Should Gurgaon expect rapid gains?
While the commercial market is likely to benefit from phase I of the Rapid Metro in Gurgaon, phase II will have a positive impact on the residential sector, says Vandana RamnaniUpdated: Feb 14, 2013 15:30 IST
The privately-owned Rapid Metro Gurgaon is all set to open its stations in April this year. While the five-km first phase will cover the primarily commercial Cyber City, the recently approved seven-km second phase will connect Sikandarpur station to the densely populated sectors 55, 56 and Golf Course Road. So, how will the two connectors impact the realty market in the area? Will it be similar to what the DMRC connector had when the Delhi Gurgaon line became operational in 2010?
While the Delhi-Gurgaon corridor saw a 25% to 35% increase in property prices, the private Metro will impact commercial real estate in the area. To elaborate, if the prices in Heritage City project were around R4400 when the Metro was launched around 2006, it increased to R4800 in 2007 and R5200 in 2008 when construction was in full swing, the same project commanded a price of R8000 when the Metro between Delhi and HUDA City Centre became operational. Similarly, apartments in Beverly Park that cost R6000 at the time the Metro was launched, peaked to R6500 in 2007 and R7500 in 2008 as construction progressed. These were selling at R10,000 when the corridor became operational. The apartments in the Essel Towers project cost R4800 when the Metro was launched and increased to R6000 and R7000 during the construction period. They were trading at R9000 when operations began. Similarly, the Sahara Grace project that was available at R7000 when the Metro corridor was being constructed peaked to around R9000 when the Delhi-Gurgaon link became
Improve commercial leasing
Real estate experts say that rates in Cyber City that had remained subdued for some time now will witness increased leasing activity after the first phase of private Metro becomes operational. This provides an assurance that the second phase, too, will come up. Any infrastructure upgrade will make a significant difference to the lives of the people and corporates in Gurgaon. Companies set to move out were likely to stay back.
According to Anshuman Magazine, chairman and managing director, CBRE South Asia, a property consultancy, an upgrade in infrastructure in Gurgaon in the form of Rapid Metro will definitely make a huge difference to the realty market in the area. Existing business will now decide to stay on in Gurgaon as the biggest challenge for the area so far had been transport. Its operations will have various indirect implications, too. More investments will pour in, there will be improvement in productivity and quality of life of the workforce. The bigger impact will be felt once the Metro starts functioning.
The first phase will definitely add to the feel good factor in real estate, says Amit Raj Jain of Spaze.
Real estate prices in the area, too, will go up. What the rail system, however, cannot support is inter-city movement. The city needs another organised mode of transport that can enhance connectivity within the city and connect parts not touched by the Metro, says Shashank Jain of Ansal API.
The fact that the private Metro will be operational in April will definitely push up prices in Cyber City. The area will re-establish itself as a corporate hub. “If commercial leases were signed at R65 per sq ft a year ago, they are currently being finalised at R85 per sq ft,” says Dhruv Khanna, a broker with L J Hooker Real Estate, a multinational real estate consultant.
Interestingly, the two residential developments located close to the Cyber City will not not be affected that much in terms of prices as these are relatively old developments and there are better options available elsewhere in Gurgaon. There were also some issues regarding waterlogging in these societies.
Impact on residential market
However, the biggest impact will come from phase II of the Rapid Metro that will pass through DLF City phase 1, 4 and 5, independent houses and gated communities in sector 27, 28, 51, 52, 53, 54, 55, 56 and 57. The network is expected to cover localities such as Suncity, Central park, and Golf Course Road. “Plots in DLF Phase 1 that face the Golf Course Road will be the biggest beneficiaries. If the current price of plots in the area is R2.5 lakh per sq yard, prices will double once this connector is operational,” says Khanna.
Even the rental market in the area will benefit. Rents for a 4BHK along the stretch currently, around R1 lakh now, will increase by 30% to 40% once the connection is ready.
Boost to cooperative
Cooperative housing societies in the area will also benefit. Rents in the area have already improved. A 2BHK apartment in the area, which commanded R22000 earlier, is now around R30,000 and more. Capital
values, too, have risen from R5000 to R7000. Prices of some new group housing societies coming up along the stretch are likely once the second phase is complete.
Projects along the Gurgaon-Faridabad road will also benefit from phase II. The access to this road from Golf Course Road has improved tremendously and part of a SEZ is already operational in this area with more being planned. The ASF Insignia, Gurgaon SEZ is already operational. TCS has taken up over 4 lakh sq ft of space in the area where two towers are complete. “If a residential project were to come up in the SEZ, it will not cost anything less than R6500,” says Khanna.
Even townships along the Golf Course Extension will see prices strengthen by almost 20% in six months. Another project likely to do well is Ireo City, located at the intersection of Golf Course Road and Golf Course Extension, and spread over 700 acres of contigious land parcel. Units in the project that were earlier available for R10000 per sq ft are likely to increase to R13,000 per sq ft in less than six months - almost a 20% increase in a few months.
Arrest negative impact
The second phase will help arrest the negative impact in the Gurgaon market. If the slow market was set for a correction in prices, that might not happen as phase 1 will be operational in April and phase II has already been cleared. This new infrastructure will provide a fillip to the real estate market in Gurgaon, adds Khanna.
Some property brokers are of the view that the private Metro will not have much impact on prices in the area as appreciation had already taken place in 2010 when the Delhi-Gurgaon Metro became operational. The second phase of this Metro will, however, impact property prices in DLF Phase 3, especially block V, that is located close to the highway. A plot in DLF phase III that was available for R95000 per sq yard 30 months ago is now touching R1,50,000 per sq yard.