Gurgaon weathers the storm
While commercial segment is yet to witness significant appreciation after economic downturn, infrastructure developments like the completion of Gurgaon Metro line bodes well for Gurgaon's real estate market. Brix Research tracks real estate values through the economic recession and recovery
Post-2008, Gurgaon's real estate market witnessed some fluctuations. Some positive drivers of this change - completion of Gurgaon Expressway, proposal for extension of Delhi Metro rail services, as well as other developments envisaged in Gurgaon Master Plan 2021 - took real estate values to their peak in April 2008. Further, these factors ensured that values were fairly stable or fell marginally when the rest of National Capital Region was reeling under the impact of economic downturn. The latter half of 2009 witnessed appreciating residential values and now, local realtors are optimistic about future movements in 2010.
Residential scenario
Residential market witnessed significant appreciation till May 2008, but after the economic downturn began waning last year, market started recovering. According to Shailendra Mehta, a local realtor, "Market started recovering after June 2009 and residential values witnessed an upward revision between Rs 300 per sq ft and Rs 400 per sq ft. While values still haven't reached the levels of April/May 2008, they are expected to cross them by March 2010"
Observing values in April 2008 and December 2009, Brix Research analysis reveals 11% drop, on an average, in apartment capital values in prime localities of Gurgaon, like DLF (Phases I-V), Sushant Lok (I-III), South City (I and II). Drop in values may be due to after effects of economic downturn - they are now being pushed upwards by a strong demand for housing in these localities.
Builder floors too, witnessed similar trends. However, local realtors say that demand for builder-floor apartments is on a decline despite introduction of a number of projects by developers like Emaar MGF, Orchid, Vipul and Unitech, post opening of their registry in 2009. This may be due to fear of closure of registry before completion of these projects, although the facilities offered by high rise apartments like water supply, power backup, etc, make them more attractive housing option.
In rental segment, apartment values saw an average drop of around 6% between April 2008 and December 2009, in prime localities of Gurgaon like DLF (Phases I-V), Sushant Lok (I-III), South City (I and II). According to Mehta, "A drop in rental values of luxury apartments was observed due to low demand. However, there is an increasing demand for economical apartments in sizes of 1,300-1,400 sq ft and their rentals will rise in the near future."
Further, according to Mehta, infrastructure development like extension of Delhi Metro line has impacted residential values in localities situated near Metro stations - plot values have witnessed appreciation in these localities. This is evident from an average rise of 3% observed in plot values in prime Gurgaon localities like DLF (Phases I-V), Sushant Lok (I-III), South City (I and II).
Commercial scenario
Gurgaon's commercial market is still recovering from the impact of economic downturn. Post-May 2008, commercial market witnessed negative trends with a halt in transactions and falling values. According to Abhishek Sawhney, a local realtor, "Commercial market is yet to see any marked improvement. After economic downturn, companies have once again started expanding and Gurgaon is among the preferred destinations. However, while demand has increased marginally, availability has doubled with a number of vacant office spaces in localities like Golf Course Road, Sohna Road, Udyog Vihar. Hence, no significant appreciation is anticipated in office space values in the next 1-2 years."
Local realtors are more optimistic about the future of retail market, especially in prime localities like MG Road, where availability is lower than demand and values are expected to witness significant appreciation upon completion of the Metro line.
"A fall of 40% in mall rental values was observed during economic downturn. Moreover, construction on a number of ongoing projects, like that of DLF's Mall of India, were halted. The situation is improving slowly and queries are coming in from companies looking to expand. There has been a 10-20% increase in mall rental values post-June 2009," says Sawhney. According to Mehta, "Local shopping complexes with low maintenance charges (Rs 3 to Rs 4 per sq ft) like Galleria in DLF Phase IV, have witnessed a greater demand than malls in neighbouring localities."
Values in Gurgaon are appreciating under the influence of rising demand, especially in residential segment. "A number of projects have been launched by developers like Vatika and Emaar MGF, in both residential and commercial segments. Localities like Sector 66, 67, 68 and 45 are developing fast and will witness significant appreciation in the near future," says Sawhney. While commercial segment is yet to witness significant appreciation after economic downturn, infrastructure development like the completion of Gurgaon Metro line bodes well for Gurgaon's real estate market.

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Courtesy:- Times Property dtd:- 06-02-2009