Nearly 19 mn sq ft of housing projects unsold in Gurgaon

Gurgaon housing market has unsold inventory of nearly 19 million sq ft, 28% of the total area under development, due to slowdown in demand and a surge in supply, according to rating agency ICRA.

However, ICRA Research said in its latest report on Delhi- NCR residential market that sales would outstrip demand in near term at Gurgaon.

"Golf course road extension and new Gurgaon have remained the most active micro markets in Gurgaon witnessing maximum launches. The total area under development in the Gurgaon market stood at 66.11 million sq ft as on March 2014 end," ICRA said.

It estimated that the total unsold inventory in Gurgaon at 18.82 million sq ft, with 63 per cent unsold inventory being in the Golf course road extension and New Gurgaon.

The rating agency attributed the high unsold inventory to surge in supply in New Gurgaon and Golf Course Road Extension amid slowdown in real estate demand.

"We believe in the near term, improvement in sales velocity will take precedence over new launches," ICRA said.

The report highlighted that Gurgaon is witnessing major infrastructure developments like KMP expressway and Dwarka expressway, that are expected to create a positive impact on the overall market scenario.

"Although there have been significant delays in completion of most of these infrastructure projects, the real estate market is expected to reap significant benefits post completion of these projects.

Overall in Delhi-NCR housing market, ICRA said the demand is expected to remain subdued in the medium term due to tight monetary policy and weak economic growth.

"Profitability of developers to remain under pressure as cost inflation remains stubbornly high leading to rise in cost of key inputs like steel and cement," it added.

ICRA also said that further funding avenues would remain scare with tightening of lending norms by banks and reduced inflows from other sources such as private equity investments.