Gurugram performing better in commercial compared to other NCR micro-markets
With more than 24% of the country’s population receiving at least one vaccination dose, the economy is also returning to normal with renewed energy. The GDP growth rate in the country improved to 1.6 per cent in Q1/2021 from 0.4 per cent in Q4/2020, demonstrating a slow but steady recovery. The real estate sector, particularly the commercial component, which can be regarded as the backbone of economic activity, has improved.
The leasing market in Delhi-NCR is expected to grow by 20-25 per cent in 2021, with the majority of activity taking place in the remaining second half of the year. Technology, BFSI, consulting, and manufacturing occupiers are expected to drive the demand. The Delhi-NCR region has more than 8 million sq ft supply pipeline, with Gurugram expected to complete half of it.
The most active micro-markets in the Delhi-NCR region have been on Golf Course Extension Road in Gurugram. About a quarter of the leasing by technology occupiers was focused on the Golf Course Extension Road micro-market. Golf Course Extension Road had an exceptional demand and supply share in H1 2021 because of good infrastructure development, connectivity, and relatively affordable rents compared to other micro markets. Gurugram outperformed several of the micro-markets in the NCR in terms of leasing activity in H1 2021, contributing 47 per cent to gross absorption.
Following the first shocks in April and May, economic activity began to pick up in June 2021, partly due to a decrease in infections and slight relaxations in lockdowns, both of which are critical for enhancing employment and income stability. It is a sign of hope that people are turning to real estate to help them stabilise their finances. Commercial real estate is proving to be a far more tempting investment option for both individual and institutional investors. Pre-rented units, for example, have entered the commercial sector, ensuring a profit for investors. Although demand hasn’t increased significantly, momentum could lead to better days for Gurugram’s commercial segment.
As the third wave approaches, the psychological scar will remain, and the market will be a little more unsure. To avoid market weariness in such conditions, the government should take a more accommodative approach based on larger cash injection, demand stimulation, and stronger growth. The Reserve Bank of India (RBI) enabled commercial real estate project loans to be extended till the beginning of commercial operations in February 2020, which was the last major piece of good news for the commercial sector. Now that the RBI has announced that the TLTRO available to NBFCs will be extended till December 2021, we are optimistic that the segment will receive enough liquidity. Till then, demand and supply are working towards the road to recovery.
