Living up to its sobriquet, ‘Millennium City’, Gurgaon became an oasis in Delhi NCR’s oppressed real estate landscape by reporting stable property values in Jan-Mar 2016. Factors such as comparatively low unsold inventory, rise in the number of affordable housing projects, improvement in physical infrastructure and sizeable office space absorption helped the realty market stay afloat.
At a time when real estate sentiments across Delhi NCR remained downcast, with all the zones posting a downtrend on the capital charts, Gurgaon turned out to be an exception by recording a stable market. Capital prices in Delhi, Noida, Greater Noida, Ghaziabad and Faridabad fell by 1-3 per cent in Jan-Mar 2016; however, proving naysayers wrong, Gurgaon’s realty terrain remained resilient and did not witness any change in capital prices QoQ, despite witnessing a dip in values in Oct-Dec 2015.
Let’s delve into some of the major factors that helped the Millennium City hold its grip on housing prices during the first quarter of 2016:
Comparatively low unsold inventory
According to the latest study by Associated Chambers of Commerce and Industry of India (ASSOCHAM), unsold inventory across the top major cities of the country has increased to 2.5 lakh. However, out of the total inventory of 1.9 lakh in December 2015, Gurgaon had accounted for approximately 22,000 unsold units. This figure, albeit uncomfortably high, was lower than Noida, which was burdened with one lakh houses. Furthermore, almost 30 per cent of this unsold inventory was located in habitable sectors, which have greater propensity to attract buyers in the future.
The luxury (Rs 1-2 crore) and ultra-luxury (above Rs 2 crore) brackets formed the prime repository of unsold inventory in Gurgaon since demand for properties with soaring price tags has been on a decline. However, developers have been offering discounts and flexibility in payment terms in order to offload the units in their kitty, which led to a YoY correction of over 20 per cent in housing prices, revealed a JLL India report.
Rise in the affordable housing projects
With average capital values in the city at Rs 14,050 per sq ft, sky-high prices had been one of the major deterrents to real estate growth. However, city builders gauged the realty pulse and Gurgaon currently has around 40 projects and over 35,000 units which can be classified in the affordable category, ascertained Rajan Kumar Hans, Founder-Director, Prop Windows Infratech Pvt Ltd.
In fact, 99acres Insite Report clearly delineated that the comparatively affordable localities of sectors 70, 84, 85, 108 and 110, where capital values ranged between Rs 4,700 and Rs 6,900 per sq ft, boasted of a buoyant market. On account of being reasonable, property values in sector 108 witnessed a whopping surge of 11 per cent in Jan-Mar 2016 vis-à-vis Oct-Dec 2015.
The mature micro-markets of Golf Course Road and Golf Course Extension Road also saw a decent traction owing to home values averaging around Rs 14,000 per sq ft and Rs 8,900 per sq ft, respectively, opined Hans. A report by JLL India has also elucidated that new launches in the premium category have dropped by 30 per cent yearly, while transactions in the affordable segment have steadily increased.
The push given to the Sohna urban development plan, with 11 builders developing around 5,000 acres and 7,000 apartments, is expected to give a massive fillip to low-cost housing within the range of Rs 25-30 lakh. The initiative also aims to develop South Gurgaon, while boosting the infrastructure of the region.
Improvement in physical infrastructure
Gurgaon is expected to witness a slew of infrastructure enhancements in the near future. With the intent of boosting road infrastructure, the Dwarka Expressway had been accorded the status of National Highway, while Delhi’s Nelson Mandela road was linked with Mehrauli-Gurgaon Road in order to improve connectivity.
Recently, the state government announced the expansion of the metro corridor from HUDA City Centre to Manesar or Sohna. Furthermore, development work worth Rs 900 crore has already been initiated on NH-8 in order to smoothen traffic movement. The Millennium City will soon boast of a Smart City sprawled across 1,000 acres. The Manesar-Palwal stretch of the Western Peripheral or Kundli-Manesar-Palwal Expressway has been inaugurated as well while the remaining 83-km stretch of road is slated to be completed within a year.
Meanwhile, upgradation of the Gurgaon railway station, development of a bus stand covering 83 acres and expansion of the Chandu Budhera water treatment plant are on the cards. The city is expected to witness the development of community centres in sectors 4 and 53 as well as multi-level parking facilities soon. In addition, the government has announced plans for underpasses at the IFFCO Chowk, Signature Tower and Rajiv Chowk to decongest these intersections; work on which is likely to commence within a month.
Increase in office space absorption
Corporate offices, especially those belonging to the IT/ITeS sector, gravitated primarily towards Delhi NCR in Jan-Mar 2016. Of the total absorption of 5 million sq ft of office space, NCR alone bagged 31 per cent. Within the National Capital Region, Gurgaon magnetised maximum corporate occupiers, who pre-committed space in under-construction properties. Not surprisingly, DLF Cybercity was the preferred corporate destination. This sentiment directly translated into a seven per cent spike in rental values in sectors 15, 23 and 23A and is believed to have had a positive impact on the overall capital values of the locality.
In addition to the aforementioned factors, the governmental measures of allowing purchase of additional floor area ratio (FAR) and permitting plot owners to increase ground coverage, is further expected to stabilise real estate sentiments in Gurgaon.