Why repeated floodings of Indian cities are not affecting real estate prices

In a high-demand society, urban flooding simply drums down the sentiment of Indian homebuyers, albeit temporarily.

This monsoon, several houses across Delhi-NCR have seen massive basement flooding and loss of property. In Old Rajendra Nagar in Central Delhi, three IAS aspirants lost their lives when the basement library was flooded because of faulty sewerage systems. In Sushant Lok 1 market in Gurugram, one person was electrocuted due to flooding of a basement. Bengaluru woke up on August 12 to the rude shock of waterlogging across several parts of the city; and news reports suggest more spells are expected.

Do repeated flooding and waterlogging affect the real estate prices of properties in our cities? Have transactions in these affected areas stopped with buyers giving them the thumbs down?

Experts say that where loss of life and systemic flooding take place, it is difficult to enact sales during and immediately after the monsoons. Listed prices do not fall, but negotiated prices can drop by about 3-5%. But with rains for only three out of 12 months and a short public memory, both tenants and buyers flock to these markets again. In places like New Rajendra Nagar where rules have been openly flouted for commercial gain, prices do drop and vacancies rise. But being centrally located, the usual sale to families is replaced by paying guest accommodations to service the large number of students living here.

Poor Upkeep: Most severe flooding issues relate directly to poor civic upkeep. Desilting and management of sewer systems can fix about 60% of flooding issues. But the multiplicity of agencies leads to a blame game where everyone passes the buck. In Gurugram, which is in the foothills of the Aravalis, the biggest cause for massive flooding annually was the obstruction of water channels with premium construction. A similar problem was faced by Bengaluru where the Rajakaluve or the traditional water channels were interrupted by encroachment by builders, large and small.

After the massive floods of 2022 in Belandur where premium residents had to be evacuated by boats, prices of some apartments dropped, albeit briefly. However, the massive influx of young working populations ensures that fresh buyers or tenants come in where the locational advantages outweigh the flooding problems.

State Interventions: City interventions help restore sentiment. In Gurugram, the Gurugram Municipal Development Authority (GMDA) has teamed up with a group of committed activists to find natural solutions to flooding. Water sinks and channels have been created on the Sunset Boulevard and Sikandarpur pondage area. This has prevented flooding of some parts of the Gold Course Road. The bund through the middle of the city from Paras Hospital to DLF Phase 4 has directed some water to the channel adjoining the bund. The Badshahpur Forest corridor has also opened a natural channel for water so that the scale of flooding on Rajiv Chowk and Sohna Road can come down.

Similarly in the worst affected areas of Chennai during the flooding of the Adyar river, landlords panicked that these properties could never be resold. However, the floods of December 2023, which were cleared by the authorities within days of the cyclone, convinced people that good civic management can ensure that disasters are mitigated as soon as they occur. Chennai is one city where the civic authorities have taken corrective action, and included flood mitigation measures in the new master planning process.

The problems are more acute in places like Kerala where landlords in many places which faced intense flood havoc in 2018 worried of ever being able to sell their property. After all, the floods had sprung untold miseries on them. Even after the assessment that it was poor planning that led to widespread floods, the negativity stuck. Currently, the scale of the disaster in Wayanad has taken a lot of property aspirants off Kerala’s hilly areas market.

The Delhi-NCR, on the other hand, which is used to poor management of the three months of rain, shrug off the temporary flooding. Property agents in Gurugram, who have seen the premium Golf Course Road flooded time and time again say buyers know that pumps can be pressed into service and the locality becomes serviceable soon after the rains. In any case, these rains are for a short duration only. In many places here, the flooding is mostly because of poor desilting of drains before the rains, solid waste clogging drains, and encroachment of natural water channels.

With climate change ensuring higher peak rainfall, citizens take mild flooding in their stride. Flooding takes place because of a breach of planning principles. During the planning stages, many roads are below the building's plinth level. Houses with basements had been planned taking into account the height of the adjoining road. However, unlike earlier, cities do not mandate road rebuilding after scraping off the previous roads. As a result, the new roads are significantly higher than when it was planned. Now combined with higher peak rainfall, the water flows into the houses and floods the basements. Newer architects and planners are now raising the basements substantially and creating slopes that allow water to flow out of the buildings.

The impact of flooding on property markets manifests in two ways: it leads to rental vacancy when the flooding is on and takes buyers off the market during peak flooding. However, the need for housing overtakes the apprehension of flooding and eventually most houses find buyers or tenants. Prices do not drop substantially as there is a huge influx of dwellers from smaller to bigger cities. They take on what premium buyers or tenants leave out because of flooding issues.

(E Jayashree Kurup is a writer-researcher in real estate, and Director, Real Estate & Cities, Wordmeister Editorial Services. Views are personal.)

Disclaimer: The views expressed here are the author's own. They do not necessarily reflect the views of DH.