Gurgaon cements lead in realty prices" growth

Gurgaon, 30 km south of Delhi, has emerged as the top real estate market among the hubs adjacent to major cities, giving higher returns to investors.

In 2012-13, Gurgaon saw the highest price appreciation, about 33.59 per cent. Among its peers, Whitefield (Bangalore) saw a rise of 14.68 per cent, Rajarhat (Kolkata) 24.93 per cent, Navi Mumbai (Mumbai) 7.24 per cent and Gachibowli (Hyderabad) 5.14 per cent.

However, the growth in sales in Gurgaon was not in sync with that in other promising markets.

In terms of growth in absorption of units, Whitefield was ahead of Gurgaon, recording 103.51 per cent growth in 2012-13, at 3,470 units. The growth seen in Gurgaon was 2.46 per cent (22,075 units). In terms of new launches, Whitefield overtook Gurgaon, according to data by real estate research firm PropEquity.

Gachibowli was also ahead of Gurgaon, in terms of growth in new launches. Absorption in Gachibowli increased 70.6 per cent to 766 units.

The Hyderabad realty market has started picking up again, after instances of unrest over the Telangana issue. After recording contraction, it was expected the market would turn around in a couple of years, said a person tracking the sector.

In Navi Mumbai, new launches and absorption dipped 6.72 per cent to 16,534 units and 17.36 per cent to 13,366 units, respectively, in 2012-13.

An executive at a leading realty firm said, “All these destinations came as a boon for developers and for those who wanted to own a home within their financial capabilities and near big cities or metros.”

Apart from Gurgaon, the four micromarkets Business Standard considered for this article had the same governing council as the cities or states concerned. Gurgaon has several micromarkets under it; in terms of volume, it is a much bigger market compared to, say, Whitefield, which has fast developed as an information technology (IT)-park city.

Whitefield boasts of several malls, big hotels and luxury villas and is considered a posh location in Bangalore.

Gurgaon, which started being developed as an industrial and information technology hub about 30 years ago, is bordered by Delhi and Rajasthan.

Through the past five years, realty prices in Dwarka Expressway, Gurgaon, have risen 206 per cent to Rs 7,121 a sq ft (as of March-end) from Rs 2,329 at the end of March 2009.

In New Gurgaon, prices have increased 180 per cent in five years to Rs 7,068 a sq ft, against Rs 2,528 five years ago, according to data by PropEquity.

Though property prices in south Delhi are three-six times more than those in Gurgaon, depending on the location, the gap was expected to narrow to two-three times in five years, said Sanjay Sharma, managing director, Qubrex, a real estate research and brokerage company.

Harinder Singh, managing director of Realistic Realtors, said Gurgaon had turned into a better version of south Delhi. However, Gurgaon residents depend heavily on groundwater and power backup.

Now an integral part of Bangalore, Whitefield was a village grew at a rapid scale. Established in the late 1800s as a settlement for the Eurasians of Bangalore by the Maharaja of Mysore, Whitefield remained a quaint little settlement till the late 1990s, when the information technology (IT) boom in Bangalore transformed it into an integral part of Greater Bangalore.

The settlement was three km south of the Bangalore-Madras (now Chennai) railway line. The fact that a railway station was built here led to the influx of those working at the Kolar Gold Fields, about 50 km to the east.

The Export Promotion Industrial Park at Whitefield houses many IT and IT-enabled services firms. One of the oldest establishments is Tata Elxsi, which came to Whitefield around the late 1980s. The Export Promotion Industrial Park zone houses the offices of TCS, Accenture, Wipro, GE Medical Systems, iGate Global Solutions, Dell, IBM, Intel and Mindtree, among others. The boom in residential space came at the end of the 1990s and gained scale from 2002.

“Whitefield remains one of the most prospective micromarkets in Bangalore. This micromarket has all assets classes, five-star hotels, budget hotels, high-end residential villas, a huge supply of various classes of apartments and impressive malls with huge development potential. A live metro line is the only missing link. But it is coming,” said Goutam Chakraborty, director of integrated services (India), Colliers International.

He added when it came to commercial property, Whitefield accounted for about a quarter of Bangalore’s commercial development. However, the area has been hit by water shortages, especially during the summer, with the whole region relying almost entirely on groundwater.

New Town (Rajarhat), Kolkata

Around 1997, Kolkata’s fringes saw the development of New Town, earlier known as Rajarhat. New Town, an IT and residential hub, is on the north-eastern side of Kolkata.

In the absence of any planned development, Kolkata’s real estate growth has been sporadic. Recently, extension of the metro railway triggered real estate development on the fringes of the city, escalating prices in areas such as Garia and Joka. In Garia, metro service is already functional; in Joka, it is expected to start soon. “After the metro rail, prices in Garia have jumped 30-40 per cent. Currently, residential real estate costs are Rs 2,800-3,000 per sq ft, against Rs 1,500-1,600 about three years ago. In Joka, it is about Rs 2,500 a sq ft, against Rs 1,000-1,200 a few years ago,” said Mayank Saksena, managing director (land services), Jones Lang LaSalle.

In comparison to the fringes, real estate prices in Kolkata’s plush locations stand at Rs 15,000 per sq ft, at a premium over its satellite towns. About 200 km away, the proposed airport city at Andal was expected to attract substantial investments from developers, said Saksena. Andal Aerotropolis, a first in India, lies between Asansol and Durgapur and is being developed with Singapore’s Changi Airports International. Prices in the area stand at Rs 2,600-2,700 per sq ft.

“In Kolkata, the problem in the real estate sector is the absence of master plans,” said Pradip Sureka of Sureka Group. Most areas lacked proper drainage systems, roads were narrow and water supply wasn’t well managed, he added.

One of the biggest hurdles to developing new townships in West Bengal is the Urban Land (Ceiling and Regulation) Act, 1976. According to the Act, the ceiling on vacant land in a category-A city such as Kolkata is 7.5 cottah or about 500 sq m. West Bengal is one of the few states in the country to have such legislation.

Gurgaon cements lead in realty prices" growth