Gurgaon shows resilience to recession
Oct 24, 2013
Source : The Times of India


DELHI: Golf Course Road continues to dominate Gurgaon’s suburbs as the prime address for both residential and commercial property. It is followed closely by Golf Course Extension Road, which is emerging as yet another zone for luxury real estate and golf-themed projects.

Sohna Road is being considered for investment opportunities in the medium term but it is Dwarka Expressway that is drawing maximum interest owing to its future potential. While the expressway evokes optimism over its profile, it is drawing skeptic remarks over its timelines-but it is creating waves in real estate market, nevertheless. Its great prospects and connectivity through a very wide 150metre road makes it an attractive option, also due to slow payments at the moment.

Rajat Mahajan, a consultant, says: “Gurgaon is the place for high net worth investors. DLF recently launched Camellias here-a project in the league of Aralias and Magnolias-an ultraluxury, golf property. Apartment sizes range from 7,400 sq ft to 9,500 sq ft and penthouses come in sizes between 13,000 sq ft and 16,000 sq ft; at Rs 25,000 per sq ft, they cost between Rs 20 and Rs 25 crore.”

Broadly, the minimum ticket size of an average at Golf Course Road is Rs 3 crore plus, Rs 2 crore onwards at Golf Course Extension Road, Rs 90 lakh onwards at Sohna Road, Rs 1.2 crore onwards at Dwarka Expressway, and Rs 75 lakh onwards at New Gurgaon. The next emerging micromarket is Sohna Road where values are in the ranges of Rs 5,000-8,500 per sq ft while the values are in the range of Rs 4 , 5 0 0 – 6 , 5 0 0 per sq ft in New Gurgaon. But the area to watch out for in the medium term is Dwarka Expressway.

The 18km-long Dwarka Expressway has construction on both sides of the expressway. At present, there are 50,000 units in various stages of construction and the prices of these are in the range of Rs 5,500-9,500 per sq ft. Nearly every developer has something here: Vatika, DLF, BPTP, Ramprastha, Sobha, Raheja, ATS, among others. Some of the noteworthy projects are Diplomatic Greens by Puri Construction at Rs 8,500 per sq ft, Sobha Developers’ project at Rs 9,500 per sq ft, and Raheja’s Vedas at Rs 5,700 per sq ft.

Interestingly, the prices go up for projects located closer to Delhi and taper down as you move away from Delhi and towards Gurgaon. While the quality of projects is good, the issue here is that the expressway has been delayed and is eighteen months behind schedule. This was supposed to have come up by October 2013. One of the reasons for the delay has been the dislocation of 500 families at Palam Vihar. The other issue is that it’s now becoming an investor-driven market; off-take has also been slow due to the slowing down of the economy.

Nikhil Jain, CEO of Ramprastha Group, says: “Reality is now weighing heavy over perception for Dwarka expressway. The state government has made huge strides in developing physical infrastructure in Gurgaon. Reputed and trusted developers are still getting good response from investors as well as firsttime house hunters, as delivery of projects is becoming the key for consumers. At Ramprastha, we are gearing up to deliver three of our projects—The Edge towers, Atrium, and The View—in the next three-six months.”

As physical and social infrastructure fails to keep pace with the oversupply of residential units, investors are turning wary; while this is becoming an investor’s market, caution is advised owing to the oversupply.

Microtek Infrastructure is set to launch an ultraluxury project, Microtek Greenburg, in Sector 86 on Dwarka Expressway, and has five other projects lined up here. Ajay Aggarwal, MD of Microtek, says: “Despite hurdles in some quarter, we expect the expressway to be the leading property market, not only for high-end users, but also in the affordable and commercial segments. Infrastructure hurdles are part and parcel of realty markets globally, but property market around Dwarka Expressway has registered price appreciation of more than 206% in the last five years—this speaks for the expectations, and value placed, upon this destination.”

Developers are hopeful that the festive season will stoke demand and give the much needed fillip to sales in the real estate industry. Harindra Nagar, MD of Paras Buildtech, says: “The last five-six months have been tough for developers owing to the overall slowing of the economy. On the one hand, end users seem to have postponed their plans to buy property due to the slowdown impacting their earnings, as well as due to the high rates of property. On the other, investor activity has also been impacted—they are not buying as much as six months earlier.” Paras Buildtech has projects in Noida, Gurgaon, and Punjab.

Harinder says the current festive season has injected some momentum into the market as there are positive signs visible in the market— “we are hoping for the return of the good run”.

Nikhil Jain of Ramprastha says: “Sohna Road commands a higher price than some bigger and better projects on Dwarka Expressway, owing to its proximity to developed sectors of Gurgaon. We can vouch for its potential after the forthcoming DMIC corridor comes through—this is one of the most ambitious infrastructural projects undertaken in India since Independence. The long-term growth potential of Dwarka Expressway is better than that of any other location in the NCR region.”

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