14th January 2017 - Residential Property in Gurgaon as a choice of asset class for the medium to long term

At a time where we're still running through a down market cycle in Gurgaon, and there seems to be an abundance on the supply side of things, I thought I'd put across the table some points for those mulling on medium to long term property investment decisions and their choice of asset class for the same.

Our experience as a firm operating in Gurgaon for over twenty years now is that residential has been the choice of asset class as far as capital appreciation potential goes. Rental yield of residential assets has always been low in comparison to office assets but then the tendency over residential assets to more than make up in terms of capital appreciation is a case in point.

Gurgaon has seen phenomenal amount of residential capital appreciation perhaps unmatched by any city in the country during the last twenty years. Market leaders DLF brought the concept of residences in Gurgaon, South of Delhi as also a destination for corporates and a massive influx of fortune 500 companies to Gurgaon, which they positioned on a lease model.

Clearly, that sort of mushrooming of growth in the city will be tough to re-create by any developer or group of developers however property should still be an avenue for investors and end users to put their money into in Gurgaon for the medium to long term. Gone are the days when investors bought multiple properties with the idea of making a quick buck owing to sluggish demand and a more developed market structure.

In terms of capital appreciation potential for residential properties in Gurgaon, keep atleast a 3 year perspective for good capital growth. Stick to known developers for under construction projects. Note we're only recommending DLF Crest and Camellias as far as premium end and super premium end under construction properties go for the time being. Ready properties are safe but bear in mind age of construction as one of the parameters when considering an apartment complex as also the profile of owners in the complex by and large. And then ofcourse one cannot but emphasise the importance of location try and stick within a 6 km radius of CBD properties. Prime properties we forecast will continue do well in the medium run. As far as ready developments in the 2000 3500 sq. ft. range go Park Place, Belaire, Palm Springs are shortlisted to make the cut in premium end complexes. A special mention for World Spa as well. Lot of sellers in the market now, but I do see that trend changing as the market picks up. Magnolias has been a micromarket in the super premium segment and is forecasted to have good growth as well on a 3-5 year perspective.

In terms of other pick-ups I would shortlist IREO Grand Arch on the golf course extension road. Note golf course extension road is a 5 year story still bear in mind in our opinion but should have good growth owing to connectivity to the golf course road, sohna road and southern periphery road - NH8. As far as sectors close to Manesar go I still believe they are very long term owing to infrastructure upheaval and connectivity being long-drawn, I would be cautious and wait and watch.





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