Amidst many pricing theories for real estate in India, Demonetization cannot be referred as the only factor leading to the movement of property prices in Gurgaon (now Gurugram). As the year 2016 cannot be referred as one of the best years for property segment in terms of demand, Gurgaon has also witnessed a substantial fall in the supply of housing projects as well.
While the prices for real estate in India remained stable, the developers offered lucrative discounts while negotiations to allure prospective buyers during 2016. But post-demonetization, as buyers today are well-informed so with anticipation of fall in pricing by 20% – 25% holding back their buying. These anticipations are supported with lowering home loan rates and decline in the demand for real estate segment in India. On the other hand, sellers are resistant in dropping prices with the view of expected increase in the cost of land due to enhanced taxes and restricted cash-inflows bringing more transparency.
Hence, stagnation in demand is observed accompanied by the muted supply over a period of time. Not just the demonetization, Real Estate (Regulation & Development) Act (RERA) is another factor that is refraining developers to hold back their new launches. Expected to get implemented in Haryana by April 30, 2017, the developers are keen to keep an eye on the new law enforcement and would subsequently launch their real estate projects inn Gurgaon turning them RERA compliant.
However the recent survey suggests that the prices for luxury homes in Gurgaon have been slashed drastically by 25-30% due to their huge involvement of cash transactions. As an aftermath of the demonetization, market value of residential properties in India is expected to get wiped-out by Rs.808,874 Crores constituting a share for Gurgaon real estate (now Gurugram) which has witnessed a fall in market valuation by Rs.79,059 Crores. The major factor leading to such a drastic fall in market valuation is steep fall in the volume of resales in secondary market where buyers are reluctant to pay all-cheque.
With the drop in the home sales by 30%, the majorly affected areas in Gurugram are Golf Course Extension, Dwarka Expressway, Gold Course Road and New Gurgaon (Sector : 74-92) which have witnessed a whooping slash-down by 90%. With almost no project launches from Primary markets since demonetization, the supply of the new apartments has also been dropped down to 70% by September against the three quarters of 2015.
This economic disruption has definitely propagated a wait-and-watch policy for buyers while developers are optimistic about the market revival in the New Year.