How is Gurgaon’s realestate market performing as of now? Since last few years, there was stagnancy in the property market of Gurgaon due to demand crunch and slow sales growth. Actually, Gurgaon is an investor-friendly market and this micro-market has an excellent mix of retail, commercial and residential properties.
According to JLL, the real estate consultant firm, Gurgaon’s residential market has strong fundamentals of good supply and potential traction from investors and buyers. All the major developers have their eyes set on the residential growth corridors of NH 8 and the Dwarka-Gurgaon Expressway, which account for most of the new supply in this market over the past 18-24 months period. Gurgaon’s property market also has a huge inventory of luxury units as well. The scenario of Gurgaon’s real estate market is going down. Both the buyers and the investors are waiting for the opportune time.
Why people are taking interest in Gurgaon market?
The commercial development usually attracts homebuyers to invest in Gurgaon. According to Knight Frank’s report, NCR region has 53 percent of office stock in the real estate market. Among this, Gurgaon has the highest portion of office spaces. However, Gurgaon is not only the financial centre of Haryana but also one of the most pronounced IT/ITeS outsourcing and offshoring hubs in the world. The areas such as DLF Cyber City, Udyog Vihar, Golf Course Road, Golf Course Extension Road and Sohna Road have the highest office space inventory. Gurgaon being the commercial hub of NCR and a location of choice for MNCs, it saw an increase in population and per capita income, which created a huge demand for housing, resulting in escalating property prices in the recent years.
What is the current market scenario?
Therefore, post demonetisation, it is expected that there will be downward pressure on the property prices, including land prices, as the investors will fear to deploy their cash in the real estate market. Gurgaon has been one of the safe havens for investing the unaccounted cash of people. A large sum of money (especially black money) has been invested heavily during the 2005 to 2010 period due to which Gurgaon has grown robustly in the last few years. The property prices have increased substantially and due to this reason, buying properties in Gurgaon have become unaffordable for many. The property prices will likely drop both in the secondary and in the resale market in the near future. According to the experts, over the next 6 to 12 months, there will be 30 per cent drop in prices in the Gurgaon market.
Why should you invest in Gurgaon?
The next 6 to 12 months are probably the best time to invest in Gurgaon’s property market, as the prices in the secondary market will see a downward trend. People can hunt for properties in the resale and ready-to-move-in segment. For homebuyers, the future will be quite profitable for investment in Gurgaon as the buyers will get some relief from the escalating price structure.
The demand crunch in the luxury segment will likely revive in Gurgaon and it would witness more NRI investment. This will boost the sale of the residential real estate in Gurgaon region. This will only happen over the next 1 year or beyond as the homebuyers are in a wait and watch mode currently. The demonetisation may force builders to sell properties at lower prices in the market as well.
Moreover, the rate of interest of bank may fall in the long-term if not immediately. The fall in the rate of interest will help the homebuyers to spend less on the EMI. If the bank interest rate falls over the next few months then it will help to revive the market sentiment.
The use of cash component is reducing. The builders are reluctant to accept cash and are interested taking payment only through cheque. Therefore, this will increase the bank loan requirement in the Gurgaon’s real estate market.
In addition, the implementation of the Goods and Service Tax (GST) from April 1, 2017, will be an added advantage for the homebuyers. Currently, the real estate is likely to attract 12 per cent to 18 per cent GST rate. The experts say that a lower rate of 12 per cent will help to bring down the costs of units and increase the affordability factor. It will also push sales in a slow market but a higher rate of 18 per cent could increase the overall cost of homes especially in under construction properties. There is a need to provide more clarification on the composition of the scheme as well as on value-added tax and service tax.
We hope that the real estate trends in Gurgaon market will pick up after about a year. Fresh transactions will start happening once the government policies fall into place and property prices may show its downward momentum. There will be a revival of market sentiment in Gurgaon and ultimately the city can get rid of its high unsold inventories.
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