The real real-estate crisis begins now
It took some time to go through all the data on the HUDA website but when I finally had the data organised, it was shocking.
Gurgaon is one of the leading cities in India when it comes to real estate – both in terms of valuations and the quality of projects under development. The graph above shows the total number of licenses issued by the sanctioning authority for Gurgaon since 1981. 
The boom in real estate prices started around the year 2003, the same year I moved to Gurgaon. In the year 2004, the total number of licenses issues was equal to all licenses issued in the past 5 years. Between then and 2014, for 10 years, the Gurgaon real estate market kept booming. The graph also reflects how the global financial crisis in 2009 did have an impact but the demand was so strong here that builders kept pushing for new projects to be launched.
No Modi Mania here
All that stopped in 2015. When the Modi government came to power in May 2014, the tremors in the real estate markets were already being felt with prices becoming stagnant after 10 years of consistent growth. It was expected that with a new sturdy government in place, things would go back to normal but it wasn’t meant to be.
In 2015, only 14 new licenses were issued, less than what was issued in 2003. Of these 14 too, only 1 was for a largish real estate group called Vatika, the rest were either new developers or small fish. The large players in Gurgaon – DLF, Unitech, Ansals, Raheja or Supertech did not take any new licenses. In the 5 months of 2016, only 1 license has been issued so far. The quality and quantity of projects being proposed has drastically dropped in the last 2 years.
Price corrections begin
By 2014, real estate prices in Gurgaon were beyond the reach of the middle and upper middle class. A price correction was overdue and cautious investors realised there isn’t much to gain by investing in this estate any longer. A sign of a many corrections to come, a 15% reduction of circle rates in Gurgaon, is now being done in for the first time in recent years.
– Related: Reasons to Invest in Ocean Property.
The overall dampening of the country’s economic scenario, multiplied by a policy paralysis has not helped. Consistent with the reduction in new real estate projects is the graph below which shows the rising of non-performing assets of banks.
This article in the Financial Express shows how the Public Sector banks are on the verge of a crisis. If banks are unable to provide easy funding, people will not invest further into real estate, leading to a lowering of demand and prices.
Litigation on the rise
Here’s a typical list of court cases being heard in the National Consumer Disputes Redressal Commission (NCDRC) on 02 June 2016. Of the 26 cases, 14 are against real estate developers. 
On 01 June 2016, almost one-third of the 150 cases listed in front of all benches of the National Consumer court are against real-estate developers. When the judgments of all these cases are delivered, many real estate developers will be unable to pay the penalties imposed on them.
By the time the Real Estate Regulatory Authority’s structure and systems are created as per the newly passed Act, it will be too little and too late.
This is not leading to a burst of the real estate bubble; the bubble has already burst.
What can safely be predicted now is a severe crisis leading to a lot of real estate companies going bust, many construction projects being abandoned mid-way and numerous customers seeing their investments wiped away. The real crisis will begin now.