The incredible rise of Gurgaon’s commercial real estate

Stoked by swiftly expanding startups and multinational corporations, Gurgaon is fast emerging as the rising star of India’s commercial real estate market, but the old guard in New Delhi and Mumbai’s central business districts (CBD) is still holding strong.

In the last year, commercial rental prices in Gurgaon’s MG Road shot up by a staggering 30%—the highest in the country—according to real estate consultants Colliers International. During the same period, prices in Gurgaon’s DLF Cyber City and the institutional sectors also went up by 22% and 24%, respectively.

“Major corporates like Snapdeal, NTT Data, Zomato, Arvato, BCG Group, SAP together took around 1.17 million sq.ft which is about 66% of the total office absorption,” Colliers said in its report about Gurgaon. And except for Delhi’s Nehru Place, no other commercial area in the national capital or Mumbai found itself among the areas with the highest change in rental prices. Meanwhile, four locations in Gurgaon were listed among the top ten locations where rental rates surged.

  1. Gurgaon MG Road
  2. Gurgaon DLF Cybercity
  3. Gurgaon Institutional Sectors
  4. Grgaon Golf Course Road

Once a nondescript village on the outskirts of New Delhi, Gurgaon emerged as a satellite city to the capital in the late 1970s when Maruti Suzuki, India’s largest carmaker, set up its factory a little away from the city. Since then, a number of multinational firms, including Google and Microsoft, have set up their offices in the suburb.

Gurgaon also saw a 60% jump in the absorption of office spaces during the April-June quarter in 2015—the third highest after Mumbai and New Delhi—compared to the January-March quarter this year. Absorption in real estate parlance refers to the total occupancy of commercial properties that are sold or leased. During the quarter, Mumbai saw absorption of 2.93 million sq.ft while Delhi’s absorption was at 0.21 million sq.ft.

But rental rates in many of these upcoming cities like Gurgaon are still very low compared to New Delhi or Mumbai, which continue to command sky-high rents. Delhi’s CBD, which comprises Connaught Place, and Mumbai’s CBD, which comprises Nariman Point, Fort and Ballard Estate, were among the most expensive office locations.

India’s top 10 most expensive office locations
Area Price (Rs per sq.ft)
Delhi CBD 185-450
Bandra Kurla Complex 225-320
Mumbai CBD 200-250
Mumbai-Worli/Prabhadevi 185-225
New Delhi-Nehru Place 175-250
Mumbai-Kalina 150-200
Mumbai-Lower Parel 145-190
New Delhi-Saket 130-190
Gurgaon-MG Road 110-150
Gurgaon-Golf Course Road 100-150

“The office market recorded approximately 19 million sq.ft of office absorption in the first half of the year across major cities in India,” the report said. “With an expanding economy and the introduction of the REIT (real estate infrastructure fund) regulation, the demand for office space is increasing and so is the demand from institutional investors to acquire income yielding office property.”

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Meeting fails to find way to decongest Gurgaon toll plaza

Gurgaon, September 13
A three-hour meeting of officials of Delhi-Gurgaon Super Connectivity Ltd (DGSCL), National Highway Authority of India (NHAI), the district administration and the Gurgaon traffic police failed to yield any concrete plan to decongest the eway.
A majority of the array of solutions suggested by DGSCL failed to get consent from the other three parties.
Claiming that the widening of the toll plaza was the need of the hour, the company suggested acquisition of more land to add more lanes, but the NHAI rejected the proposal.
“The simplest way to deal with the jams and congestion is to create more lanes and we need the support of both HUDA and NHAI for that. While HUDA supported the idea, NHAI did not approve of it and suggested the alternative of staggered lanes,” revealed an official of DGSCL.

(more…)

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