Gurugrams residential property market on restoration mode
Over the past two years, the residential real estate markets in India have been passive. In Gurgaon, until the middle of 2016, the city witnessed subdued transaction activity and restricted new supply, with the demonetization drive further impacting the market. Cautious buyer sentiment, coupled with high levels of unsold inventory, resulted in a slowdown in construction activity and sales.
While there were a few projects in the third quarter of last year, the focus of most developers continued to be on offloading existing inventory, completing their ongoing projects and deferring new project launches. Ambiguity around the implementation of the Real Estate (Regulation & Development) Act (RERA) during the first half of the year resulted in transaction activity remaining low.
On the flip side, the office market continued to see robust demand. During the April-to-June period this year, Delhi NCR witnessed close to 2 million square feet of office space absorption. A majority of this take-up was recorded in the Gurgaon micro-market. Due to sustained occupier interest, Golf Course Road, DLF Cyber City and NH8 contributed to almost 50% of leasing activity here. IT and SEZ spaces were the preferred options by occupiers.
This positive traction in the office market, improving clarity around RERA, coupled with the effects of the demonetization drive dissipating, are resulting in transaction activity in Gurgaon’s residential segment witnessing an uptick in recent months. According to a research, Gurgaon’s dominance as a corporate hub, availability of quality residential options, continuously improving infrastructure and connectivity to Delhi as well as expansion of civic amenities in and around NH8, Golf Course Road and Dwarka Expressway are providing an impetus to the growth of the real estate market. It is also helping to attract significant investments into the segment. Institutional investors continue to remain bullish on the market thanks to the commercial office segment being in overdrive and emerging areas of Gurgaon offering excellent residential development opportunities.
Most of the demand and supply for residential property has been concentrated in the mid-end to high-end segments. This is indicative of a revival in the city’s housing market. For an end-user looking to invest in the market, the rapid infrastructure development has helped to expand the market for residential options. In the months ahead, we expect housing activity to further improve, albeit slowly. Demand would be concentrated in the high-end/mid-end segments and primarily in the upcoming micro-markets of the city including the Southern Periphery Road (Sectors 68-74), New Gurgaon (Sectors 78-85), sectors near Manesar (Sectors 86-95) and the Dwarka Expressway (Sectors 88-115).
With a continuously growing population, a burgeoning office market, more affordable prices than two years ago and lower interest rates, the long-term demand dynamics for Gurgaon’s housing segment continue to be strong.