Despite the long wait, the much-expected turnaround in Gururgam’s real estate market has not happened, but a gradual upward movement in prices and sale of properties can be observed in the last one year in certain micro-markets, particularly where infrastructure and basic amenities have improved.

This change in sentiment is particularly strong in developing sectors along the Dwarka Expressway, formally known as the Northern Peripheral Road, where there has been an uptick in sale and purchase in the secondary market (pre-owned homes), and prices have moved upwards by an average of 5-7%, real estate brokers said.

Experts say this is a remarkable improvement as the real estate sector in Gurugram, and across the country, has been facing a slowdown for the last five years. The slowdown has been fed by oversupply, delay in project completion, failure to deliver projects and also some realtors simply vanishing after booking flats leaving the buyers in a lurch. Non-completion of the Dwarka Expressway for the good part of the past decade and civic agencies’ inability to provide basic amenities in developing sectors along this road had also proved to be a dampener for homebuyers.

In January 2019 there were 6.73 lakh unsold residential units across India, and, out of these, 1.86 lakh were in the National Capital Region (NCR), shows data by real estate consultancy Anarock. Gurugram-based brokers said that nearly 75,000 unsold units were in locations spread across the city, majorly along the Dwarka Expressway.

The Anarock data further shows that in the middle of 2018, if the number of unsold properties for top 7 cities are added up, it can be observed that residential projects launched before 2013 were stuck in various stages of non-completion; an estimated figure for these was around 5.75 lakh units, together worth ₹4.64 lakh crore. This is besides the inventory under construction, which will get delivered in three to four years, the data shows.

Real estate experts and Gurugram-based brokers said this massive oversupply and mismatch in demand and what could be absorbed by the end-users was one of the major reasons that led to the slump after 2014.

“A lot of money was invested by speculators who wanted to game it as if it was a stock market, but real estate is a long-term asset and not meant for fast trading. This was also one of the reasons for the slowdown,” real estate consultant Sanjay Sharma said.

In 2016, the demonetisation of large notes, implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA), coupled with the implementation of Goods and Services Tax on real estate also had a major impact on the growth of the real estate industry in Gurugram and across the country, experts say. “Incessant project delays, shady activities by some developers and litigation over land also did not help,” they add.

In a statement made in the middle of 2018, Anarock CEO Anuj Puri had said that the issue of stalled or delayed projects was at the core of buyers’ discontent and is yet to be addressed satisfactorily.

However, industry stakeholders hold that though oversupply is an issue, the problem of stalled or failed projects is far less in Gurugram as compared to Noida. “Barring few builders most of the projects are being delivered and one can check this on Dwarka Expressway and in other parts of the city. The problem here (in Gurugram), is more about lack of basic (civic) amenities. If this is resolved, homebuyers will return to the market,” chairman of the Haryana chapter of National Real Estate Development Council (Naredco), Praveen Jain, said.

Some new developments, such as the closure of land allotment cases from New Palam Vihar residents for Dwarka Expressway, allotment of work for two packages of Dwarka Expressway in Gurugram to L&T and supply of water by the Gurugram Metropolitan Development Authority in the developing sectors has also led to a spurt in buyers’ interest in the primary market.

It is based on these positive signals that brokers have once again started to pitch their tents along the expressway, starting from Bajghera to Kherki Daula. On weekends, buyers can be seen meeting brokers, a scene reminiscent of the days when property market was on a high between 2011 and 14.

Compared to the boom years, real estate players tell that what has changed around this time is that buyers are not chasing properties, but they are looking for space where they plan to live and make a home. “This (Gurugram) is a market driven by the end user, people who are mature, who visit a property a few times and weigh all the pros and cons before making the final decision,” said Anupam Varshney, vice-president (sales and marketing) of Vatika Ltd, which has a major presence along the Dwarka Expressway.

Also, majority end-users are looking for properties in the mid-segment range—in the price band of Rs 60 lakh to Rs one crore — brokers aver. Apart from price being an important aspect that is influencing the purchasing decision, is the development of key infrastructure and availability of basic amenities such as roads, water, power and sewage in and around the residential projects.

Realtors point out that Dwarka Expressway, which has been in the making for over a decade, is seeing a jump in transactions and queries after the National Highways Authority of India (NHAI) handed out contracts for packages one and two to L&T in mid-2018.

“The sentiment has improved along the Dwarka Expressway in the last six months and we are receiving more queries. On an average, three to four serious queries come to me every week which is quite an improvement,” real estate dealer Pradip Mishra said.

Real estate dealers have divided the Dwarka Expressway in three sections on the basis of price, with properties in sectors 109 to 115, that are close to Delhi, commanding Rs 4,500 to Rs 5,200 per sq ft in the middle range and Rs 6,500 to Rs 8,100 per sq. ft. in the high-end market. The price in sectors 37 to 107 is Rs 4,500-Rs 5,500 and prices near Kherki Daula are Rs 4,000-Rs 4,600 for mid-level housing and Rs 5,000-Rs 5,400 for high end properties.

Although these prices are not comparable to the rates that prevailed during the boom year, brokers said that prices have held out after 15%-20% correction in some areas. “We are seeing 5%-7% rise in prices and increased transactions as the end users’ confidence returns,” broker Sanjiv Thakur said.

Despite the uptick in market, it has also been observed that buyers are still not ready to invest in projects that are in the launching stage except those which belong to corporate real estate players. In the last few months, Hero Homes, Godrej Homes and Shapoorji Pallonji did launch residential projects in the medium to high segment, and managed to sell. But, this was mostly due to their strong corporate background, experts added.

Vivek Sachdeva, vice-president of the Hero Realty Ltd, which recently launched Hero Homes project in Sector 104, said buyers have become more mature and they want to study the product and understand it before they put their money in it.

“To cater to a discerning client in a muted market, we worked on improving product efficiencies at every step. Be it carpet area, saleable efficiency, product specification or design, we have tried to match the best at a reasonable price,” Sachdeva said, adding that early completion of the Dwarka Expressway project and better amenities will help things improve a lot for the realty sector.

Majority buyers in the Hero Homes project and the one launched by Shapoorji Housing are end-users from middle-class families, a number of whom are employed with the government and hail from west Delhi, Hero Homes stated. They added that to ensure that there was a healthy mix of end-users and investors, they insisted on selling on a fixed price and resisted the tendency of offering discounts, which leads to speculation.

Echoing similar views, Sriram Mahadevan, managing director of Joyville Shapoorji Housing, said they had received 750 expression of interests and they managed to sell 400 flats at the launch.

“Our focus is on the job-creating cities where most of the migration is taking place, and Gurugram is a place one could not have missed out. It is an end-users driven market and when the market is backed by the end-users, it sees revival,” he asserted. The price range of flats in this project is between Rs 58 lakh to Rs 1.05 crore and majority buyers are middle-class professionals aged 30 to 45 years.

Market watchers said that launch of new projects and their sale has become possible only because the confidence of customers is returning and the arrival of the Haryana Real Estate Regulatory Authority (HRERA), which has made it mandatory to register projects prior to launch has also helped improve the sentiment.

“The chances of builders launching projects without licences, titles that are not clear have become negligible the HRERA was established. This is also one of the reasons why the new projects are finding buyers,” Mishra said

Most stakeholders agree that a complete turnaround in the real estate market in the developing sectors will depend on the development of key infrastructure, completion of the Dwarka Expressway and removal of the Kherki Daula toll plaza.

“A strong eco-system has evolved in sectors beyond Kherki Daula as over 2,500 families have shifted to various projects near the village. Properties in sectors 81 to 86 in particular are affordable for the average buyer, who has become more confident and is ready to invest again but preferably in ready-to-move-in homes,” Varshney of Vatika Developers Ltd said.

However, there are experts who believe that instead of a turnaround, the market will have to correct itself in terms of prices, practices and deliver on the promises made to buyers.

“Both, the developers and the government, will have to work hard to deliver what they had promised to the end-user. The government needs to complete the roads, give water and power connections, and the builders must give homes as per the promises they initially made,” Sonia Vaid, a real estate consultant said, adding that the recovery will be slow, gradual, but definite if these steps are taken.

First Published: Feb 25, 2019 05:16 IST