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Will pollution and worsening air quality dent your property's price in Delhi-NCR?

Since Delhi-NCR’s pollution problems will not reduce demand for inner-city housing, adjoining (sometimes less polluted) areas will not benefit from pollution-induced outward migration.

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Recent reports have suggested that getting business into NCR is becoming increasingly difficult due to rising pollution levels, so much so that not only are international clients cancelling their business trips after seeing the headlines, even employees do not want to take up assignments in the region.

Some companies are even considering upgrading their offices in other parts of the country as their second headquarters.

If one goes by  these reports and the fact that several employees would want to relocate to other cities, it would seem that both commercial and residential real estate markets have been adversely affected by the toxic smog situation in Delhi-NCR.


As per a new analysis by Anarock Research, the impact of pollution on property demand in India is almost negligible and like seasonal flooding, pollution also has the unfortunate tendency of becoming an accepted feature for urban dwellers.

Real estate prices in most Indian cities are not dictated by environmental factors as much as by affordability and their ability to provide employment. For affordable and mid-segment housing, the primary demand driver is connectivity - the speed with which residents can get to work and back, it says.

Since Delhi-NCR’s pollution problems will not reduce demand for inner-city housing, adjoining (sometimes less polluted) areas will not benefit from pollution-induced outward migration. There are no substitutes for workplace hubs and economic power centres, it said.

Delhi-NCR’s pollution will not cause less polluted far suburbs and adjoining cities to catch the spill-over demand of people looking for cleaner, healthier environs. These far suburbs and cities will eventually become equally polluted, once they gather enough 'economic momentum', the report said.

This is not to say that Delhi-NCR's pollution issues do not impact certain real estate choices. Grade-A office buildings with state-of-the-art HVAC and air purification systems have an edge, as do housing projects with similar facilities apart from more green open spaces and sustainability features, according to the analysis.

Integrated townships on well-connected peripheries are steadily gaining relevance and demand. More and more citizens will choose to live in such projects; however, the demand for homes in the congested city centres which offer the fastest access to workplace hubs will remain undiminished, it says.

There will be increasing demand for second homes in less polluted areas which can offer their owners an occasional respite from the inner-city pollution. However, at least for the next few years, the number of citizens of Delhi-NCR who will abandon their primary inner-city homes for the outskirts will be insignificant in market terms, explains Prashant Thakur, director and head – Research, ANAROCK Property Consultants.

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 a fallout of rising pollution levels in the region. Low prices result in higher demand, regardless of most other considerations

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.

Prices too are unlikely to fall because of increased outward migration. In a country where condemned buildings - clearly declared unsafe for habitation - continue to be occupied, people tend to stay where they are if the economic rationale is compelling enough and no immediate alternatives exist, says Thakur.

Mumbai unerringly experiences floods during the monsoons, yet property prices there remained impervious to this annual event. Despite this, investments keep pouring in - the city’s real estate market does not slow down on account of environmental factors. There is simply too much at stake in the country's financial capital.

Flooding too becomes a hard reality which is impossible to ignore - as witnessed in Chennai, where many previously aspirational beachfront properties suddenly lost value after they were inundated by tsunami-invoked tidal waves.

Delhi is the national capital and the hub of administration, political power and vast economic activity. Key government institutions and large businesses generate massive employment opportunities, which drive real estate demand. Most parts of NCR continue to see multi-fold investments into real estate, including from multinationals otherwise known to be very concerned about environmental factors, it said.
First Published on Nov 19, 2019 05:39 pm