The Capital’s Loss Is Gurgaon’s Gain.
Even though the recent past has posed great challenges in the real estate market, the commercial space is showing some unrelenting growth. With strong macroeconomic policy reforms infusing a fresh lease of life into the corporate ecosystem, the demand for commercial space is witnessing a significant boom. Policy reforms coupled with opening up of domestic as well as foreign capital investment channels, startups are poised to fast expanding their operations. The business niche is further being strengthened by an increasing number of multinational companies (MNCs) setting up base in the country, which directly reflects on the commercial and retails business segments. Clear signs of an imminent proactive growth pattern is seen with major IT and ITeS companies expanding their trail across Indian cities, with rapid hiring and office space expansion strategies. Commercial realty has seen an unprecedented growth in demand over the past year or so with more than 12.7 million 1 sq ft of workspace being filled out across urban cities in 2015 alone.
Gurgaon makes a steady comeback
Among metropolitans, Gurgaon has rapidly emerged as the hotspot of India’s commercial real estate sector in the past decade. With MNCs pumping in huge investments into countless startups, the recent past saw Gurgaon’s real estate prices soaring. Even though NCR is losing out to other corporate hubs such as Bangalore in the past couple of years due to stagnation in real estate prices, Gurgaon is not backing down just yet. Gurgaon is still flourishing as a corporate favorite in terms of workspace. With increasing income levels of its people, the city is home to a variety of lifestyle brands and high-end retailers. According to expert reports, Gurgaon accounted for more than 75% 2 of the overall commercial space rented in NCR in 2015.
Some of the main areas of commercial development in Gurgaon are MG road, Golf Course Road, and Golf Course Extension Road. These areas are also part of some of Gurgaon’s ultra luxurious residential properties and have witnessed a robust rise in commercial space prices in the past year. The growth of commercial infrastructure in Gurgaon has transformed the city into a major IT hub. It is attracting investors with its big profits and high returns on investments. With its proximity to other commercial cities like Delhi, Faridabad, Noida, and Ghaziabad, and seamless transport connectivity via Delhi Metro and Rapid Metro System, and Dwarka Expressway, Sohna Road and Golf Course Extension, Gurgaon is benefiting from an array of social amenities. Another reason for people investing in commercial properties in Gurgaon are the changing trends in fashion with sprawling malls and supermarkets leading the way.
Delhi’s pricy story
In the capital, where space comes at a premium, investors are holding back when it comes to buying property. Commercial property not only brings with it high maintenance costs, but also constrained spaces. Commercial development in Delhi almost seems to have come to a stagnation, given the fact that there is not much left to expand, except vertically. And with local authorities like Delhi Development Authority (DDA) holding vast areas of wasted land in the name of development, nothing seems to be moving in Delhi and other big metros.
In recent times, inventories are piling up in the capital with prices hitting stagnation, after skyrocketing in the recent past. With few takers for exorbitantly priced properties, stagnant prices, and project delays, investors are pressing the panic button. Therefore, investors have shifted focus to NCR and other suburban areas. The real estate boom of the last decade now seems to be facing a downside. Even though the residential segment seems to be the worst hit, commercial realty is still holding fort. Delhi’s southern regions as well as the Central Business District of Connaught Place have been ranked among the top 10 most expensive prime office locations in the world. However, in recent times, office and retail space in New Delhi will be available for lower prices to companies compared to Gurgaon and other places in the NCR. The Delhi government has been faced with concerns of developing vast vacant land parcels. Besides high rentals, other infrastructural issues such as parking space and poor traffic movement have also plagued the capital.
However, Delhi and other urban cities are experiencing a different kind of commercial development. A large number of business centers and co-working spaces, which have existed for over a decade now are pitching in to solve the space problem. With open-office formats and uniquely advanced infrastructure, these co-working spaces are changing the phase of commercial realty in Delhi. Startups and small businesses acquire space as per their current needs without actually putting in large investment on buying properties in anticipation of future growth.
Both Delhi and Gurgaon are major developmental primes when it comes to commercial realty. With great returns, any investment in the region is sure to earn around 10% to 12% from the first day of investment, even if the property is under construction. With the demand for both office space and retail set to increase, investment in commercial real estate, especially in Gurgaon, is definitely expected to bring in great profits.