Are current Gurgaon prices sustainable?

TOI reported this on 17th July 09

Haryana has entered into a deal with real estate developers to provide affordable housing and is inviting expressions of interest for building 8,000 flats in NCR areas in the state. In a move expected to give a big push to the housing sector in Gurgaon and Faridabad, the Haryana Housing Board is in the process of inviting expressions of interest for building 8,000 flats in these cities and some other places in the national capital region areas. This is in addition to the 38,000 housing units, majority of them in NCR, planned in the next two years.

Under the latest project, the state will enter into an agreement with real estate developers to provide affordable housing to middle and lower middle class under the public private partnership mode.

‘‘Since we do not have land in Faridabad and Gurgaon, we will be joining hands with private colonizers whose projects have been stuck due to the (economic) slowdown. We’ll prefer those who have the licence, and then those who have enough land,’’ said S P Gupta, chief administrator of the housing board. The announcement follows chief minister Bhupinder Singh Hooda’s assurance to developers that steps will be taken to counter the slump in the real estate market. It will also fulfil his commitment of providing cheap housing to locals, especially those in NCR cities of Gurgaon and Faridabad. Among the other areas selected for the project are Bawal (in Rewari district close to Gurgaon), Badhi (Sonepat) and Karnal. Officials claim that around 828 units would come up at Badhi, a township to the north of Delhi.

Analyst’s Opinion:

* There would be Supply of approx. 50,000 acres of R- Zone developable/ urbanizable land in Delhi. Hence more land available for development.

* Land prices in Delhi even today is 60% lower than Gurgaon, it means lower FSI cost.

* Development norms in Delhi are likely to be more simplified.

* Quality of construction is likely to be better in Delhi.

* Haryana Government likely to construct houses in Price range of Rs 20- 25 Lacs.

Above points indicates that, If Delhi prices are x, Gurgaon prices has to be x-20% (20% lower than Delhi) .

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