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Gurgaon & Faridabad Rental Markets Stay Resilient Post Demonetisation

While the Centre's demonetisation initiative in November 2016 sent shockwaves through India's residential real estate markets, the rental segments in Gurgaon and Faridabad demonstrated remarkable stability, offering a silver lining for property owners and investors in these two cities. As prospective buyers chose to sit on the fence waiting for a potential correction in capital values the tenant population in both cities continued to grow, keeping rental demand firm and upward. Gurgaon, in particular, emerged as one of the more stable property markets within the NCR during the October December 2016 quarter. Positive infrastructure momentum including accelerated progress on the Kundli Manesar Palwal (KMP) Expressway and Dwarka Expressway had already been restoring buyer confidence in the city's newer sectors. However, with purchase decisions being deferred post demonetisation, the rental market absorbed much of the demand that would otherwise have translated into property transactions. Faridabad's residential sales market also softened, with average weighted property prices declining for the third consecutive quarter. Yet, as in Gurgaon, the rental segment stayed resilient. On an annual basis, rental values across Gurgaon and Faridabad recorded average growth of 5% and 3% respectively , year-on-year. Analysis of Gurgaon's micro-markets revealed that nearly 90% of all localities either maintained or improved their rental rates during this period. Below is a detailed look at the five localities that delivered the strongest year-on-year rental growth across both cities in Q4 2016. Rental Performance Summary Locality City Monthly Rent (2 BHK) Monthly Rent (3 BHK) YoY Change Sector 58 Gurgaon ₹27,000 ₹32,000 ₹32,000 ₹34,000 12% DLF City Phase V Gurgaon ₹25,000 ₹29,500 ₹28,500 ₹32,000 9% Sector 71 Gurgaon ₹16,000 ₹17,000 ₹19,000 ₹20,000 8% Sector 78 Faridabad ₹6,000 ₹7,000 ₹9,000 ₹10,000 7% Sector 87 Faridabad ₹7,000 ₹8,000 ₹9,000 ₹10,000 7% 1. Sector 58, Gurgaon 12% YoY Rental Growth Sector 58 topped the rental growth chart for Gurgaon with a remarkable 12% year-on-year increase in rental values during Q4 2016. A key driver of this performance was the locality's close proximity to Golf Course Extension Road, one of Gurgaon's most commercially significant corridors. According to Gautam Adhikari of Adhikari Estates, Sector 58 stands out from many other developing sectors in Gurgaon due to its effective public transport options and smooth road connectivity. The sector's geography gives it a unique advantage it has direct access to nearly half of Gurgaon's corporate hubs, which continuously draws working professionals to the area as tenants. The locality is also well-served in terms of healthcare and banking facilities. Multispecialty hospitals including Alchemist Hospital and Fortis Healthworld are situated nearby, while banking services from State Bank of India, Bank of Maharashtra, and Oriental Bank of Commerce are conveniently accessible within the vicinity. 2. DLF City Phase V, Gurgaon 9% YoY Rental Growth DLF City Phase V recorded a solid 9% annual increase in rental values, cementing its reputation as one of Gurgaon's most favoured residential destinations for corporate tenants. The locality's sustained appeal is closely tied to its position at the centre of Gurgaon's corporate ecosystem it is surrounded by a dense concentration of multinational offices and business parks. Despite the presence of narrow internal roads that occasionally contribute to traffic congestion, the area's connectivity via National Highway 8 and the Rapid Metro network effectively offset these concerns. Young working professionals in particular continue to prefer this pocket for its vibrant social environment the famous Galleria Market is located in the neighbourhood, as are popular shopping destinations including South Point Mall, Sahara Mall, and MGF Mega Mall. 3. Sector 71, Gurgaon 8% YoY Rental Growth Sector 71 benefitted significantly from one of Gurgaon's most important infrastructure milestones of 2016 the opening of the Southern Peripheral Road (SPR) to traffic in September of that year. The SPR serves as a vital link between Faridabad Gurgaon Road, Golf Course Extension Road, and the Delhi Gurgaon Expressway, and its operationalisation had an immediate and positive impact on rental demand in several neighbouring residential pockets, with Sector 71 being the most notable beneficiary recording an 8% rise in rents year-on-year. Adhikari noted that Sector 71 holds particular appeal for tenants due to its excellent road access to Faridabad and its short distance from the commercial establishments and retail destinations along Sohna Road. The sector also enjoys connectivity to important nodes including Rajiv Chowk, Hero Honda Chowk, and Manesar via the Gurgaon Sohna Road a strong multi-directional accessibility profile that continues to drive tenant demand. 4. Sector 78, Faridabad 7% YoY Rental Growth In Greater Faridabad, Sector 78 emerged as one of the standout performers in the rental market during Q4 2016, posting a 7% year-on-year increase in rental values. The decision of many end-users to postpone property purchases in the wake of demonetisation redirected demand towards the rental segment, directly benefitting this locality. Sector 78's core strengths lie in its relative affordability compared to more central locations, combined with significantly lower congestion levels factors that appeal strongly to budget-conscious tenants seeking a peaceful living environment. The locality is situated close to the NH-2 Delhi Kolkata Bypass Road and is well-served by educational institutions including St. Mary's Convent School, Mother's Pride, Lingaya's Institute of Health Sciences, and Delhi Public School Greater Faridabad. On the infrastructure front, the eventual operationalisation of the KMP Expressway is expected to directly connect Sector 78 to Gurgaon, while the planned widening of the existing bypass road to six lanes promises to significantly enhance the locality's connectivity profile in the coming years. 5. Sector 87, Faridabad 7% YoY Rental Growth Sector 87 is one of Greater Faridabad's most rapidly developing localities, emerging as a promising new rental hotspot in a city where the majority of active real estate development has been shifting away from congested central areas. The sector recorded a 7% year-on-year increase in rental values during Q4 2016. A strong base of social infrastructure is the primary factor underpinning Sector 87's growing rental appeal. Several reputed schools including Modern Delhi Public School, EuroKids Greater Faridabad, and Millennium Public School are located within the locality, while healthcare needs are served by facilities such as Janak Hospital and National Hospital. The sector is surrounded by developed and established neighbouring areas including Basilva Colony, NIT 3, and Sectors 17, 19, 76, and 80, lending it a sense of maturity and stability. The area has also attracted attention from reputed real estate developers, with several of them having recently launched integrated townships and commercial complexes in and around the sector a clear vote of confidence in its long-term growth trajectory.