#DemonetisationAnniversary: Residential sales remain low in Delhi NCR


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Demonetisation story delhi

On the momentous night of 8th November 2016, the country witnessed its biggest currency demolition move, which shook all businesses, including the real estate market. A year later, 99acres.com analyses the impact of demonetisation on the realty landscapes of the top eight metro cities. 

Until November 2016, Delhi NCR’s real estate market was reeling under the pressure of piling residential stock. The inventory overhang of around 1.8 lakh residential units was the highest in the country. Subdued buyer sentiment in anticipation of the then-upcoming Real Estate (Regulation and Development) Act (RERA) kept buyers at bay and housing prices in check. Peripheral locations of Gurgaon and Noida, Greater Noida which offered competitive prices as compared to Delhi lured end-users and garnered relatively healthier traction until the country encountered the demolition of 500 and 1000 rupee currency notes. The move, which was taken to curb black money and bring transparency in currency flow, knocked down various industries – not sparing the realty market. The industry is one of the biggest vessels of unaccounted cash in the country.

Like other cities, real estate deal closures almost immediately hit a rock bottom in Delhi NCR. Buyers withdrew from the market and those closer to finalising the deals took a back-seat and reassembled on the negotiation table to strike better deals. Multiple market distractions including cash-crunch took precedence over everything. In such a scenario where even necessary purchases were deferred or canceled, home buying was the last thing on people’s mind.

Amidst such chaos and mayhem, the ongoing and proposed infrastructure projects in Delhi NCR could do little to lift demand. Not surprisingly, the first quarter post demonetisation recorded the lowest ever sales in many quarters. Till March 2017, advancement of road infrastructure projects such as Eastern Peripheral Expressway, Faridabad-Greater Noida Road and a master road between Gurgaon and Manesar; approval of Jewar International Airport; allocation of a whopping Rs 48,000 crore for development of civic infrastructure in Delhi and several other such government initiatives failed to revive real estate sentiment.

The resale market, which largely thrives on cash, received the biggest blow. Reduced home loan rates proved futile to lure buyers back into the market. Slashing of circle rates by Haryana Government in Q2 2017, too, did not help the market recuperate. Marred buying sentiment benefitted the inventory-heavy rental markets of Noida, Greater Noida and Gurgaon but did not propel ‘ask’ rates owing to excess rental inventory.

As the market started settling to the dubieties triggered by demonetisation, it met the implementation of two other radical reforms – RERA and Goods and Services Tax (GST) in Q2 and Q3 2017, respectively. While RERA infused confidence amongst buyers, the uncertainties pertaining to its norms made buyers fence-sit and wait for price correction. Liquidity constraints post currency ban and ambiguities regarding RERA led developers to halt new launches, which helped the market inch towards demand-supply equilibrium. By Q3 2017, Noida and Gurgaon had bridged the demand-supply gap by almost two percent due to limited number of new launches and developers focusing on clearing their existing unsold inventories.

Market Analysis

Delhi Story_demonetisation


Impact of Demonetisation

Primary Residential Market

The first facet to be impacted by the demonetisation move was the supply in the primary market. At the onset of November 2016, Delhi NCR stood with an inventory stockpile of 1.8 lakh housing units. Almost immediately after being left cash strapped by the currency ban, developers stalled new launches and halted under-construction projects across budget segments. New project launches dipped by almost 70 percent in the first six months of 2017, as against H1 2016. Implementation of RERA in May 2017 infused further ambiguities, thus, delaying the revival of launches.

Homebuyers adopted a cautious stance and evaded investments in under-construction units – both in the primary and secondary markets. Price points, however, stood strong as developers refused to offer discounts on account of muted sales. Poor liquidity of developers was ascertained in H2 2017 when a few of them declared insolvency, leaving thousands of homebuyers in lurch. As buyers struggled to tide over the volatility of the market, they shifted focus towards ready homes, which offered a safer investment opportunity. Noida, Greater Noida and Gurgaon posted the largest shift of five percent, each, in buyer preference from under-construction to ready units in Oct-Dec 2016. At present, the primary market largely thrives on the sale of limited ready inventory, while the under-construction stock continues to register poor traction.

Industry verdict: Demonetisation, followed by RERA and GST cumulatively limited new projects across Delhi NCR. Price points did not alter much as developers refrained from offering huge discounts on new project ‘asks’. Demand took a downtrend due to the various factors including developers’ insolvency resulting in distrust for under-construction units in the market.

The growing inclination of homebuyers towards ready-to-move properties is the new norm owing to the persistent delays in residential projects and 12 percent GST on under-construction properties. Homebuyers are prepared to bear the additional cost of a possession-ready apartment rather than facing undetermined delays.  

Secondary Residential Market

Essentially dependent on cash, the secondary market was the worst hit by demonetisation in the first two quarters following the big move. The National Capital Territory (NCT) of Delhi suffered the most on account of holding maximum resale inventory. Hefty negotiations took precedence. Owners who were desperate to exit realty investments offered significant discounts leading to a price correction in average weighted prices by approximately 20 percent. Such deals, however, were limited in numbers. Most owners withdrew their properties from the market and put them on rent. Sales volumes for secondary market bottomed in H1 2017 at a figure 26 percent lower than H2 2016.

Post the implementation of RERA, demand for ready homes propelled by a margin, however, not many enquiries translated into sales. The market swarmed with resale inventory, resulting in price points to remain stagnant. Certain pockets also saw average weighted asks sliding by a percent or two in a quarter.

Between Jul-Sep 2016 and 2017, Delhi and Gurgaon witnessed the highest fall in property prices to the tune of five percent, each, closely followed by Noida, Greater Noida and Ghaziabad, where prices dipped by four percent, each. The correction in property prices could not be attributed solely to demonetisation. Several other market factors such as buyer distrust, RERA implementation, heavy housing supply, limited demand are also at play here.  

Prices trends in the popular micro-markets of Delhi NCR


Current ‘ask’ rates*

Capital Growth**

Market Drivers

Mayur Vihar Phase I



  • Exorbitant properties
  • Absence of new projects

Noida Extension



  • Piling unsold residential stock
  • Delayed projects and wary home buying sentiment

Sohna Road



  • Piling unsold stock
  • Exorbitant properties
  • Delayed projects

Golf Course Extension Road



  • Housing demand spilling over to comparatively affordable neighbourhoods
  • Piling unsold inventory
  • Poor buying sentiment

Vasant Kunj



  • Exorbitant properties
  • Subdued home buying sentiment for premium homes

* Current ‘asks’ are median rates for listings in the respective localities posted on 99acres.com in Jul-Sep 2017 – both resale and new projects

**Capital growth is calculated basis the changes in average weighted ‘asks’, YoY – Jul-Sep 2016 vs. Jul-Sep 2017. 

Rental Market

Subdued buying sentiment triggered by demonetisation and reinforced by RERA and GST in the subsequent quarters benefitted the rental market. As buyers deferred purchase decisions, they shifted focus toward rented accommodations in the peripheral locations of Noida, Greater Noida and Gurgaon. Despite robust demand, rental pricing in Noida and Greater Noida dipped by three percent, YoY, owing to mounting stock. Ghaziabad, too, witnessed a marginal dip in rental rates, YoY.

Delhi and Gurgaon witnessed an insignificant positive price movement. Dwarka in Delhi emerged as the top grosser in the rental landscape.

If at all demonetisation impacted the rental market, it did positively as the last one year was marked by “wait-and-watch” approach w.r.t. to buying. Many buyers withheld purchase decisions and continued being tenants.

Demonetisation rental graph delhi

National Outlook

Home Buying Sentiment

  • Was initially marred by demonetisation; has seen some improvement post RERA implementation
  • Under-construction market suffers post GST reform
  • Buyers remain at bay due to uncertainty over price correction triggered by multiple restructurings

Property Prices

  • Insignificant price correction in the short term
  • Property rates stabilised over quarters until the new projects market witnessed disruptions on the back of RERA and GST
  • Resale ‘ask’ rates remained steady in comparison to new projects

Rental Market

  • Demand strengthened as buyers deferred purchase decisions
  • Rental ‘asks’ went north in cities with good migrant population.
  • Cities with heavy rental stock such as Noida, Greater Noida and Gurgaon saw ‘asks’ flattening due to piling stock


  • New launches dwindled as developers lacked liquidity post demonetization
  • RERA worsened the scenario as developers opted to wait for clarity
  • Resale inventory swelled as cash-strapped owners attempted to exit real estate investments


Overall, the last one year remained passive for Delhi NCR’s residential real estate sector. Muted sales, halted new launches and dipping ‘ask’ rates in the secondary market remained a key feature. While the pricing in the primary market remained steady, it was the worst hit by the multiple reforms of demonetisation, RERA and GST in terms of both demand and supply. The city stands with an unsold inventory that could take four years to liquidate. The failure of Delhi, Haryana and Uttar Pradesh governments to efficiently enact RERA provisions is expected to worsen the scenario in the coming months. However, the reducing gap between demand and supply of ready units could create an upward pressure on the prices. 

Expert Opinion

By Ashish R Puravankara, MD, Puravankara Ltd

By Niranjan Hiranandani, Founder & CMD, Hiranandani Communities

By Aaron Solomon, Partner, Solomon & Co

By Saurabh Jindal, JMD, SVP Group

By Sanjay Jain, Group Managing Director, Siddha Group

By Arjunpreet Singh Sahni, Executive Director, Solitaire Group

By Pankaj Kumar Jain, MD, KW Group

By Mukund Patel, MD, Rutu Group

By Shishir Baijal, Chairman & MD, Knight Frank India

By Manju Yagnik, Vice-Chairperson, Nahar Group

By Aashiesh Agarwaal, Founder & Managing Partner, Pinakin Advisors LLP

By Anuj Puri, Chairman, ANAROCK Property Consultants

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. 99acres does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.

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