Gurugram’s commercial space caters to real occupier demand

Created on 13.03.2019 14:58:26
Gurugram’s commercial space caters to real occupier demand

Commercial real estate in the Millennium City of Gurugram is now entering a new phase, even as the industry continues to struggle to maintain a healthy supply against the high demand for quality spaces, realtors in the region said. And there are factors driving the trend.

“Gurugram has always been as one of the most preferred commercial destinations for buyers and investors. Ease of connectivity and growth in infrastructure has led to new hotspots. Also, progressive policies like the REITs policy has further made it more market-friendly,” Pankaj Bansal, director of M3M Group, says.

“Owing to the increasing MNCs and start-ups, and the consequent demand from them, the city’s peripheral and secondary commercial markets will continue to thrive,” Bansal says.

Market experts corroborate the trend. Colliers International says Gurugram registered gross office space absorption of 5.4 million sq feet (5,00,750 sq metres) in the fourth quarter of 2018, an increase of 19.8% compared to 2017. The micromarket of the Cyber City emerged as the most preferred location, constituting 21.7% of overall leasing activity, followed by Golf Course Extension Road (GCER), and Golf Course Road — at 15.8% and 12.1%, respectively.

Demand for quality space: Occupiers are now looking to take up quality space in one of the emerging markets like Golf Course Road and Golf Course Road Extension, Southern Peripheral Expressway (SPR), National Highway 8, and parts of Sohna Road. Expensive central regions are already occupied.

The regions now offer all kinds of commercial spaces. Both Grade A and Grade B category of commercial spaces are available. Sectors along NH-8, DLF Cyber City, and the phases of Udyog Vihar continue to offer quality, ready-tooccupy commercial spaces on rent.

These are the areas commanding the maximum demand. Newly developed DLF phases, Golf Course Road Extension, parts of Sohna, and New Gurgaon have the latest supply and are available on sale or rent.

Developers have a taken a note of this trend. The focus is now on delivering quality spaces even in the peripheral zones.

“Market is gradually moving to Grade A properties across Gurugram. Development firms are aware that commercial projects are not just about building a property. It is now about after-delivery services and amenities too. And tenants are asking for these,” Pankaj Rathi, head of corporate leasing at Vatika Limited, said. Vatika plans to deliver nearly 2 million sq ft in the city in the next 6-12 months.

Amir Husain, president (sales and marketing) of Orris Infrastructure Pvt Ltd, says: “There is high demand for ready properties but there is limited supply in the city as of now. The supply will moderately increase by end of the year.”

IMPACT ON PRICING

High demand for quality properties has impacted pricing, especially rentals. Both office and retail rentals have gradually firmed up in the past two years, Husain of Orris Group says. It is likely that 2019 will see yet another moderate rise in rates. “While rents are high in central areas, peripheral areas are also seeing an upward movement,” Husain said.

Colliers data for 2018 shows that average rents in Gurugram increased by 0.9%, compared to 2017.

While rates have been firming up, shops and retail real estate is doing well in comparison to offices.

“High street retail is in great demand against established malls, as development firms do not want to incur the high maintenance cost at this point,” Hussain said.

However, offices will continue to register steady growth due to new areas and new projects.

 

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