flats in bulk to the Delhi Police and some banks, and was trying to explore the option of extending the same to minor private companies and corporate entities.
When asked whether the DDA would consider relaxations in its housing norms, the senior DDA official replied that it would depend on the recommendations made by the real estate consultant.
The DDA has recently dabbled with relaxations in a housing scheme specifically dedicated towards disposing of its unsold flats — through a “first come, first serve” model.
Under the scheme, which was launched this July, the pre-condition of not owning a plot or house in Delhi was relaxed and it showed some results, with over 1,500 of 5,623 flats getting sold so far.
Moreover, buyers under this scheme were allowed to choose and book their preferred plot online after registering for the scheme.
Realty experts welcome the move
The DDA’s former commissioner (planning), A.K. Jain, welcomed the authority’s move to hire a real estate consultant and noted that it was a long time coming, but cautioned that it would be effective only if the DDA decided to implement the recommendations, even if they required sweeping changes.
Speaking to ThePrint, Jain asserted that over the past five decades, the housing scenario in Delhi has changed on a large scale along with the needs of the people, and the authority needed to account for these factors while making future decisions.
However, according to Rajeev Talwar, Chairman Emeritus of National Real Estate Development Council (NAREDCO), a study by a private agency would not suffice in the DDA’s case. He pointed out that “many, many more brains” would have to be taken in by the DDA.
“If they (DDA) have distressed projects in areas like Narela and Rohini, then they should be disposed of as distressed projects. Otherwise, the DDA needs to make more cities and towns. Where’s the government rental housing in Delhi? It’s all private. People need rental housing at the cheapest cost and the DDA should explore this,” Talwar, who formerly served as the CEO of real estate firm DLF, told ThePrint.
NAREDCO is an industry association that provides a platform for the government, real estate industry, and the public to address their concerns and find solutions to the challenges faced by the real estate sector.
(Edited by Nida Fatima Siddiqui)