NCR's property market, which is currently witnessing a setback, is all set to regain its lost momentum with the revival in economy. Government is leaving no stone unturned to capitalize on the inherent capabilities of the real estateand infrastructure sector to drive growth and to deliver to its citizens.
In this regard, the private public partnership (PPP) model is increasingly being supported by the government to boost the infrastructural activities in NCR. This cumulative growth strategy involving contributions from public and private sector are expected to revamp the city's environs.
The impact of the subdued economic sentiment and the rising inflation rate on the realty market and the attractiveness of a city's business environment can largely be gauged by evaluating the health of commercial realty in that city. The popularity of NCR as an investment destination can be determined by emergence of Connaught Place as the fourth costliest commercial office market inthe world. Rental values in central business district (CBD) rose by over 20 per cent in one year primarily due to lack of availability of quality space, no new supply while prevailing high demand. Commercial activity apart from Delhi CBD is mainly concentrated in the prominent locations of Gurgaon and Noida. Gurgaon enjoys precedence as a choice of business destination above cheaper market of Noida.
The total supply of Grade A commercial spaces in NCR last year was approximately 5.5 million square feet (msf) while supply was recorded at 1.28 msf in the first quarter of 2013. Though the vacancy levels have increased to 24.3 per cent, there is an increase in the average rental values by 8-10 per cent. Rental values are expected to remain stable this year due to increased vacancy.
The new and upcoming growth corridors along Gurgaon and Noida like Yamuna Expressway, Noida Expressway, Dwarka Expressway have recorded tremendous increase in the residential activity in the past few months and will continue to drive the residential market activity.
Faridabad - Noida - Gurgaon (FNG) Expressway, Southern Peripheral Road and Kundli- Manesar-Palwal Expressway are other major corridors that are witnessing prominent residential developments and their popularity is likely to accelerate with time. Amenities, travel time to commercial districts, connectivity to various parts of the city and quality of public transport and infrastructure are decisive factors affecting the capital value of a residential realty market. The residential property markets of South-East Delhi, South-Central Delhi and Gurgaon have witnessed capital appreciation in the range of 14 per cent to 29 per cent in a year. Rent is mostly stable across all markets as compared to the last quarter. Though the residential sector has witnessed a cautious buyer sentiment in the last year, the situation is expected to improve this year with suburban markets seeing good activity.
The focus on affordable housing and the impetus provided to the real estate sector in the recent Budget will translate into opportunities for the residential market. Delhi Development Authority (DDA) has been shouldered the responsibility of building 65,000 affordable housing units in Delhi in the next four years.
Overview of retail realty sector states that no new supply has come up during the first quarter of 2013 and the total mall supply last year was approximately 475,000 sf. Thus, though the market activity has been subdued in the recent past, with the revival in global economy on the cards, the level of activity in the sector is expected to normalise soon.
Due to the continuation in power of government and existing co-operation between Delhi and neighbouring states, execution long term commitments and materialization of proposed programmes and policies is visible.
(By Manish Aggarwal, Executive Director, Cushman & Wakefield)
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