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The NCR has seen a buoyant market with considerable
investments, both in the residential and commercial sectors. The growth of
commercial sector has been quite meteoric, when viewed in context of
property prices at the beginning and end of 2006. In the first quarter of
2006, rental values in the NCR region varied between Rs 35 to Rs 150 per
sq ft per month, with the central business district of Delhi touching the
upper rental levels in contrast to commercial grade A buildings in Gurgaon
and Noida.
Vacancy rate at this point of time was around 6% in the CBD area of Delhi,
and 9% to 12% in the suburbs. Compare this with corresponding rental
values in the last quarter 2006, which were in the range of Rs 85 to Rs
210 per sq ft per month with the vacancy rate at 3.5% in Delhi and in the
range of 4% to 7% in the suburbs.
Explaining the cause for low vacancy, Santhosh Kumar, CEO, Trammell Crow
Meghraj says: “This low level of vacancy, in spite of property prices
escalating by over 40% in Delhi and by more than 150% in the suburbs over
the last one year, is due to a number of factors.
The growth of the services sector in the NCR, which has relatively better
infrastructure, has allowed for job and wealth creation for both
businesses and residents. Because of their global reach, these services
sector companies are looking for good quality commercial space in the
region. With more and more companies setting up offices in the NCR, there
has been a significant rise in demand for commercial space in the region.”
Adds Sanjay Verma, executive MD, Cushman & Wakefield: “Absorption rose by
almost 100% to over 6.5 million from last year’s 3.2 million sq. ft, which
was a record. Delhi witnessed largescale relocations and price escalation,
primarily in South due to MCD’s demolish and sealing drive. Limited supply
and high cost of corporate office space in Delhi led to many corporate
grabbing cheaper offices in the suburban locations of Gurgaon and Noida.”
Due to the sealing drive, CBD and south micro markets saw over 100%
increase in rental and capital values over the last year. The outlook for
the commercial sector is positive and buoyant. As the Indian economy
continues to steam ahead with relatively lesser supply to handle the
growing demand, commercial property prices will head north in the near
future.
The residential sector, too, has witnessed an upward trend. With
increasing household incomes, supportive home loans, and competitive
pricing of dwelling units, residential property prices, on an average,
increased by 40% to 50%, depending on the location and development.
Prices of apartments in suburbs, for instance, rose from Rs 1,500 to Rs
3,300 per sq ft in 2006 to Rs 2,700 to Rs 7,000 per sq.ft. in 2007. Says
Anshuman Magazine, MD, CB Richard Ellis: “Growth of residential sector,
like the commercial sector, is likely to observe an upward trend, albeit
at a lower growth rate than the commercial sector. This may be primarily
attributed to high levels of supply and competition that will seek to
stabilise property prices. Moreover, the impending increase in home loan
interest rates may marginally discourage buying sentiment with the
concomitant marginal slow down in growth rate of property prices.”
However, some residential micro-markets are likely to observe high growth
rates in the coming years owing to better connectivity through Delhi
Metro, improved infrastructure, and enhanced connectivity of Delhi with
the suburbs. Faridabad is one such example, where high levels of growth
are likely to be seen in the near future.
In fact, Ghaziabad and Faridabad have emerged as the next best choice for
investors, expecting medium to short-term gains. Many established
developers have announced major residential projects in these areas and
are in various stages of construction. Overall, both commercial and
residential sectors are likely to continue the upswing in the coming
years, with the commercial sector likely to display relatively higher
growth rate than the residential sector in NCR.
by http://economictimes.indiatimes.com
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