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Luxury Homes revival in Gurgaon likely to boost overall real estate performance in the city
When we talk about Gurgaon’s real estate market, we understand that it is a hub for the corporate sector, high paid individual and business class. Gurgaon is known for its premium and luxury home offerings and is considered to be one of the posh localities in the NCR region. The sales growth is stagnant in the Gurgaon real estate market for quite some time now and new launches are on constantly declining. The high inventory level in the luxury property market in Gurgaon is also a matter of great concern.
According to a report, the piling-up inventories and slow sales velocity brought stagnancy in the market, wherein developers could not increase prices substantially. The cash-strapped developers are trying to complete quickly the existing projects lined up with them and restricting new launches.
What is changing in the luxury home segment in Gurgaon?
Moreover, theluxury propertymarket in Gurgaon is also unable to find genuine home buyers due to sluggish market situation. Lack of trust and transparency is another reason why the home buyers are shying away from investing in Gurgaon’s luxury home market. The NRIs and foreign investors invested quickly in Gurgaon’s realty when it was booming few years back. Once the market started showing a declining trend this NRIs and investors have started looking for more lucrative market overseas, which is one reason why Gurgaon market has almost come to a standstill in the luxury segment. If certain transactions are happening it is likely to be from the affluent class residing in India.
Currently areas such Sector 42, Sector 54, Uniworld City, Sushant Lok Phase 1 and Sector 25 are offering luxury properties and fulfilling the demand of Gurgaon’s luxury home requirements. According to a real estate portal, the top supply of properties are on the Golf Course Road, DLF City Phase 2, and Suncity. These localities are having a price range within Rs 10,000-14,000 per sq ft.
Who invests in luxury homes?
Moreover, the home buyers usually give preference to under construction projects because they are cheaper than ready-to-move-in properties. The demand for luxury home projects are from expatriates or high net worth individuals (HNI)who have potential capital and can invest in luxurious projects. What do such individual look for before investing in such properties? NRIs usually desire comfort, luxury, best amenities, a signature address and a status symbol. Investing in suchluxury projects increase their weight in their friends circle and society.
With fast infrastructure development and commercialization in the last few years, there has been a boom in Gurgaon’s residential market in all segments whether it is premium, luxury, ultra-luxury, super premium and what not. The real estate market trend in Gurgaon suburbs have picked up very fast since 2005 as many builders have then investing heavily in property projects and sold them off too quickly to buyers at good rates. As time passed, the property prices started increasing further and today it is sky-rocketing, which makes home buyers to think twice before investing in Gurgaon. High earning people are waiting for the prices to subside. Lack of sales growth is actually hurting the luxury home development in Gurgaon and economic progress of the city in the real estate.
The Haryana government recently has brought down the circle rate by 15 per cent in a bid to revive the sluggish Gurgaon realty market. Since July 2016, there has not been much difference in Gurgaon real estate’s overall prices. Karan, a real estate broker in Gurgaon said, “The circle rate that has been reduced recently but it has not provided much impact on the current price rates of Gurgaon. The prices are almost same and high. However, the real estate market of Gurgaon is low and stagnant.”
The expert believes that although there has not been a drastic change in realty prices of Gurgaon in the short- term after the circle rate cut, there is every possibility that price changes may start appearing in the long-term. Hopefully, it will revive the sentiments of those NRIs and investors who are reluctant to invest in the luxury home segment currently may invest once prices start declining.
The luxury home market in Gurgaon offers different configurations such as 3BHK, 4BHK and 5BHK. And, such type of units is available in the price range of Rs 3-6 crore easily.
Currently, the market is stagnant and no major transaction is taking place as compared to scenario it was few years ago. No sales growth means the performance of the real estate market is poor. This means there is a depression in the Gurgaon property market due to continuous high prices. The use of black money through which Gurgaon has actually made its niche in the real estate market is not taking place at the moment due to the stringent measures incorporated by the Narendra Modi government. This is also a reason why new launches are not taking place and builders are focusing to complete under-construction projects. There is lack of capital to take off new projects by the builders in the luxury home segment. Although the Reserve Bank of India (RBI) have reduced the repo rates but that is not enough as bank capital cannot solely cater to the high capital requirement from the builders in Gurgaon. Luxury projects are expensive due to its unique features and top-class facilities built-in to develop units. Moreover, there is a huge requirement for foreign direct investment in a right channel to provide impetus to the Gurgaon real estate sector. Till then, it is merely a wait and watch situation for both developers and the home buyers.