Arun Jain, who works as an auditor at a corporate firm, has shelved his over two-year-old plan of purchasing an apartment in Gurugram. “You want it but you can’t have it,” says Jain, 33.
Gurugram is no longer a middle-class suburban dream. The millenium city is holding its own near the national capital when it comes to real estate and the word affordable is now out of its dictionary.
But Aranimal Munjal, who ran a startup earlier, has found her new home in Gurugram with no trouble, amid skyscrapers and sprawling condominiums. “Delhi is too crowded and my family and I felt that Noida wasn’t cosmopolitan enough. Only Gurugram seemed to replicate the luxuries of Mumbai and Bangalore for us.”
The likes of Munjal, says real estate agent Munish Soni, “are not only purchasing a house but buying an address too. It comes with social status and class.”
In my 40 years, I have seen middle and luxury sectors rising and I am
unhappy because the affordable sector should have risen but we are
witnessing a downfall there —
NAREDCO chairman Niranjan Hiranandani
Between the experiences of these two residents, a new wrinkle is emerging in Gurugram’s prime real estate market. The sector has entered its second innings after nearly a decade of lull and it’s the luxury segment that appears to be leading it. While ‘affordable’ is fast becoming elusive from the sunurb, luxury is basking in its glory. DLF just opened 2024 by selling over 1,000 luxury flats in less than three days. The appetite of the uber rich demands Italian marbles, plunge pools, gazebos, private forest trail, luxury clubhouse and spas. And everything should be within the premises of a condominium.
“In last one year, the growth in terms of affordable housing has come down. It is zero per cent growth while in mid and higher income, we have seen 15 per cent growth overall…we need the government to continue Prime Minister Awas Yojana to give that subsidy to that segmentation. We need to think about when we say housing for all, it should also be for the poorest of poor. In my 40 years, I have seen middle and luxury sectors rising and I am unhappy because the affordable sector should have risen but we are witnessing a downfall there,” said NAREDCO chairman and real estate tycoon Niranjan Hiranandani.
In luxury space, however, developers are quickly capitalizing on the demand by rolling out upscale properties that cater to the affluent few. Big real estate sharks such as Emaar Properties, Grand Hyatt, Trump Towers and Oberoi Realty have dived into this market with big cash. The middle class are now shifting their attention to another NCR city, Noida for more affordable options. Jain himself has been contemplating changing his job and moving to Noida.
And pricing is favouring the UP suburb.
Noida-based real estate agent Dhiraj Gupta says the middle-class buying apartments in the city has witnessed a surge in the last two years. Gupta, who has been in the industry for the last six years, says that the Noida market has shifted from rental to ownership and he attributes this change to rising prices in Gurugram, better regulatory measures in UP and new projects.
“Earlier, people would rent houses but now, they are buying. We have people who work in Gurgaon but live in Noida and commute via metro. The average price of 2BHK in high rises starts from Rs 70-80 lakh, including all the amenities from swimming pools, clubs to gyms.”
The average cost per sq ft in Noida ranges between Rs 8,000-Rs15,000 while in Gurgaon it starts at Rs 20,000 per sq ft.
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Expensive land, higher bank rates
The real estate sector saw ghost houses across NCR for a better part of the decade gone by as buyers remained elusive in an economy that grew in slow lane. And now when the sector is witnessing revival, it is starting to go out of reach for the average Indian.
Hiranandani expresses concerns about this growing chasm between luxury and affordable segments.
The cost of land acquisition and cost of construction has grown
exponentially high. Over the last decade only, the land cost has gone more
than twenty times higher
— Ankush Kaul, Chief Business Officer, Ambience Group
“Even if the prices go up, affluent individuals can easily afford luxurious properties by borrowing money from the banks and paying EMIs. But that’s not the case with other housing segments. The middle class is struggling to pay EMIs and that’s concerning. And the rate of interest (ROI) on the loans have seen a jump from 6.5 per cent to 8.6 per cent in the past three years, making affordability of a house difficult for the middle class,” says Hiranandani.
It’s not just the bank rates adding to the difficulties of an average buyer. Developers are also attributing the high cost and rise in luxury apartments to the rising cost of land.
“The cost of land acquisition and cost of construction has grown exponentially high. Over the last decade only, the land cost has gone more than twenty times higher. When people used to acquire land earlier, it used to be a fraction of the overall project cost but now, it is a sizeable cost, so naturally you have to hike up your base price in order to make project viable and the developers need their ROI as well,” says Ankush Kaul, Chief Business Officer (CBO), Ambience Group.
ThePrint reached out to Haryana’s Additional Chief Secretary, Town and Country Planning and Urban Estates Department, Arun Gupta but he refused to comment.
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A middle-class dilemma
It was the summer of 2022 when Jain first visited DLF Crest on Gurugram’s Golf Course road to meet a colleague. An old property of DLF, launched in 2013, with luxury amenities of club, spa and salon in the backdrop of the Aravalli view and Golf course, Jain was keen to buy a 3BHK there. But a mere inquiry on pricing threw him out of the market. The property spread over 27,00 sq feet cost R 4.7 crore. And the price has since doubled to Rs 9 crore.
In the last two years, Jain has made many trips to different projects, spending his weekends with brokers and hunting for his home. Nobody could show him a 3BHK apartment for a price tag of Rs 1 crore even in the exteriors of Gurugram — From MRG Crown in Sector 106 to Silverglades on Sohna Road to BPTP’s Park Generation in Sector 37D.
Now the absence of an own home is dictating his personal life. Jain is not getting married because he doesn’t want to put his family into the hassle of renting and then changing houses once he purchases a property. But the wait is now looking untenable for Jain who shares an apartment with three people, on Sohna Road.
“Even on Sohna Road and other sectors such sector 60 and 70, good apartments start at hefty Rs 2-3 core,” says a dejected Jain. He calls it a “middle class dilemma”. And it is being faced by many who can’t decide between buying a house or living on rentals.
New sectors such as 72, 74, 80, 106 and 37D are witnessing an influx of new high-end properties despite the civic infrastructure not ready, says Pankaj Kumar, a real estate agent who has been in the business for a decade now and deals in mid-level and luxury properties.
“These sectors and localities are getting developed. They still lack civic infrastructure. They are not well connected to the main city and look deserted. But now, the focus of the market is shifting to these areas since new properties are cropping up. But that doesn’t change the price, it’s hard to find anything below Rs 1.5 crore,” adds Kumar.
Brokers are saying that you won’t get anything for Rs two crore. They suggest going to South Gurugram, which is not exactly Gurugram but Sohna and is deserted and not well connected
— a Gurugram homebuyer
Abhishek Baxi, a freelance technology journalist, is stuck between the same push and pull. He has been planning to buy an apartment using money that he got after selling another property. Staying at a rented accommodation with his family in DLF phase 5 for the past 12 years, Baxi pays a hefty rent of Rs 60,000. He can’t complain much as he enjoys the luxuries that come with that price — the clubs, spas, hyper connectivity and a niche lifestyle. But he can’t afford to buy it – the same amenities, connectivity and lifestyle is a far-fetched concept on Gurugram’s exteriors.
“Brokers are saying that you won’t get anything for Rs two crore. They suggest going to South Gurugram, which is not exactly Gurugram but Sohna and is deserted and not well connected,” he laments.
But unlike Jain, Baxi is happy living on rent. He doesn’t want to move to a city like Noida.
“Gurugram has much more to offer than Noida and now with my son growing, I want him to experience that lifestyle,” says Baxi.
At this rate, NCR suburbs is soon going to be split between the luxury-seeking rich and the stability and savings seeking middle-class. Those who want a spa, golf course, forests and fancy penthouses head to Gurugram and those who want community and family clubhouses buy in Noida. The CEOs and unicorn founders are lining up to Gurugram, the upwardly mobile, hard-working, EMI-paying middle-class heading to Noida.
Another NCR town — Ghaziabad — that has long carried the image of being affordable is experiencing a squeeze vis a vis the availability of affordable houses. “The developers are not seeing any lucrative offer in building the affordable segment anymore. The government has withdrawn their schemes and only they can push for it now. The allotment rate ranges between Rs 5,000-9,000 per sq ft, which is much less compared to Noida or Gurugram. Hence, developers don’t see any ROI in constructing 2BHK. A 3BHK in Ghaziabad would cost Rs 85 lakh – Rs one crore depending on the location,” says Manoj Gaur, CMD, Gaurs Group.
As for Gurugram, Haryana has policies for affordable housing and mid-size housing in place that never really took off the way the government desired. In 2013, the state government launched an Affordable Housing Policy. In 2016, Deen Dayal Jan Awas Yojna (DDJAY) was launched in the state by Prime Minister Narendra Modi to provide “housing to lower and middle-income groups.” But within seven years, DDJAY was discontinued owing to “high cost of land and its failure to benefit the lower and middle-income home buyers,” says a real estate developer who has shifted their focus from the affordable to the luxury segment.
“Gurugram saw few mass housing projects and other real estate developers, but it really didn’t take off since the land cost and overall construction cost didn’t prove viable for the developers,” says the developer mentioned above.
According to the Affordable Housing policy of 2013, the government had set an allotment rate of Rs 4,200 per sq ft. In 2023, the Haryana government amended the policy, increasing the rates by 20 per cent to Rs 5,200 per sq ft. The developers had expressed their disappointment over the Rs 4,200 per sq ft rate fixed for the scheme claiming that it made projects unviable.
But increase in allotment rates didn’t translate into any positive outcomes for the affordable sector and developers are still finding it challenging to tap into this segment.
“The overall cost of construction has gone up considerably. If you see the allotment rate at Golf course road, it is Rs 60,000 per sq ft and minimum rate at new Gurugram sectors is Rs 20,000 per sqft. So, it’s not viable for a developer to come up with an affordable construction,” says a real estate developer, requesting anonymity.
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How luxury became more luxurious
Sitting in his office at Star Tower in Gurugram, 51-year-old Soni says that the landscape of luxurious condominiums is changing. And developers are tailoring condominiums to meet the evolving demands. Buyers are opting for open spaces over crammed-up confines of Delhi and they are ready to invest, he adds.
After living in Mumbai and Bangalore for two decades, Munjal wanted to live closer to her in-laws in Delhi. She had Delhi, Noida and Gurugram to choose from. And she chose the latter.
Luxury projects in sector 70 and 22 have started the de-hyphenation of posh Gurugram from areas such as DLF and the Golf course. Projects such as Ambience Creacions in Sector 22 offer a diverse range of amenities, including a cigar lounge. DLF South Privana in Sector 79 provides a conference room — for an office-like environment within the residential complex for those working from home.
“Luxury could be defined on the basis of location, urban infrastructure, and amenities,” says Kaul.
Room sizes have almost doubled, balconies have become wider and the clubhouses are like five-star hotels with top-end chefs,” says Soni as he examines a blueprint of recently launched DLF properties.
Luxury projects in sector 70 and 22 have started the de-hyphenation of posh Gurugram from areas such as DLF and the Golf course. Projects such as Ambience Creacions in Sector 22 offer a diverse range of amenities, including a cigar lounge. DLF South Privana in Sector 79 provides a conference room
— for an office-like environment within the residential complex for those working from home.
The real estate agents that ThePrint spoke to attributed the surge in demand for luxury to the Covid pandemic. Not only luxury condominiums, people are also showing significant interest in buying luxurious villas for bungalow-style living spaces.
For Priyanka Khemka who had lived all her life in Greater Kailash’s posh neighbourhood in Delhi, moving to Gurugram was a big change. Covid made her realise the value of open spaces, sunlight and air.
“Covid opened our eyes and we realised that Delhi was not an option for us anymore. People now want terraces, they want balconies. Earlier, the ground floor used to cost more than the terrace floor, but now it’s vice-versa,” says Khemka.
Khemka bought a bungalow in Sushant Lok in 2023, considered as a wealthy neighborhood in eastern Gurugram, last year.
“I have light coming from every window of my house and we wanted that. We also wanted the luxury of tweaking the structure as per our future need. And that’s something an apartment couldn’t have offered,” says Khemka.
In the last two years, the luxury space has seen the likes of Make My Trip CEO Rajesh Magow and Chief Human Resource Officer (CHRO) of Genpact, Piyush Mehta buy properties in DLF Magnolias. While Magow made the purchase for Rs 33 crore, Mehta got his flat for Rs 32.60 crore.
Amit Jain, who has been living in Magnolia for over a decade, calls Gurugram’s luxurious condominiums as “self-contained communities”.
“It is a self-contained community. They don’t fight over parking like in Delhi. The living experience is superior. There is a sense of community. The city is advanced and has a multinational environment,” Jain adds.
And accessing these luxurious apartments is no ordinary job. The real estate agents maintain their own LinkedIn verification process to filter out chaff from the wheat. They snoop on the profile of the prospective buyer to assess whether they would fit in the company of C-suits. Before this, one can’t even visit a luxury property. It’s like a breed check.
“If we don’t do these checks, anyone with no potential to buy these flats will show up and we don’t want that. It will be a waste of our time,” says a broker who only deals in luxury apartments and wanted his name to be kept anonymous.
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Affordable now a neglected market
With the arrival of the Real Estate Regulation and Development Authority (RERA) in 2017, the sector has seen some level of streamlining when it comes to curbing project delays and keeping developers with poor delivery potential out of the market. It was all for the consumers to benefit. But the current market mix doesn’t seem to be favouring the middle-class. And the regulator, say some developers, has helped drive growth in the luxury sector.
Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd calls Gurugram the mocktail of social infrastructure, upscale lifestyle amenities, better healthcare facilities, and job opportunities — making it the most desirable city for owning a house.
“For a long time, real estate in Gurugram was deprived and stuck in red tape. But after RERA was established, almost 90 per cent of the projects launched have been successfully delivered since 2019. This has instilled confidence among buyers,” says Aggarwal while also underlining the supply constraint and how the sector is navigating cautiously.
“The real estate market has become regularised. Most real estate guys who were not doing serious business have left and only a few developers are now there,” he adds.
But there are a few who ‘want’ to tap into the neglected market of the affordable but the land cost is proving a hurdle, says a developer on condition of anonymity.
Signature Global is planning to develop 19 affordable and mid-income projects in Gurugram and adjoining areas of Sohna and Manesar. The company is known for developing affordable group housing for the mid-income segment but the elevated land costs is likely to push their average offerings out of the reach of such buyers.
But a real estate agent doubts Signature group can deliver affordable housing to middle-income buyers easily.
“If a salaried middle-income professional asks me for a good apartment, I won’t be able to show anything. Gurugram is only for the rich. Let’s accept that,” he smirks.
(Edited by Anurag Chaubey)