15th July, 2023 - Property Market Brief - gurgaon Q2, 2023

Real estate markets in Gurugram over the quarter April to June saw increased office space leasing transactions. The plates were varying sizes signed from 20000 sft – 40000 sft. Also independent buildings got signed greater than 1 lac sft. Space takeups ranged from BFSI, Tech, Consulting and Manufacturing cos. Both Indian and MNC companies participated in equal measure in Gurgaon.

Residential sales maintained rates, velocity also mostly on par with the last quarter. Residential and Office rents escalated this quarter whilst some medium ticket land deals were signed.

Commercial Office and IT : Drivers for office space have been the strong show by Indian company results. On a expansion spree outside investors have sniffed gains in Indian markets. As a result the real estate footprint in Gurgaon has spread well beyond CBD and into SBD & peripheral PBD. With supply chains maturing we see warehousing and satellite offices augmenting natural organic demand side work by company clients. Core plus flex is a choice by occupiers, but locking in to a long term traditional lease has its advantages. Most deals thesedays are on bare shell basis. With higher preference by occupiers to tailor make their own offices and layouts bare shell is here to stay.

Grade A office saw deals of 20000 sft in extension, plus 50000 sft in udyog vihar to name a few. FII search for core assets and greenfield remains on track with funds targeting superlative returns over 5 years. The confidence of the investor fraternity in office space and IT space assets is proof that commercial office asset class in Gurgaon will deliver the goods on both appreciation & yield for the long term.

Residential

Residential Volumes remain buoyant, pricing is not stagnated but facing some headwinds visa vi alternative investment avenues on lower end properties. Often however end users opt to invest capital gains into prime real estate. We see top end and medium end residential on a solid footing this year alongside the recent buoyant movements in office space leasing as already mentioned above. Transactions happened at world spa, laburnum, ivy to name a few.

Residential rentals escalated again this quarter in line with inflationary movements in the region.

Forecast Q3, 2023 : July-September will see closure of pentup demand in office space deals plus new signing lease deals for both bare shell and fitted spaces. We expect healthy absorption in office space in the major submarkets of Gurgaon. Delhi rents rising will also pip up Gurgaon lease rentals with piggyback effect. Flex players will tend to ramp up centre expansion plans. We also see a proliferation of this end of the market as there's customers at every price point. Residential sales and retail leasing to continue to see velocity. Prime areas will benefit from higher disposable incomes and the likes of larger catchment audiences in every micromarket. Office rents in Grade A space to rise more than residential rentals for the next 2 quarters as our forecasts have seen clear patterns of the same in previous timeframes. More investment into commercial prime and new money in tandem to hit the markets.