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Invest In Gurgaon: The Best Place To Maximize Your Returns On Property!

Gurgaon, being a suburb of Delhi has become an attractive investment destination for both individual and institutional real estate investors. These investors want to invest their savings into substantial assets that can prove to be a good hedge against inflation and balance their overall investment portfolio. Ever since Gurgaon has come into prominence, it has become the darling of investors as it has offered appreciable returns to investors for the past 25 to 30 years.

 

The Gold of Real Estate

As seen on fig 1.1, investments in Gurgaon properties have even surpassed that of gold in 2011. While the investment rate fell to -20% for the BSE, investments in Gurgaon properties rose to 21% in the same year.

 

 

A city of choice – for Locals and Expats

The city captured the attention of foreign investors since 2002 when a lot of shopping malls began to set up base in the city. The positive response received by these malls coupled with the profusion of IT and ITES companies in the previous decade made this suburb the darling of domestic and foreign investors who began to invest aggressively in this suburb through direct and indirect channels.

Amongst all the upcoming cities in India, be it Bombay, Bengaluru, Pune, Vishakhapatnam, Baroda, Mathura, Patna and many more, Gurgaon has offered superior returns to investors and will continue to do so in the times to come.

 

The fig 1.2 represents five upcoming cities that are preferred by IT, ITes, KPO and BPO companies as ideal locations to set up their businesses. Gurgaon tops the chart with 30% of such companies preferring it over the rest.

 

 

 

 

 

Gurgaon: ‘The Suburb’ becomes ‘The Millennium city’

When viewed from a purely urban development perspective, Gurgaon was expected to be a neighboring town where people would buy property to live and go to work in Delhi.  But, in reality, the reverse happened as multi-national companies set up their base in Gurgaon and more number of professionals started searching for property in Gurgaon. This led to Gurgaon expanding its limits drastically over just a single decade making it one of the largest and most lucrative real markets in India.

Fig 1.3 represents the growth of residential sectors across seven major Indian cities during the first quarter of 2011. The striking aspect is the exponential growth of residential sectors in Gurgaon during the month of February, which matches up to the growth of a developed city such as Chennai.

To cash in on the popularity of Gurgaon amongst investors, developers began constructing premium residential complexes on their existing land banks to maximize their return on investment. A lot of other builders also followed suit leading to an over-supply situation in the premium luxury segment. Demand dynamics now indicate a boom in the mid-segment INR 45-50 lakh bracket as rising disposal incomes and an inherent obsession amongst Indians to buy property has led to situation where demand far outstrips supply.

Fig 1.4 represents the steady rise in the growth of colonies in Gurgaon since 1985. By 1998 the number of colonies has risen to 66 from 29. The annual growth rate being 17.8%. At this rate, it has been predicted that the number of colonies will go up to 152 by the end of 2012.

 

 


Fig 1.5 traces the landmark developments since 1965 that have made Gurgaon what it is today. From the establishment of Maruti Suzuki Automobiles in the 1980′s to General Electricals (GE) setting up their business in the 90′s, Gurgaon has evolved as an industrial hub. Moreover the rise of a string of malls, the completion of the Delhi-Gurgaon Metro (Phase-I) and the setting up of entertainment centers such as PVRs and the Kingdom of Dreams in the last decade has made Gurgaon attractive as a residential area. The Timeline also includes the upcoming developments in Gurgaon till the year 2015, such as the Personal Rapid Transportation system.

 

Gurgaon: A good investment bet for residential property

 

With the Delhi Metro extending its reach right into the heart of Gurgaon, connectivity options have improved for both residents of Delhi and Gurgaon. The development of the eight lane expressway has proved to be an added boon as it helps both passenger and commercial traffic to move freely causing less delays and thereby saving a lot of time for consumers. The following graph depicts the prevailing capital values of residential property in Gurgaon.

 

 

Fig 1.6 depicts the price trends of the various residential properties in and around Gurgaon for the year 2011. According to the graph MG Road has seen the highest price rise in comparison to other sectors, while Extended Golf Course Road has seen the least of rises.

The M.G. Road Area has the highest rates of residential property followed closely is the Golf Course Road Area, DLF Phase IV and Sushant Lok area . For cheaper options, one can explore the Sohna Road Area where property prices hover in the range of Rs. 5,000 per sq.ft. For even more economical options, buyers can explore areas around Sector-56 where they can get a lot of mid-priced options.

Fig 1.7 and 1.8 are two charts that chalk out the difference in the rise in the capital value of lower segment apartments and higher segment apartments, respectively in the year 2011. While fig 1.8 reflects a minor rise in the rates of per square ft. of higher segment apartments, fig 1.7 represents a substantial rise in the rates of per square ft. of lower segment apartments.

 

Commercial Property in Gurgaon: Expect more sales action!

With rapid urbanization, in and around the national capital, it is only natural that demand for  commercial space in Gurgaon, is  bound to escalate as small, medium  and   large  companies look to expand operations.

Not only is Gurgaon, the hub of all IT and IT-enabled companies, it has also emerged as the hub for all major automobile companies who have set up their base in Gurgaon. Even a lot of auto-ancillary units that supply components to these automobile manufacturers havefollowed suit and set up units to cater to their clients based in Gurgaon.

As seen on fig 1.9,the demand for a million square ft in the NCR region  will be more or less equal to that of metropolitan cities such as Chennai, Bengaluru and Mumbai by 2014. In fact, the total demand for apartment units in the NCR will far exceed Chennai’s and Bengaluru’s and be as high as that of Mumbai by 2014.

 

It is clear that property prices in Gurgaon are hovering at very high levels and such price levels are remarkably similar to those prevailing in the developed world. It is clear that the market for commercial real estate in Gurgaon has caught the fancy of investors from all across the globe.

The fig 1.9.1 draws our attention to the difference in the rise in property value. Commercial plots currently command an average price of Rs. 7,695 per sq. ft. and average price of commercial plots vary around Rs.21.31 crore. Office Space is little less expensive and average office prices are in the range Rs.3.67 crore. Shops tend to be even more economical offices and commercial plots and average prices of commercial shops vary in the price band of around Rs.78 lacs.

 

What attracts corporates to Gurgaon is the fact that it offers world –class office spaces to cater to the rigorous demands of transnational corporations something which other cities find it hard to match. Moreover, Gurgaon’s proximity to New Delhi and the international airport is also a factor which adds to its appeal amongst investors. Areas around Gurgaon like Dharuhera, Bawal, and Manesar are also experiencing rapid growth as a lot of giant manufacturing firms have set up base in these suburbs.

 

Conclusion

 

Most analysts  monitoring the real estate sector will suggest that real estate in Gurgaon , at present, is a bit over-heated and  prices are all set to go down as vacancy rates are going up owing to the sky-high rental  values prevailing in Gurgaon. But once price correction happens, Gurgaon is a great investment destination for real estate investors as its also become one of the commercial hub with more IT & ITes parks, proximity to India’s busiest International airports, great residential options, good road and railway connectivity and open spaces. Real Estate developers predict that Gurgaon will attract the attention of investors from all across the globe as the day is not far when it will provide world-class infrastructure at the most optimal prices.

 

About Sanjit Sharma

Sr. Online Marketing Executive with Favista Real Estate Pvt. Ltd.
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