The millennium city, Gurgaon is an integral part of the real estate market in India and especially the National Capital Region. The city was not unaffected by the slowdown that hit India’s real estate sector. New launches decreased, sales dwindle, prices came pretty down and the complete sentiment nosedived in the previous years.
Gurgaon has been a bellwether for long of the increasing growth in India over the years. Credit can be given to the presence of numerous multinational corporates. This particular factor has attached countless NRIs and expatriates and this has resulted in the boom in property in Gurgaon over the past decades. The past couple of years, however, have been tough for the real estate market of Gurgaon.
As a has witnessed highest unsold inventories in the country figures at as much as 1,70,000 units. Gurgaon’s total contribution to this total number has been only 22,000 unsold units but this is very much uncomfortably high. Another matter of worry is that as much as 30% of the unsold inventories are under construction and is located in complete inhabitable sectors.
The major reason for this particular scenario has been the slow economy over the years along with the skyrocketing rates. Buyers were waiting for rates to come down while the investors who bought the properties in the earlier boom cycle of 2009-10 are not willing to invest more money when there is no clarity on the returns. With the crises brought in liquidity especially on the increasing unsold inventories, the developers began to offer discounts, freebies and all other kinds of schemes that would lure the buyers.
There has been a significant and visible impact decline in the rates of almost 25% in 2014. This, however, has proved insufficient for catalyzing of the new boom in demand. In other words, it can be said that while the millennium city’s real estate market have favored the developers in 2010-12, it certainly is the buyer’s market now. But, most of the buyers are still looking at the market’s rates as unattractive.
Whereas on the positive side, Gurgaon has witnessed a maximum number of launches within National Capital region and that too in affordable housing segment under the Haryana government’s Affordable Housing Policy 2013. The dwellings are rates at under Rs. 25 lakh which is where the real demand may come in short to medium term. The property demand rates beyond the cost of Rs. 3 crore has been on the steady decline and the projects that were launched in 2009-10 are catering to the premium segment constitute a huge part of the unsold inventories. Some of these projects, in fact, have not even been completed till date, all thanks to the liquidity crisis. This has resulted in some launches that are being down around 30-35% on a years’ basis.
Passed the year 2016 from the bird’s eye view
Even with not insignificant challenges ahead, Gurgaon’s real estate market’s future is hopeful and positive. With the projected Gross Domestic Product growth of almost 7.5% has once again robust the economy that will generate income for more people and this would likely boost the demand as well. Gurgaon is said to be the hub of the service industry in National Capital Region and the surrounding areas are becoming increasingly vital in the manufacturing sector. The ‘Make in India’ by the government initiates and ensure more industries, as well as this, will result directly in the increasing demand for housing.
The RBI’s present rate cuts which will begin having an impact on the bank’s lending prices resulting in low home loan prices and greater demand. The initiatives by the government of ease out FDI in the real estate market will also improve the liquidity which means that the developers will have a lot more room for offering their good deals to the buyers.
Another major persuading factor is the Smart Cities Project for which the millennium city Gurgaon is definitely a strong contender. It’s presence in this particular scheme will boon for the real estate sector.
Does this sound like a wishful thinking? On the contrary, there is a valid and strong logic that is involved in it. The economic slowdown of the country has troughed out and the only way is definitely up. The government has woken up to this fact that the realty sector needs real help and it is making favorable policy decisions.
For the city like Gurgaon, there is need only of the small amount of stimulus to get up and begin running again. Of course, the winds of change are blowing pretty strong. The changes will not take place overnight but the year will bring some visible progress on the ground. A result to this is the realty rate trends in Gurgaon that will also begin to pick up again.