DELHI: Gurgaon and Manesar continue to be the hub of real estate activities in the NCR region. Despite the slowdown in the economy, demand for residential and commercial real estate in these sub-cities has not been affected appreciably.
Now, developments in these parts are extending all the way till Dharuhera along NH-8, Sohna along Sohna Road, and Pataudi along Pataudi Road.
However, the total distance from Delhi to these new developing zones is prohibitive, from the perspective of a daily commuter. But what is happening in these towns and cities is that these destinations are no more a residential cluster for those working in Delhi — with a number of large corporates opening offices in these areas because of the availability of qualified personnel and high-quality real estate space, these areas have turned into self-sustained urban agglomerations.
In fact, Gurgaon and Manesar, which are together known as Greater Gurgaon under the new master plan, have acquired the critical mass for self-sustainable development. These areas have world-class residential units, schools, hospitals, malls, and all the other lifestyle amenities for modern, urban life.
A number of large players like Godrej, Tata Housing, Mahindra Realtors, and Sobha Developers have entered the market here. Apart from them, a number of realty majors like DLF, Unitech, Emaar, Raheja, Ireo, Vipul, Vatika, M3M, Puri Construction, ATS, Supertech, Assotech, Orris, Ramprastha, etc, have already launched projects in the area.
A large number of Fortune 500 companies, BPO and ITeS companies, too, have opened offices in the millennium city. Because of this, Gurgaon offers both an opportunity to have a good job as well as a good residential accommodation to people looking for challenging jobs and quality life. Thus, the demand for commercial real estate space and the demand for residential units feed upon each other.
Interestingly, despite the slowdown in the economy in the last couple of year, there is no visible slowdown in the demand for commercial space in the sub-city, which has further kept the demand for residential units alive.
RICS India says in a report: “Sentiments towards commercial real estate investment remains favourable, as India’s economy shows itself to be less vulnerable to the overall slowdown as compared to other Asian economies.”
An independent organization, RICS acts in the public interest, upholding standards of competence and integrity among its members and provides impartial, authoritative advice on issues affecting business and society.
According to the report, the capital value of commercial real estate in Gurgaon region is likely to move up. While investment enquiries remained stable since the previous (Jan-March) quarter, it is expected that capital values and transactions will continue to edge upwards as the year progresses, the RICS report said. And investments and prices are both likely to remain in the positive territory in the coming quarters across retail, office, and industrial segments.
However, along with signs of sluggishness in the economy, the commercial sector is facing challenges like lack of funding for building more projects, inflated prices, excess inventory across large cities, and delays in obtaining building approvals.
Despite these hurdles and the slowdown in the economy, the mood of investors is positive as there is a sense of stability due to the recent policy measures like the opening of retail sector for foreign direct investment. The retail sector is forecast to grow because of this announcement. On the rental side, values appear to be moving higher despite some oversupply resulting from the completion of a series of projects sanctioned before the downturn in the economy.
These clearly suggest that the number of new offices that are going to come up in the area is not seeing any slowdown in the region. However, there is some problem for the occupier side. “The occupier side of the market is a little more challenging with the flatter trend in occupier demand reflective of the more mixed macro picture. However, for the time being, rent expectations remain positive, which may be partly linked to the subdued trend in development over the past few years,” Simon Rubinsohn, chief economist of RICS, said on the findings of the report.
However, there is expectation that as soon as the economy is back on a high growth trajectory of over 6%, demand from the occupier side will pick up. There is an expectation that the Indian economy will be back on high growth by the next fiscal year. This will also drive the demand for residential real estate. As most of the projects launched take around three years to complete, an investor today can reap handsome benefits when he gets the possession of his property after three years.
A number of corridors are being developed in the area, where developers are selling their p ro j – ects at around Rs 4,000 per sq feet to Rs 6,000 per sq feet. However, these areas are at a considerable distance from the Delhi border, but that is not going to affect the price appreciation if there are enough commercial activities coming up there.
In the previous slowdown, in 1999-2003, property prices continued to remain sluggish. But as soon as the economy turned around and grew at around 7% in 2003-04, property prices started looking up. And after that, as the economy continued to grow at around 8% over the next five years, property prices in the NCR jumped up tenfold.
Therefore, economic slowdown, when property prices remain subdued and developers are open to hard negotiation on the prices of their products, provides a good opportunity to invest in the real estate. But, before investing in a project of a developer, one must check their credentials. One should also find out, whether the developer owns the land for the development or not. It is also advisable to check beforehand all the approvals that the developer required to start a project.
In fact, it is better to take a loan from a bank to buy a property. Before lending on a property, banks check all the necessary approvals and permissions from various authorities necessary to start that project. This saves you from a good deal of hard work!