Property Prices in NCR Outpace Rentals Sohna Road & Noida Sector-150 Lead
New Delhi: Property prices in key NCR micro-markets have surged significantly over the past three years, outpacing rental growth in many areas. According to ANAROCK data, Noida’s Sector-150 recorded an extraordinary 128% rise in capital values between 2021-end and 2024-end, while rental values for a standard 1,000 sq. ft. 2BHK unit increased by 66% in the same period. Sohna Road in Gurgaon saw capital appreciation of 59%, with rental values rising by 47%.
Among India’s top seven cities, NCR, Hyderabad, and MMR saw higher capital value growth compared to rental values. In contrast, key markets in Pune, Kolkata, and Chennai experienced stronger rental value appreciation than capital value growth.
The divergence between capital and rental value growth in NCR highlights emerging investment patterns. Buyers looking for long-term gains find greater appreciation in Noida’s newer sectors, while tenants still benefit from relatively moderate rental growth in established localities.
While Noida’s Sector-150 led the capital appreciation chart, rental growth remained relatively subdued. Similarly, Sohna Road’s rental increase of 47% was modest compared to its 59% capital value rise.
Director of GLS Group, Surinder Singh said “Gurgaon continues to solidify its position as a top real estate destination, driven by robust infrastructure, seamless connectivity, and high demand for premium housing. With rapid urbanization and upcoming developments, the city offers immense investment potential for homebuyers and investors alike. The steady appreciation in property values and the growing appeal of integrated townships highlight Gurgaon’s transformation into a modern, self-sustained urban hub.”
Anuj Puri, Chairman of ANAROCK Group, explains, “Capital values in many NCR markets have seen significant growth over the past three years, making them attractive for investors focusing on long-term appreciation. However, rental yields in some micro-markets are yet to catch up with the capital surge, suggesting a shifting balance in demand and supply.
New LTCG Tax Options Boost Real Estate Market
Anuj Puri, Chairman – ANAROCK Group
The government’s revised budget announcement allows taxpayers to pick between a 12.5% Long-Term Capital Gains (LTCG) tax rate without indexation and a 20% rate with indexation, for properties purchased before July 23, 2024. This will have a very profound impact on both homeowners and aspiring homebuyers.
Homeowners: This change gives homeowners flexibility in their tax liabilities when they sell their property. For properties held over a long period, where inflation has majorly raised the property’s value, opting for the 20% tax rate with indexation would be beneficial. Indexation adjusts the purchase price for inflation, potentially reducing the taxable gain and overall tax liability. For properties held for shorter periods or in low-inflation periods, the 12.5% rate sans indexation could be more beneficial and result in a lower tax burden.
Homebuyers: This revision can potentially stimulate the residential property market because it provides clarity and implies potential tax burden reduction. Homebuyers’ sentiment will improve as they have flexible options for addressing their future capital gains tax burden. This will result in higher demand, particularly in markets where property values have been seen to rise significantly.
Also, the anticipation of these changes can potentially cause some homeowners to sell properties sooner to benefit from the new tax regime. This will raise the overall supply of housing units available on the market, helping to keep prices in check.
As per ANAROCK Research, H1 2024 saw total sales of nearly 2.51 lakh units across the top 7 cities, 9% more than the same period last year (H1 2023). Given that Q2 2024 saw sales tapering due to the election heat and the increased prices across cities, the new tax imposed by the government in the budget was considered a dealbreaker for many. Now, with the government giving these options to the homebuyers, housing sales momentum will continue unimpeded.