The property market in Gurgaon, which witnesses buoyancy with the onset of the festival season every year, has failed to gain momentum. There is a lack of cheer in the market. Poor buyer interest, fewer launches by builders, protests by farmers against land acquisition, and a high interest rate, appear to have dented the confidence in the Millennium City this year. Real estate companies have also been hit by tighter funding norms, delay in new launches and delayed completion of existing projects; in addition to huge debt burdens. Has this impacted prices?
Real estate consultants and property dealers aver that despite the slowdown in the market, correction in prices is unlikely—as supply is less than demand, particularly in mid-range housing.
However, Amit Aggarwal, Director of Ravi Reality Inc., says that property prices have gone beyond the reach of the average buyer in Gurgaon, who has a budget of Rs 40 to 45 lakh. The high interest rates on offer by banks, combined with fewer new project launches, and fears of a slowdown in the US, have put pressure, says Aggarwal.
Gurgaon and NCR are today the key real estate markets in the country, and account for 30 to 40 per cent of the sales volume of the top seven cities.
The combined effect of all these factors has been that the property market has remained flat in the past few months. “It was expected that property sales would rise with the advent of the festive season; but our hopes have been belied”, says Amarjeet Singh, assistant general manager, sales and marketing of Hitech Township and Infrastructure Pvt Ltd. Singh blames higher land acquisition cost, higher cost of inputs, and poor supply, for the rising property prices in the past couple of years. “Property prices have risen by 30 to 40 per cent, and gone beyond the pale for the common man. If someone comes with a budget of Rs. 30 to 40 lakhs, I tell him to search in Manesar and Bhiwadi instead of Gurgaon”, he adds; and also says that a major correction is in the offing in the next six months. “The property bubble will burst”, he quips.
Bimal Gupta of ABC Buildcon opines that business is usual in the city. Most of the buyers here are young people, and they do not postpone buying decisions, he adds.
Gurgaon based property analyst Vikas Rikhye however, opines that that there is oversupply of high end housing in the city, whereas the real demand is in the affordable housing segment. “People here have lost appetite for new projects; as only 5 per cent of buyers are end users. The prices of apartments are likely to come down soon, whereas the rate of plots will appreciate”, he predicts.
Those in the know of things also aver that while Gurgaon is witnessing slow property offtake, the market is better in areas like Manesar and Bhiwadi. Mohd Irfan, Marketing Manager at Avalon Group, says that Bhiwadi is witnessing key interest from buyers; despite the general perception of slowdown. “The prices have doubled, bookings are good, and most of the buyers are end users here”, he adds.
In Noida—the closest competitor Gurgaon has in the NCR—too, the conditions are better off, says Tarun Rangnani, Manager Sales, Paragon Realtors; adding that Noida offers better options to those looking for affordable homes. Despite the protests by farmers, people are still buying there.
A recent property camp organised by Investors Clinic in Noida on October 2 met with a resounding response, says Pranav Sharma, Director, Marketing, Investors Clinic. “We booked 300 flats in two days; a great response”, he adds.
The situation in Gurgaon, however, is quite different. Most of the buyers here are investors; the number of end users is less. The former are scared by the fear of slowdown in the US, an unwieldy government at the centre, and inability of the builders to deliver projects on time. Until some of these factors change, the market is likely to remain dull; but property prices won’t come down, caution realty experts—failing to explain the paradox.