Colliers Quarterly Q2 2016
GURGAON | RESIDENTIAL
August 2, 2016
Mid segment
gaining traction
Growth in number of new launches should remain
muted in coming quarters if the inventory overhang is
to be addressed. Golf Course Extension Road is
likely to witness an uptick in sales primarily in
projects near completion. Dwarka Expressway may
experience growth in sales volume if the
infrastructure improves in accordance with the recent
timelines issued by the state government.
Forecast at a glance
Demand
Increase in number of enquiries
indicates that demand will pick up in the
coming quarters; demand shall remain
skewed towards developers with proven
track record
Supply
Limited new launches likely in the short
term amidst rising concerns about
consumer activism, litigation and
Regulatory Act coming into force
Subdued growth in new launches
The second quarter of 2016 continued to see subdued
transaction volume. Most of the developers have
exercised caution in their launch strategies, as the
markets have registered a build-up of inventory due to
lower sales volume from last nine quarters. In total, 1,580
units were launched this quarter in the mid-luxury
segment. Notably, the Tata La Vida project was launched
on Dwarka Expressway in Sector 113 at a base price of
INR 8,500 per sq ft in affordable luxury segment.The
project was launched at about 20% less than the previous
launch of Tata Gateway at the same location in 2013
which was a high-end project. Ambience Group launched
2 BHK apartments in Ambience Creacions, Sector 22 at a
base price of INR 10,500 per sq ft.
Golf Course Extension Road has started gaining impetus
with the completion of a few projects. Major deliveries
include Pioneer Park and Emaar MGF Palm Drive.
Besides this, New Gurgaon micro market has started
witnessing end-user activity in both the rental and sale
segments on account of its connectivity with NH8 and
Manesar. Currently, the absorption of residential space in
this area is skewed towards the INR4,500-6,000 per sq ft
price band and rents are very low due to absence of
proper social infrastructure.
Market Trends
Capital Values
Set to remain stable in most of the micro
markets in the short term
Rental Rate
Should remain stable due to high
vacancy in prime projects and large
supply pipeline
Construction
A number of projects should see
completion in micro markets such as
Golf Course Road and New Gurgaon
Micro Markets
Capital Values
(INR Per Sq
Ft)
QOQ%
Change
YOY%
Change
Golf Course Road
11,000-36,000
0%
0%
Sushant Lok
14,500-18,000
8%
0%
DLF Phase 1
11,000-13,000
0%
0%
NH-8
10,000-18,000
-2%
0%
Sohna Road and Ext
6,500–11,000
4%
0%
Source: Colliers International India Research
Note: Above values represents indicative base selling price for
premium properties for secondary market products.
The capital values have registered a slight correction in
NH8 compared to the previous quarter. However,Sushant
Lok and Sohna Road have recorded an escalation in the
range of 4% to 8% in capital values owing to their
strategic location; an uptick in construction activity in this
area by local builders was noted.
Golf Course Road
DLF Phase I
NH-8
Q2 2018F
Q2 2017F
Q2 2016
Q2 2015
Q2 2014
Q2 2013
Q2 2012
Q2 2011
32,000
28,000
24,000
20,000
16,000
12,000
8,000
4,000
0
Q2 2010
INR per sq ft
Average Capital Value Trends
Sohna Road & Ext
Sushant Lok
Source: Colliers International India Research
Note: Dotted lines in the chart above represent forecasted values
60
Amidst heightened concerns over the delay in
possession and high price points, affordable housing is
gaining traction in the newly developed sectors across
the city. Developers are pushing hard to grab the
opportunity in the price range of INR 15 lakhs to 25 lakhs
for one and two bedroom, home and kitchen apartments.
It also allays the fear of delay in possession because
government notification for affordable housing states that
all such projects should be necessarily completed within
four years of the approval of building plans or grant of
environmental clearance, whichever is later.
In Q2 2016, the Transit Oriented Development (TOD)
Policy was approved by the district planning committee
which aims to wean off the problem of traffic congestion
by proposing a Floor Space Index (FSI) of 3.5 in the
Intense TOD Zone and FSI of 2.5 in the Transition TOD
Zone. Multi storey group housing projects adjoining the
proposed Metro links along SPR and NPR should benefit
in the long term owing to scope for redesigning and
availability of vacant land parcels. Mature and saturated
corridors such as Golf Course road will have much
lesser leeway in redesigning.
Colliers View
50
40
30
20
10
NH-8
Sushant Lok
DLF Phase I
Sohna Road & Ext
0
Golf Course Road
INR per sq ft per month
Average Rental Values
Rental values have remained stable compared to Q1
but declined by an average of 22% versus Q2 2015.
The correction in rents has been primarily seen in the
luxury segment.
Source: Colliers International India Research
Note: Rental Values in INR per sq ft per month
For more information:
Sumit Jain
National Director
Residential Services
[email protected]
Avnish Yadav
Deputy General Manager
Residential Services
[email protected]
Copyright © 2016 Colliers International.
The information contained herein has been obtained from
sources deemed reliable. While every reasonable effort has
been made to ensure its accuracy, we cannot guarantee it.
No responsibility is assumed for any inaccuracies. Readers
are encouraged to consult their professional advisors prior to
acting on any of the material contained in this report.
We expect New Gurgaon to see increased traction on
account of its good connectivity with NH-8 and
availability of number of residential projects in the midsegment and affordable category. However, social
infrastructure development will remain a challenge in
short term. Recently, the Dwarka Expressway has been
granted the National Highway status and also the
development body has decided to alter the alignment of
Sector 37C- 37D Road which will augment the
connectivity of these areas to other parts of the city
through Pataudi Road. The initial response in the newly
launched projects indicates that the market has latent
demand and smaller units are more likely to draw the
attention of buyers.
Authors:
Surabhi Arora
Amit Oberoi
Senior Associate Director
National Director
[email protected]
Parul Bhargava
Senior Analyst
[email protected]