The fall in housing prices by almost 25% in 2015 did little to boost residential sales in Gurgaon which has so far been the bellwether of growth in India due to the presence of multiple multinational corporations, say property consultants. The year 2016, however, will be better.
According to property consultant Jones Lang Lasalle (JLL) it will not be long before the winds of change start blowing again. “The changes will not happen overnight, but 2016 will bring visible progress on the ground. As a result, real estate pricing trends in Gurgaon will also begin picking up again,” says property consultant JLL.
The consultant said the market would pick up on the back of cut in interest rates on home loans, higher economic growth, easing of FDI norms on real estate and other government initiatives.
“In 2015, sales dwindled, new launches decreased and prices came down and the overall sentiment nosedived,” says Ashwinder Raj Singh, JLL India CEO – residential services.
Overall, NCR witnessed the country’s highest unsold inventory figures at almost 1,70,000 units. Though Gurgaon’s numbers total 22,000 unsold units, it’s still uncomfortably high. Another source of worry is that almost 30% of this unsold inventory is under construction, and located in perfectly inhabitable sectors, he says.
The primary reason for this scenario has been a slowing economy over the years, as well as sky-rocketing prices. Buyers were waiting for prices to come down, while investors who bought properties in the previous boom cycle of 2009-2010 did not want to commit more money with no clear returns. With the liquidity crisis brought on by high unsold inventories, developers began offering freebies, discounts and all kinds of schemes to lure buyers.
The impact has been a visible and significant decline in prices by approximately 25% over 2014. However, this has proved insufficient to catalyze a new demand boom. In other words, while Gurgaon’s realty market favoured developers in the period 2010-12, it is now clearly a buyers’ market. Nevertheless, most buyers still see this market’s prices as unattractive, he says.
On the positive side, Gurgaon has seen the maximum number of new launches within NCR, and that too in the affordable housing category under the Haryana government’s Affordable Housing Policy 2013. These dwellings are priced at under Rs 25 lakh - which is where demand may come from in the short to medium term.
The demand for properties priced beyond Rs 3 crore has been on a steady decline, and projects that were launched way back in 2009-10 catering to this premium segment constitute a large part of the unsold inventory. In fact, some of these projects have not even been completed, thanks to the liquidity crisis. This has resulted in new launches coming down by around 30% to 35% on a year-on-year basis.