Escalating prices: What's driving demand?

Hi,

What you said is very true. I would also like to add something to the reason behind soaring prices of the property....

Talking about Gurgaon, this flourishing town has certainly witnessed unprecedented growth as no other. It continues to bring in sky scraping buildings, glitzy shopping arcades, plush offices, and residential complexes with scenic surroundings. So, what’s exactly the reason for continuous hike in the property rates???

Data showcased by recent studies has come up with the fact that both commercial and residential property compliments each other. With a multitude of MNC mushrooming in Gurgaon, the demand for the residential complex is also rising high. Let’s say, an MNC makes a deal for 2500 square feet of back office space in Gurgaon. And, it employs 2500 people to work there. If 15% of the total employees decide to get a house in the proximity to the company, it means 375 people and 375 new homes or an entirely newly constructed residential complex. For that reason, prices for the residential property have been soaring high.

A fast metropolis like Gurgaon is experiencing stabilized phase; that means the realty market is no longer overheated there. But prices are still going up. If anyone thinks, that prices have really come down in absolute terms, no they haven't.

So, is real estate boom has been over hyped or the industry is just trying to meet the demanding requirements?

Why rise in prices of Gurgaon property?

Hi,

You have got the right pulse to track one of the reasons for a boom in residential property in Gurgaon! With more and more corporate firming up with their office spaces in Gurgaon, working class seems to favor their residence to be in the vicinity of their work place.

With growing economy, there has been a rise in the job prospects as well as affordability pattern of different income groups. This has certainly brought good modifications in standard of living. A large majority of both high as well as middle management executives working in Gurgaon are coming up with the demands for all types of accommodation.

Consequently, a rise can be commonly seen in both leasing and purchasing activities for the last few months. Land rates have been appreciating by about 20-25% for the last one year in most of the locations in Gurgaon.

I wonder, will real estate prices continue to rise like this or come down now??? :)

It was exactly 6 years back you wrote this piece....

And still none has been able to find the right answer....

All logic stands defied till date .

Looks like back then any unregistered member could also post, moreover, a person, having 6 posts could also become senior member just with time, despite hardly posting any post at all, the criteria for seniority was quite different.

However, how much this forum has developed now, needs applaud.

Good Find Rushil!!

Interesting posts...but wondering which builder launched 9000 bsp way back in 2006 ?? (Even Magnolias was launched at 4500 in 2006).

Secondly the construction cost was not at all 1000 psf then, it had been merely 250-500 rs psf, back in 2006. 500 psf was for luxury specs.

Dear Lalitg,

Are you sure you mean to say Rs250-Rs500 psft as cost of construction in 2006?

I built one bare minimum basic room and a bathroom on first floor of my house in 2006 in a tier2 city and here is the stats:
room size = 12ft by 10ft = 120 sft
bathroom = 8ft by 6ft = 48 sft ~ 50 sft
Total ~ 170 sft
Cost ~ Rs 120,000
Construction Cost ~ 120,000/ 170 = Rs 700 psft

Note that this was a just a basic construction - no marble floor, no wood work (except door and windwos ofcourse) etc no luxury at all - it was sort of a servant room or a spare purpose. Also it didn't require foundation etc as it was on first floor. Also it was in a tier2 city so labour costs were less. Has I gone for a little bit of woodwork or marble floor or slightly better bathroom accessories or it was in a metro or it was a ground floor, or if it required new water connection, approvals, new wiring, stairs for room etc the cost woudl easily have been at much more than Rs 1000 psft.

Pls let me know which contractor/ builder you used in 2006?

Regards,

This goes to show how gurgaon has progressed in last 6 years and how definitions have also changed.

6 years back members could become senior member with 6 posts, builders use to advertise " New luxury projects in 50L" , Sohna road use to be the end of the world, Dew was in embryonic stage, Metro was a dream etc etc....

Today a budget home is advertised in 70l for 2bhk, IREF needs 500 posts to badge us as senior, Sohna road has become the centre from where all future destinations measure their distance etc etc.

Come on Dude,

Let's be reasonable though, I should not have put the figure 250 which looks like very cheap now. but I can assure you builders were definately available in the range from 400-500 back in 2006, and 750-1000 rupees per sq ft until 2009.
Construction cost jumped to 1000+ in 2010, and as on today it stands somewhere between 1200-1500.

And for all these I did not choose any reputed builder or something, it was a calculation based upon where contractor would supply the labor and I would supply the material, in nut shell if it comes about the figures which I mentioned above. And almost you are right, if I do not buy material myself , then it would certainly add to the cost.