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Gurugram a business haven for industry giants and newbies alike

Gurugram has dominated its NCR counterparts of Delhi and Noida so much so that it has captured 60% of the demand for office space in the region for five consecutive years, a report by Colliers International India, a consultancy, stated.

Notwithstanding the slowdown in the residential real estate, Gurugram has been able to attract corporate giants and IT companies despite traffic jams, overcrowding and a high cost of living.

In fact, the city has dominated its NCR counterparts of Delhi and Noida so much so that it has captured 60% of the demand for office space in the region for five consecutive years, a report by Colliers International India, a consultancy, stated.

The availability of good quality housing, retail malls, entertainment options and a large talent pool coupled with a business friendly government in Haryana is the reason corporates prefer Gurugram, say experts.

The trend is likely to continue as corporates are entering pre-commitment deals (leasing an under-construction building) and buying large floor plates in central business districts and off it. New office space lease means more employees, more demand for housing, retail and other consumables, which will translate into economic growth for the city.

“Gurugram is a unique market. It is not unidimensional. Instead, it is very secular, where corporate offices, IT companies and call centres often share space in a single building. Also, more absorption of office space means there is more demand for housing and other consumables, which translates into overall economic growth,” said Rajat Johar, head, residential services, CBRE, India.

According to the Colliers International India report of June 2018, of the entire office stock of 109 million square feet (msf) in the national capital region (NCR), Gurugram accounts for 58 msf.

The demand is primarily coming from technology, financial and manufacturing companies looking for grade A properties. Most of the firms moving to Gurugram were located in south Delhi business districts and Connaught Place, where limited supply and high price forced them to move, say experts.

Around 4 to 4.5 msf office space is leased annually in the city, indicating that demand has not tapered.

Grade A buildings are identified by parameters, including construction quality, location, elevators, power backup, floor load capacity, recreation facility, etc. Market watchers say there is a strong demand for premium office buildings in the city.

Also, firms that need large space are being more strategic with their real estate requirements by pre-committing space for future needs and optimising their real estate portfolios.

International players like Gartner, Bank of America, Lava International, Glaxo SmithKline Beecham, electronic major Samsung have bought or leased large space for their offices, according to industry sources.

“These are good buildings, near the airport and close to Delhi. Access is through the high-speed national highway 8. The Golf Course Road and rapid Metro have also helped strengthen commute options. A U-turn is being planned near the Ambience Mall, which will add to the convenience. The underpasses on the expressway have also decongested the highway and has made the going stronger for CBDs in the city,” said Vineet Anand, director, office services, NCR, Colliers.

Sanjeev Sinha, who has made large investments in the commercial real estate, says that Golf Course Extension Road, Sohna Road and NH-8 between Signature Tower and Kherki Daula are three micro-markets to watch out for in the coming years.

“The expansion of rapid Metro, availability of a large number of premium buildings, and rising rentals in CBDs are fuelling growth in these markets. The rental at Golf Course Extension Road is between Rs 45 and Rs 75 per sqft and on Sohna road, between Rs 50 and Rs 70 per sqft,” said Sinha.

Experts at CBRE, a multinational realty firm, observes that flexible workspaces are developing as a niche in their own right and several large players are operating in this space. The flexible workspaces segment started to take off in 2015 and currently, around 1 msf is managed by flexible operators, as per their data.

“We do not see the impact of co-working space on conventional office leasing, but it offers an opportunity to a developer. For the clients who look for spaces for short/medium tenure, co-working spaces are a suitable option,” said Karun Verma, who heads the rental business for DLF.

The stakeholders agree that the momentum built over the last five years is going to continue in Gurugram, as a number of infrastructure projects were completed and bigger ones like Dwarka Expressway and SPR are on the verge of completion. The proposed local bus service, Metro expansion and better intracity connectivity will ensure that Gurugram remains a hub for India’s corporates and IT companies that want proximity to Delhi but not at the cost of personal space.

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