The monsoon season has once again brought devastating floods to several Indian cities. In Delhi-NCR, severe basement flooding has resulted in tragic fatalities and property losses, while Gurugram and Bengaluru have also been plagued by waterlogging and disruptions.
Despite these recurrent issues, real estate prices in affected areas remain relatively stable. Experts attribute the resilience of real estate prices to several factors. While flooding can temporarily dampen sales and lead to short-term price reductions of around 3-5%, it does not significantly alter long-term property values. The primary reasons are the short duration of intense rainfall and the limited impact on overall demand.
Historical trends indicate that buyers and tenants quickly return to these markets once the immediate crisis subsides, particularly given the city’s infrastructural advantages and locational benefits. In areas like New Rajendra Nagar, where planning regulations have been violated for commercial gain, property values can indeed drop, and vacancies rise. However, such declines are often offset by alternative uses, such as converting residential properties into paying guest accommodations for students.
The root of most severe flooding issues can be traced back to inadequate civic upkeep and poor urban planning. Problems such as clogged sewers and the obstruction of natural water channels by construction have exacerbated flooding. For instance, Gurugram’s persistent flooding has been attributed to blocked water channels due to high-end developments. Similarly, Bengaluru’s floods have been worsened by encroachments on traditional water pathways. State interventions and improvements in civic management have played a crucial role in mitigating the impacts of flooding. In Gurugram, the Gurugram Municipal Development Authority (GMDA) has collaborated with activists to create water channels and improve drainage systems.
Chennai’s swift response to flooding in December 2023 showcased how effective management can quickly restore property market sentiment. Despite significant flooding in Kerala in 2018, which initially led to a drop in property values, the market has slowly recovered as the state addresses the underlying issues. The broader market has demonstrated that while floods can influence property prices in the short term, the overall demand for housing, combined with improvements in flood management, ensures that prices remain resilient over the long term.
