NEW DELHI: The real estate market in Gurgaon has unsold inventory of nearly 19 million square feet, 28% of the total area under development, due to slowdown in demand and a surge in supply, according to the ratings agency, ICRA.
But the report by ICRA Research on the Delhi-NCR residential market also sees sales picking up in Gurgaon in the near term.
"Golf course Extension Road 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," the ICRA report said.
It estimated that the total unsold inventory in the city at 18.82 million sq ft, with 63% unsold inventory being in Golf Course Extension Road and New Gurgaon. The ratings agency attributed the high unsold inventory to a surge in supply in New Gurgaon and Golf Course Extension Road amid a 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 noted that Gurgaon is witnessing major infrastructure development like the KMP and Dwarka expressways, which are expected to create a positive impact on the overall market. "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," according to the report.
Overall, in the 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. It said, "Profitability of developers will remain under pressure as cost inflation remains stubbornly high leading to rise in cost of key inputs like steel and cement."
The ICRA report said that further funding avenues would remain scarce with tightening of lending norms by banks and reduced inflows from private equity investments.