delhi housing scheme 2014 - should you care?

Delhi Housing Scheme 2014

Is it worth the Attention?

Delhi Housing Scheme 2014 - Review

• What’s on Offer?• Some facts about the Scheme• Analysis - What numbers Say?• Conclusion (Recommendations)

• What’s on Offer:Total HIG Flats = 21 (Old)

Total MIG Flats = 49 (Old) + 512 (New) = 561

Total LIG Flats = 451 (Old) + 22627 (New) = 23078

Total Flats in Expandable Housing Scheme Type “A” = 129 (Old)

Total Janta Flats = 161 (Old) + 384 (New) = 545

Total EWS Flats = 700 (New)

Grand Total = 25034 Flats


• Some Facts about the Scheme97% flats meant for lower income groups – LIG,

Janta and EWS flats.

84% flats are located in underdeveloped areas like Narela, sector-34, 35 of Rohini etc.

Lock-in period - No conveyance deed till 5 years. Can’t sell during this time.


• Analysis – What Numbers Say?2 Choices for investment (for say Rs. 25 lakhs):

1. Invest in DDA Housing Scheme with 1% chance

2. Invest in another NCR area with 100% chance – Expected return 15% CAGR

DDA investment shall make 15% CAGR + Risk Return (to cover loss of interest on registration amount)


• Analysis – What Numbers Say?Money at stake:

o Loss of interest on Rs. 1 lakh of registration amount

o DDA will pay 8% simple interest after 3 months of scheme closure on 9th Oct 2014.

o Assuming application is submitted on 9th Sep – payment/ loss of interest for 4 months.

o Assuming 12% interest on bank financing – 4 months loss would be 4% interest expense = Rs. 4000 (Risk Amount)


• Analysis – What Numbers Say?Covering up Risk Amount:

o Probability of Selection = 1%

o Extra returns to be made to cover risk amount (Using Probability decision making formula)

Rs. 4000 (Risk Amount) / 1% (Probability) = Rs. 4 lakhs (Risk Premium)


• Analysis – What Numbers Say? DDA Housing Scheme vs Open Market:

o A Rs. 25 lakh worth flat in open market shall be priced @ Rs. 21 lakh in DDA Scheme to cover risk premium of Rs. 4 lakhs. i.e. DDA flat should be priced 16% below market rate to cover risk amount.

o A Rs. 20 lakh flat shall be priced at Rs. 16 lakh or 20% below market to cover risk amount and so on.

o Actual DDA pricing – 15-30% below market. DDA pricing easily covers the risk cost for flats worth more than Rs. 20 lakhs.

o Only from numbers perspective, flats more than Rs. 20 lakhs are worth taking the risk for. But buying a house is not purely a numbers game. Let’s have a look at 4 scenarios of investing.


• CONCLUSION (Recommendations)Scenario 1 - End User:• LIG, Janta and EWS Flats - Don’t wait, just apply before

the forms go out of stock.• MIG and HIG Flats- Higher Competition. You may try

your luck.

Scenario 2 – Investment (5 Years Horizon):• Invest in flats which are priced at more than Rs. 20

lakhs to justify risk taking in DDA lottery.• Avoid under developed areas. Visit before investing.


• CONCLUSION (Recommendations)Scenario 3 – Investment (8 years+ horizon)• Invest in any flat priced at more than Rs. 20 lakhs. You

can expect good returns after 8-9 years when you decide to sell.

Scenario 4 – Investment (Long Term Rentals):• Good opportunity to own a property in Delhi from long

term perspective.• Under developed areas may not fetch good rental

returns for initial 2-3 years.


• For more information on the Scheme, click below:http

://assetyogi.com/dda-housing-scheme-2014-review/


http://assetyogi.com/dda-housing-scheme-2014-review/




delhi housing scheme 2014 - should you care?

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