Gurugram’s housing market not doing as bad as reported, industry data reveal

Updated: December 9, 2019 1:02:25 PM

Market forces and regulations have weeded out developers that were unorganized or lacked governance, leaving the real estate sector with residual players who have strong focus on product, quality and timely delivery of projects.

real estate, real estate India, Gurugram, NCR, Gurugram real estate market, completed projectsThe data of delivered projects reflect that there is no absorption issue in the delivered projects of Gurugram as unsold inventory in the completed projects is less than 2.5%, which is quite usual.

During the last decade, a lot has happened in the real estate sector, to say the least. The nature of not only the realty market, but also of developers has changed significantly. Market forces and regulations have weeded out developers that were unorganized or lacked governance, leaving the real estate sector with residual players, often labelled as the new-age developers who have strong focus on product, quality and timely delivery of projects. However, this transition has gone unnoticed because of the dramatic collapse of dated developers that were struggling with financial discipline. Also, not much attention has been paid in the last decade onto the success of the new-age developers in the Gurugram real estate market.

The prevailing sentiment about the Gurugram realty market is that it has poor absorption rate, muted demand levels, and/or significant inventory over-hang. On a contrary, industry data tell a different story:

The data of delivered projects reflect that there is no absorption issue in the delivered projects of Gurugram as unsold inventory in the completed projects is less than 2.5%, which is quite usual. Now, let’s look at the combined data of delivered and undelivered projects:

Unsold inventory constitutes less than 14% of the gross inventory in Gurugram. Therefore, customers in the Gurugram real estate market have been making informed choices, buying units of the developers that have been consistently delivering projects in the preceding years, and inventory overhang of less than 2.5% in the completed projects reflects that good developers have been rewarded with trust by their customers for consistent quality and delivery.

Let’s review the absorption data of last ~6 months, a phase that has been considered very difficult for the Indian economy because of the NBFC crisis, slowdown, etc.:

Absorption data of the last ~6 months make it clear that customers in the NCR real estate market, particularly Gurugram, have not lost faith in good developers and absorption is happening in the region on an average of 1 million square feet a month despite the slowdown sentiment prevailing across industries in India.

Therefore, contrary to the prevailing sentiments, Gurugram’s real estate market has been responding well to the trusted developers that are giving unique value proposition to customers to capture market share, and are shaping Gurugram’s real estate market with diversified products ranging from less than Rs 5,500 per square feet to more than Rs 17,000 per square feet.

With efforts of the government to ease the liquidity crisis, such developers may find requisite support from financial institutions, and the NCR realty market may perform better than before in the future.

(By Pankaj Bansal, Director, M3M)

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