Gurgaon – a big player in the Indian real estate sector – has been facing tough times especially since 2015 and in 2016, the volume of real estate sales in Gurgaon continued to decline and new unit launches were limited in the city.
Further, demonetisation during late 2016 further affected developers in Gurgaon as well as the rest of the country. There was stability in quoted prices and discounts were still available but people avoided buying residential flats in Gurgaon. Gurgaon saw a decline in residential investment as residential buyers, most of whom were primary end-users, sought ready-to-move-in apartments and were wary of promises of future infrastructure or assets. Overall, the Gurgaon market has seen a major slump in recent times.
With the new budget placing affordable housing under the infrastructure category, the government plans to move closer to its goal of providing affordable housing for all by 2022. This newly granted infrastructure status also opens up cheaper financing options from property developers, who can now access finance at a lower interest rate than 10% for the development of affordable housing, leading to a subsequent and definitive reduction in the acquisition costs for home buyers.
Approximately 95% of demand in the real estate sector is affordable housing. With reduced borrowing rates, real estate developers can now focus on building high-demand housing projects and look forward to healthy growth in this segment.
End users benefited the most from the budget. With enormous tax benefits offered to people in the lowest income brackets as a significant tool to push for affordable housing, it seems that the dream of many to own a home is now close to becoming a reality. Also with demonetisation, banks have been further flooded with funds and there are speculations that banks will further reduce interest rates and come up with affordable and attractive home loans. Prospective homebuyers have been watching the market closely.
As a real estate market, Gurgaon has high chances of recovering from the downtime of the recent past. One of its driving forces has been its ability to churn out high-quality office space and now building on that strength, if developers in Gurgaon prioritize building and launching ready-to-move-in affordable housing projects that end consumers place high value on and subsequently reward, then Gurgaon will soon will emerge as a strong real estate provider meeting the housing needs of its residents.
