Due to demonetization, implementation of GST(Goods and Services Tax), RERA (Real Estate Regulatory Act 2016) and later Benami (Transactions) Amendment Act made real estate slow down a bit. 2017 was a challenging and eventful year for Gurgaon’s Real Estate.
Even some builders and developers went bankrupt due to ravages of time and a sense of unease in the real estate sector resulted in very few new project launches, price correction and little or no product promotion. So, this further led to a downfall in the real estate sector in Gurgaon. Implementation of RERA (Real Estate Regulatory Act 2016) gave a powerful weapon to the home-buyers while further adding to the woes of builders with its strict rules.
According to the claims of a top developer, Khattar Government did not pay heed to the troubles being faced by the people belonging to real estate sector. Unlike previous governments, no one came to the rescue of reality. But still, there was a sense of relief as affordable housing brought some cheer and money to the market. Although the second half of the year gave promising results as an increase in demand for Huda ( Haryana Urban Development Authority ) plots, builder floors and ready to move in apartments. Not only this, property prices saw an upward trend as in sectors 22, 23, 27, 38, 43, 45, 46, 57, DLF, South City 1 and Sushant Lok prices went up by almost 15 to 20%. Micro markets would not yield much to the real estate. According to developers, most of the projects are either delayed or abandoned which led to imbroglio situation. Sanjay Sharma, a Gurgaon- based realty consultant, claimed that the RERA has considerably increased the risk cost of capital available to the developers and as a result, many projects remain stuck and delayed. “Earlier, the risk capital was being borne by the buyers and if something went wrong, they suffered. However, RERA has changed the equation. Now, developers can’t use buyers’ funds for an unlimited period and without any fear of penalty,” he said. As banks are not willing to give loans directly to the developers. So, private equity was the only option of funding to leverage the buyer’s credit, which is 5-8 percent higher. Even Ramesh Menon who is CEO of Certes Realty, said, “Private equity funds are very demanding and they work on strict timelines, which made it difficult for the industry to get money. Unless there is major intervention by the government, things will not improve.”
Even the property rates fell drastically as the government is unable to complete crucial projects like Northern Peripheral Road (NPR) or Dwarka Expressway, Central Peripheral Road and the Southern Peripheral Road (SPR). In fact, Properties on Dwarka Expressway and near Central Peripheral Road reduced rapidly in 2017.
Praveen Jain, Vice Chairman of Naredco admitted that the although 2017 was a challenging year for real estates but still he expects that things will be normalized soon. According to the developers, artificial demand was almost out of the system. Affordable housing and completion of crucial infrastructure projects will boost the market.
In fact, it is foreseen by many developers that the real estate sector will soon see an upward trend. Kamaljeet Singh, vice Vice President of Bestech admitted that the market is slowly getting back to normal and things would be easier from next year onwards. Also, the buyers are again coming back to the market and sufficient availability of funds is also there. The focus will be on end-users.
While major growth areas in Gurgaon, including South Peripheral Road (SPR), North Peripheral Road (NPR) and the Golf Course Extension Road saw deteriorated growth. It was only because of micro markets that real estate sector never went too low in the last six months. Various positive changes have taken place since then in realty sector in Gurgaon. The products which buyers can invest in have made a splendid comeback. Property prices are again seeing an upward trend. Pankaj Tomar, who is CEO of the Ishadi Real Estate Ltd. deduced that property prices have risen by 15 to 20 percent in DLF, Sushant Lok, and South City as people want ready to move in properties.
According to developers and builders of these residential projects. Time was not favorable for real estate sector for first six months as lack of clarity among policymakers with regards to land pooling and transit-oriented development, under which floor area ratio (FAR) has been increased. But amidst dark clouds, there was a silver lining of affordable housing which always saved realty from great fall. In fact, they will continue to be a savior in coming years. The time has come for the builders and developers to gear up and complete the delayed projects so that new projects would be launched soon with appealing magnificent structures. One key factor that is to be imbibed is that affordable housing should never be neglected whether real estate sector is rising or seeing a downfall, as it is a savior in times of need for the real estate sector.
With new reforms and changes by the Modi Government being lined up in the upcoming months, positive outcomes are foreseen. Government is also taking significant steps to bring about a change in real estate importance cannot be doubted by anyone. To raise country’s GDP and improve its economic condition it is important to improve the current state of this sector. With Government targeting to create more jobs in 2018, the importance of Real Estate can’t be ignored. Just like Gurgaon which is the most important market in the Indian realty sector, improved in last six months in comparison to its condition for first six months, it is anticipated that with important changes coming together with the announcement of The Union Budget 2018 and special importance being given by the Finance Minister Arun Jaitley to take steps to improve the condition of real estate sector. It is expected that the Indian Real Estate will bounce back and again repeat history in order to shine among all the sectors.