Return Analysis on Residential Properties of Gurgaon!!!

After clocking appreciation of 40 to 50 per cent in a period of 18 to 24 months for its investors, the residential properties at Gurgaon are now under consolidation mode. Take DLF Icon, for instance. This residential development was launched in year 2004, offering apartments at the price of Rs 2,750 per sq. ft. A couple of years down the line, property values here reached the staggering level of Rs 4,900 per sq. ft. An appreciation of 33.48 per cent over the launch price! However, in the period between 2006 and 2007, property value at this development grew at the rate of meager seven per cent, peaking at the level of Rs 5,250 per sq. ft. 

Similar is the trend at other residential properties in Gurgaon that were launched somewhere in year 2003-2004. Interestingly, the real estate developers are not surprised of the same. According to a prominent real estate developer, Indian real estate markets suffered a slowdown till year 2003, and after that an upsurge was witnessed with tremendous growth rate achieved by Indian economy. In this period, property values across the major cities of India soared to unprecedented levels. And, since the same growth rate cannot be achieved all the time, values are bound to saturate at some point of time.

He added that despite all factors, property markets have potential to deliver returns of 10-15 per cent to the real estate developers and investors. One thing that comes clear is that the real estate industry in India is maturing but not saturating. 

Gurgaon residential real estate markets are perhaps the one that actually reflects the nationwide trends. The Eros-Grand Mansion that was launched in year 2004 with its apartments priced at Rs 3,400 per sq. ft jumped to Rs 5,300 per sq. ft in year 2006, generating returns of 26 per cent a year, settled at Rs 6,300 per sq. ft in 2007, accumulating 16.67 per cent return over the property value in the preceding year. Definitely, the appreciation in value was not as high as earlier but decent enough to keep the ball rolling, from the investor point of view.