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Thursday, July 19, 2018

From C-Suite to blue collar: Changing horizon for Gurgaon developers

On the back of rising demand for low-budget housing, builders are now shifting their focus to this segment by assuring quality, timely delivery and features such as free maintenance for 5 years.

Written by Ashwinder Raj Singh | Updated: November 4, 2017 2:11:39 am
real estate, real estate market, housing projects, gurgaon housing, building developers, RERA. HUDA, Haryana Urban Development Authority , under construction flats, Essel Tower on MG Road in Gurgaon. The overall residential supply in Gurgaon is quite healthy, and improvements are being seen on the demand side as well. (Source: Express Photo)

The real estate market of Gurgaon is primarily known for its glitzy office buildings and luxury housing projects which accommodate the C-Suite and upper management category buyers who work in these buildings. A fact that is not often talked about is that Gurgaon, like any other modern city, depends on the services of blue collar and even economically weaker section (EWS) category citizens to stay viable. Unfortunately, Gurgaon’s performance in terms of providing housing which is affordable to such people has been less than stellar in the past.

About 30,000-36,000 affordable housing units are under construction in Gurgaon, and it is expected that 55,000-57,000 units will be up for sale by the end of 2017, including units close to completion. The demand for affordable housing in Gurgaon is obviously quite healthy, owing to the currently attractive prices which fit the budgets of most individuals looking for options in this segment. Also, builders are now offering assured quality, timely delivery and features such as free maintenance for 5 years.

Nevertheless, there is no denying that a yawning demand-supply gap in EWS category housing continues to plague
the city. The reason for this is not hard to identify — for a long time, developers were investing solely in projects where apartments ranged from Rs 60 lakh to Rs 1 crore, thanks to the attractive margins in this bracket. However, the highest demand has been in the affordable housing segment within the price bracket of Rs 20-50 lakh, and EWS housing actually pertains to units priced between Rs 3.5-12 lakh (depending on location and unit sizes).

It is only in recent times that developers have abandoned the big margins dream and begun launching projects catering to the affordable housing demand in the city. This will eventually result in a narrowing of the demand-supply gap in Gurgaon. However, the EWS category of housing has its own dynamics.

Residential overview

The overall residential supply in Gurgaon is quite healthy, and improvements are being seen on the demand side as well. In the first quarter of 2017, the growth of new launches showed a 0.78 per cent improvement over the fourth quarter of 2016, and unsold inventory reduced by 2.3 per cent — a positive sign in a market that was looking at a stagnation scenario.

In terms of housing supply aimed at the economically weaker section category of buyers, Gurgaon had 1,088 units being constructed between 2010 and 2015 under the Haryana government’s Ashiana project. In October 2016, the Haryana Urban Development Authority (HUDA) repeated its invitation for bids for allotment of such houses. Nevertheless, a major share of the available EWS housing supply in Gurgaon has remained unoccupied. In the years prior to 2014-15, a total of 204 applications for allotment of this supply rolled in, but none of these met with the eligibility criteria and were all rejected.

HUDA’s invitation for fresh bids in October last year was coupled with clearer eligibility criteria which stated that such houses would be allotted to slum dwellers (essentially individuals who have encroached upon the government land and had been residing there for more than 5 years), people with ‘below poverty line’ or BPL cards, and people who otherwise met the EWS categorisation parameters.

Awaiting a policy boost

One of the most important demands the housing sector has been making is a faster process of the government approvals for affordable housing projects, which is critical in ensuring timely construction and delivery of such projects. The Real Estate Regulation Act, or RERA, which effectively puts the onus of timely project completion on developers, has unfortunately not unfolded in its intended shape and extent in this part of the country as yet.

However, even when it finally becomes a full-fledged market force in northern India, it will not unleash a reliable supply of affordable housing in cities like Gurgaon until it also provides a single-window approval system that will help developers who are active in this segment to save on time and resources.

The writer is chief executive officer, Anarock Property Consultants

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