The making of a truly global city
The Economic Times,ET Realty-New Delhi
22nd February, 2008
With nurturing infrastructure projects and potential to transform, Gurgaon is it all set to be a global city
It was just some time back, premium properties in Gurgaon clocked an appreciation of about 50% in a short period of just 18-24 months for its investors. Gurgaon had become a benchmark in the country for its capacity to generate astounding returns on investments. But market dynamics have turned the tide today.
Earlier, newly-launched premium housing projects attracted the attention of High Networth Individuals (HNIs), NRIs, corporate honchos and businessmen. Take DLF Icon, for instance. This residential project was launched in 2004, offering apartments at Rs 2,750 per sq. ft. A couple of years down the line, property values here reached the staggering level of Rs 4,900 per sq. ft. An appreciation of 33.48 per cent over the launch price!
However, markets entered consolidation mode in the period between 2006 and 2007, and the subsequent impact is pretty visible. Property value at this development rose at the rate of a meagre seven per cent, peaking at the level of Rs 5,250 per sq. ft. in 2006-07. Similar is the trend at other residential properties in Gurgaon that were launched somewhere in 2003-2004. The Eros-Grand Mansion that was launched in 2004 with its apartments priced at Rs 3,400 per sq. ft jumped to Rs 5,300 per sq. ft in 2006, generating returns of 26 per cent a year, settled at Rs 6,300 per sq. ft in 2007, 16.67 per cent return over the property value in the preceding year.
Definitely, the appreciation in value was not as high as earlier but decent enough to keep the ball rolling from the investors’ point of view. Look at Alpha Buildtech’s Gurgaon One project, which was launched in 2004. This also managed to clock an impressive appreciation of about 10 per cent in 2006-07. The group had sold all its 240 apartments, penthouses and villas at an average launch price of Rs 2,000 per sq. ft within three months of launch. This reached Rs 3,800 per sq. ft in the next couple of years, registering an increase of some 90 per cent and then settled at an average of Rs 4,200 in 2006-07.
Similarly, residential units at DLF Royalton also managed an appreciation of 4-5 per cent in 2007 over the preceding year. According to industry sources, the units at this project launched in 2004 were selling at Rs 3,250 during the launch year and moved up to Rs 4,700 per sq. ft in 2006, marking an appreciation of about 45 per cent in two years. Currently, these values hover around Rs 4,800-Rs 5,000, inform sources.
Interestingly, real estate developers are not surprised and maintain their confidence. India’s second largest real estate developer Unitech feels that continued strong economic activity in the region should sustain the demand for quality residential products.
“Indian real estate markets suffered a slowdown till 2003, and after that an upsurge was witnessed with tremendous growth rate achieved by Indian economy. In this period, property values across major cities of India soared to unprecedented levels. Since the same growth rate cannot be achieved all the time, values are bound to saturate at some point of time,” says Abhishek Lodha of Lodha Group.
Despite all factors, he says, property markets have the potential to deliver returns of 10-15 per cent to real estate developers and investors. Meanwhile, one thing that is clear is that the real estate industry in India is maturing but not saturating. And Gurgaon’s residential real estate market is undoubtedly the one that reflects nationwide trends.
Residential real estate in Gurgaon is primarily driven by improvements in its business environment and this is why the cyber city promises a great future. The city is not only receiving a huge amount of investments from all over the world but also nurturing mega infrastructure projects that have the potential to transform it into a global city in a true sense.
As many as 52 Special Economic Zones (SEZs) are approved for Gurgaon - the highest anywhere in the country. As per official claims, these SEZs would generate over 20 lakh jobs in Gurgaon alone and thus a large number of corporate executives are likely to settle down in the city in the next few years.
What does higher-end housing bring you?
Good location Quality construction and maintenance 24-hours water supply and 100 percent power back-up Sophisticated elevators Green spaces Round-the-clock security Adequate parking spaces Healthcare centre Broadband/ Wi-Fi connectivity Other features may include swimming pool, tennis, squash court, golf-course, auditorium, gymnasium etc. AJS Ltd, a NCR based developer is developing a luxury condominium in Sector 62 of Gurgaon. The project, which is going to be launched soon, will be completed in three years.