Slump fails to deter developers

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A volatile economy, grim job scenario and delayed projects notwithstanding, existing as well as emerging players continue to come up with ambitious residential and commercial ventures in Gurgaon

Forget the past, ignore the present and focus on the future. This seems to be the latest mantra of the real-estate developers in Gurgaon and other adjoining areas falling in the national capital region (NCR).

Hence, despite the country’s economy being on a roller-coaster ride, job market showing signs of flagging and home-buyers/investors crying hoarse over the inordinate delays in the completion of housing as well as commercial projects, scores of new property ventures are being launched in this area.

With lakhs of ready-to-move-in homes and shops/offices lying unsold across the country, how the real-estate sector will sustain the test of time seems to be a pertinent question. But those in the business seem to be ignoring this question.

Though the property prices have started softening a bit and the downslide may persist for some more time, a sort of stagnation seems to have set in the real-estate scene here of late.

However, the slump in the property market has apparently failed to dampen the spirits of the builders, or so it seems at least as of now. In fact, old as well as new players in the property market are devising new ways and means to attract buyers who are not too forthcoming in finalising the deals in view of the prevailing situation.

According to CBRE’s latest report on the residential sector, ‘India Residential Market View H1 2013’, the residential market of Delhi witnessed stagnancy — concentrated in both the mid-end/high-end as well as premium housing projects. Capital values across most micro-markets of Delhi witnessed a decline owing to restrained demand levels, besides a cautious buyer sentiment. “But while the prevalent market sentiment was one of caution, marginal price appreciation was witnessed in specific projects in Gurgaon on account of their relative affordability, developer profile and location”, the report stated.

Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd. said, “The NCR’s residential sector has witnessed lower levels of activity primarily due to inflated prices. Going forward this will continue to dampen demand levels, particularly in the premium markets of Delhi and Gurgaon. Though the market is expected to witness developer focus on clearing existing inventory levels, launches by prominent developers are expected during the second half of the year – primarily in Gurgaon. ”

What sounds even more curious is that rather than exploiting the vast potential of the massive middle-class, many builders are focusing on the affluent denizens by launching premium and kuxury projects.

According to CBRE report, too, the developer focus in the first half of 2013 has remained largely upon luxury housing, attracted by the higher returns offered by this niche segment. There was supply addition in the mid-end/high-end segment as well, but mostly along the Dwarka Expressway and the New Gurgaon area. Across most of these locations, developers continued to offer incentives to boost sales. For instance, DLF has recently hired Leighton Welspun Contractors, part of the Leighton Asia, India and Offshore Group, for its super-luxury residential venture “The Camellias” valued at $250 million.

The Camellias is located on the Golf Drive at DLF-5, Gurgaon, and is flanked by Arnold Palmer-designed golf course. It is a much-awaited next-generation residential project following the delivery of super-luxury residential complexes — “The Aralias” and “The Magnolias”.

The Camellias will occupy a site area of approximately 16.154 acres and a tentative built up area of approx 4.5 million sq ft. The project includes the building of nine tower blocks ranging from Ground+18 and Ground+38 floors with three continuous basement levels, which together will house 429 apartments, including 14 penthouses.

“In line with its futuristic vision, DLF is strategically enhancing its project-delivery capabilities by associating with channel partners having an internationally proven track record,” asserts Ravi Kachru, CMD, DLF Projects.

Another real-estate major, Chintels India Ltd, is in the process of developing over 600 acres of self-owned prime land in Delhi and NCR. Located across five premium sectors of Gurgaon, the land acquired by the company over the past decade or so is now being developed into luxury apartments, villas, townships and corporate parks etc.

The group is at present developing exclusive real estate areas named Chintels Metropolis and Chintels Cosmopolis.

Spread across 600 acres of self-owned land in Sectors 106, 108, 109, 114 and 115 of New Gurgaon and adjoining parts of Delhi, the development will be part of Chintels Cosmopolis and Chintels Metropolis located along the Dwarka Expressway.

Prashant Solomon, Managing Director, Chintels India Ltd and member of the governing council of CREDAI-NCR, maintains that the group has planned its construction activity in a phased manner till 2015-16, in line with the construction of the 18-km-long Dwarka Expressway connecting Dwarka (Delhi) and Delhi-Gurgaon Expressway (NH-8).

“The Dwarka Expressway, with its close proximity to the IGI Airport, Delhi Aerocity and the upcoming Diplomatic Enclave, is expected to follow the same growth curve as premium Gurgaon locations like Golf Course Road,” he points out and hopes that the Dwarka Expressway gets completed in time.

Manish Agarwal, MD, Satya Group, observes that investing in real-estate in Gurgaon has been not lost its appeal. “Gurgaon has been a popular destination for investors from India and abroad. The realty market here will grow over the next few months as the fall in rupee value will bring in more NRI investors. Moreover, other factors such as the provision of Metro and Rapid Metro rail links, the emergence of Dwarka Expressway and Gurgaon-Faridabad Expressway, have also sown the seeds of a robust investment scenario in the city and nearby locations,” he notes.

Tackle infrastructure woes

Factors like economic slowdown, inflation and steep rise in the prices of raw-material etc., have cast a shadow on the demand in the real estate sector in general and Gurgaon is also not an exception although Gurgaon properties commands a different type of demand and investors. Apart from the core issues of law and order and transportation which need immediate attention, development of proper infrastructure is also very necessary for sustainable growth of this region.

Gurgaon was envisaged to be a world-class model city with international standards of roads and other civic amenities but it wasn’t backed up with proper implementation as a result of which the city is lacking major infrastructure. Though the slump is small and could be consoled to be of transient phenomenon but the problem of poor infrastructure needs immediate resolution with proper implementation according to the master plan.

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