Gurgaon: The year 2017 was like a rollercoaster ride for the real estate sector in India. Due to the triple whammy of demonetization, implementation of GST (Goods And Services Tax) and RERA (Real Estate Regulatory Act 2016), there was a situation of great disorder in the realty sector. Although the ambitious initiatives and reforms are taken up by the Narendra Modi led BJP Government did bring about a change in the working system of our country which had not happened before. Like it brought about transparency in our country and did significant work to root out corruption from every part of our nation. Though it can not be denied that it affected all the contributing sectors of our country. So, it also affected the major contributor and the greatest sector of our country’s economic system, The Real Estate Sector. Although it also took transparency in this dynamic sector to new heights and induced a sense of trust and confidence among buyers and developers, it brought the growth of this sector to a slower pace during the first half of the year. Later the Benami Transaction Prohibition Act acted as a double-edged sword for the builders and developers.
Everything came to a standstill and the condition of real estate market worsened with each passing day. The first half of the year 2017 was tougher as compared to the second half. But still,l the realty sector maintained robust condition across India including the NCR (National Capital Region) Market among all other sectors. Approximately 34 million sq. ft. of leasing activity (excluding renewals and pre-commitment) was done at PAN level by November 2017. NCR (National Capital Region) shared about 18% of this, which amounts to almost 6.25 million sq. ft. It is expected that overall leasing volume will at par with that of last year in 2018 also. There is a rising demand for Grade A office space by some technology-related companies, which is followed by other companies like that of engineering, manufacturing, BFSI and co-working operators.
Another depressing fact is that GDP figures were not up to the mark from the past two to three quarters which further worsened the condition of the realty sector. Many large occupiers are still reviewing their long pending commercial real estate decisions. This review is done by them in order to attain complacency by attaining maximum benefits with lowest possible risk. The soul and heart of the Real Estate Sector, which is none other than Gurgaon, maintained its position of being the most preferred destination for corporate offices in NCR (National Capital Region) with an astounding share of about 63 percent in the overall leasing. It is predicted by the Colliers International that the leasing profile will be dominated by corporate offices of magnificent IT / ITeS companies. In fact, tenants who are in expansion mode, are also relocating and occupying large office space at promising lease terms.
Pre-commitment of large spaces picked up this year and a trend of co-working spaces was observed last year. But it is expected that due to increased trust and confidence, these tenants may commit themselves to large office spaces. This trend would have a significant impact in the Special Economic Zones that are coming up in the dynamic city, Gurgaon. Although Noida is also showing signs of improvement, it is still contributing a share of about 24 percent in overall leasing. The intriguing question that comes to everyone’s mind is that why corporates are moving out of this city? That too in a scenario when it has low rentals, which is really astonishing. But the reason has been figured out. It is due to the lack of elite A-grade buildings and lack of proper management in buildings. This elite A grade buildings bring shine to the eyes of big corporates. Proper management is the inevitable demand of everyone. So, this itself reflects the reason why corporates are shying away from the city.
A lot of expectations are there from micro markets to bring a remarkable change and contribute to the Real Estate Sector.A rising trend is predicted for rents in micro markets like Cyber City, certain parts of Udyog Vihar, NH-8 in Gurgaon, Aero City in Delhi and Sector 62 and Noida Expressway. This is because of the equilibrium in supply and demand that keep rents in check for certain locations. Rents seem to maintain a stable figure as no rise or fall can be expected in a state of equilibrium. A downward pressure on rents in Grade B buildings and peripheral micro markets is anticipated by some experts. In fact, it is predicted that premium buildings will continue to command a premium over market average rates in supply restrained locations like Cyber City and Golf Course Road. So, no major changes are expected on this front. It seems that a stable situation will be there for average trends over the short to medium term.
Many infrastructures and property related projects are in full swing. It is a win-win situation for the Real Estate Sector as myriads of changes are foreseen now. Large upcoming supply with a significant future development is assured by the positioning of the Golf Course Extension Road. Another likely development is expected from urban infrastructure. Urban Infrastructure would witness an enhanced growth with the completion of the Hero Honda Chowk and widening of NH-8 (National Highway 8). Further, micro markets are also going to improve its condition in 2018 as the ambitious plan to decongest four major junctions of NH-8 (National Highway 8) namely IFFCO Chowk, Signature Tower Chowk, Rajeev Chowk and The Hero Honda Chowk.
The work on the above-mentioned projects is going on a full swing and completion of these major infrastructural projects is expected by the first quarter of 2019. After a period of deteriorated growth in the Real Estate Sector, a positive situation gives a ray of hope to the developers, builders, buyers, and investors that 2018 will prove out to be a year in which the Real Estate Sector can get back on track and revive its previous trend of growth again.