Phoenix Mills to Is Sohna the new realty hotspot? more than double its office portfolio
HUB Sohna has become popular due to its proximity to industrial clusters and business centres as well as low prices
Nestled in the foothills of Aravalli - one of the oldest range of folded mountains in India - Sohna was for long a major tourist attraction due to its lakes, hot springs, temples and many places of historical importance. Located in the southern part of Gurugram, Sohna is also popularly known as ‘South Gurugram’.
In the last few decades, Gurugram’s unprecedented economic growth has led to accelerated urbanization and rapid growth in migrant population flocking the city for employment.
Over time, the fast- paced growth in key areas such as MG Road, Udyog Vihar and Cyber City has created a ripple effect and pushed developments towards the western and southern parts of the city.
This led to the emergence of new areas such as Golf Course Road, Golf Course Extension Road, Southern Peripheral Road (SPR) and Sohna Road - leading right up to Sohna town.
With proximity to various business centres and industrial clusters, good overall accessibility, affordable prices and planned i nfrastructure upgrades, Sohna is evolving as a key real estate destination for the working population of Gurugaram and surrounding regions. Envisaging the growth potential on the basis of its strategic location, urbanization and affordable prices, Sohna Master Plan - introduced in 2012 - covers various required aspects of future developments, physical as well as social.
CONNECTIVITY & PHYSICAL INFRASTRUCTURE
Sohna is easily accessible from the key cities of NCR via an existing grid of roads:
· NH-248A: A four-lane road that connects Sohna to Gurugram via Sohna Road in the North, extending up to Alwar in the South. It also touches the Kundli-Manesar-Palwal (KMP) Expressway and NH- 8 ( now known as NH-48).
· KMP Expressway: Sohna is located close (approx. 6-8 km) to the 135-km KMP Expressway that starts fromKundli (Sonipat) andconnects Palwal (Faridabad) via Manesar (Gurugram). However, this expressway is still under development and only partially operational between Manesar and Palwal.
· Southern Peripheral Road (SPR): Soon to be completed, this 16-km long road provides seamless connectivity between Golf Course Road, Golf Course Extension Road and NH-8.
This enhanced connectivity will benefit Sohna by interlinking NH-248A to these roads.
· Northern Peripheral Road (NPR): Also known as Dwarka Expressway, this 28 km 8-lane highway connects Dwarka in Delhi to Kherki Daula in Gurugram.
Due to land acquisition issues and several litigations, the development of this road has been delayed significantly and missed several deadlines.
In June 2016, the project was acquired by National Highway Authority of India (NHAI) and renamed as NH 248-BB. Also, the authority has included the proposed Central Peripheral Road (CPR) along with the expressway, which will eventually connect Northern Peripheral Road to Southern Peripheral Road.
Rail: Gurugram railway station is the nearest to Sohna, at a distance of approx. 28 km.
Airport: Indira Gandhi International Airport (IGI) is approx. 40 km from Sohna.
Metro rail: HUDA city centre is the nearest existing metro station, located 26 km from Sohna. The Gurgaon Manesar Urban Complex Master Plan 2031 has proposed a new metro route that will pass through Golf Course Extension and SPR until Manesar.
Currently, Gurugram’s core areas along with the initial stretch of Gurugram-Sohna connecting road (from Rajiv Chowk to Badshahpur) have sufficient social infrastructure in the form of hospitals, malls, hotels, offices and several business centres. While the core vicinities within a 10 km radial distance of Sohna town are still underdeveloped, Sohna has already become an educational hub due to the presence of many prominent schools and institutions such as GD Goenka World School, Ryan International School, SCJ World School, DPS, St. Xavier’s High School and many more.
In addition, being a tourist destination, Sohna has several prominent hotels and resorts such as The Taj Gateway, Botanix Gateway, The Westin Sohna Resort and Spa, etc. With increasing influx of working population and burgeoning real estate development, Sohna’s social infrastructure is likely to improve in the future and the town will soon become self-sustaining.
REAL ESTATE DYNAMICS
Sohna’s real estate market is led by affordable and mid-segment housing. With massive demand from end-users in the low and mid-income groups, Sohna has attracted several developers including Ashiana Housing, Raheja, ILD, Ireo, Supertech, Tata Housing and many more. The region has witnessed a supply addition of around 20,000 housing units which are scheduled to be delivered in next 3 to 4 years.
Units with an average ticket size of less than INR 40 lakh constitute around 49% of the overall supply. The government’s recent schemes and initiatives have given a further impetus to the development of affordable units.
As Sohna is in a nascent stage of development, most of the projects are in the under-construction stage and likely to be delivered within 1 – 4 years. In the next 2 years, a large portion of previously-launched units is likely to be delivered.
The current average residential property prices in Sohna range between INR 4000 – 4300/ sqft. Due to the impact of recent reforms such as demonetization, RERA and GST, prices marginally corrected during the past few quarters. However, the average prices in the region have marginally risen by around 3% between Q1 2015 and Q3 2017.
With its inherent advantages including proximity to the Millennium City of Gurugram, easy accessibility to other parts of NCR, its well-knit network of existing roads and planned upgrades, scope for establishment of industrial and commercial hubs – and, most importantly, affordable real estate prices, Sohna has considerable potential to emerge as a prominent satellite town in the future. The increasing emphasis on affordable housing under the Government’s ‘Housing for All by 2022’ scheme will provide further impetus to the development of this region. MUMBAI: Phoenix Mills Ltd, which mostly builds malls, is planning to more than double its office portfolio to 3.5 million sq.ft in four years, joint managing director Shishir Shrivastava said.
The company owns around 6.5 million sq.ft retail space in seven cities, including Mumbai, Pune, Bengaluru and Chennai. Most of them are malls, built as part of mixed-use development.
It also owns around 1.5 million sq.ft of office space at Kurla in Mumbai.
“We want to expand our office portfolio to about 3.5 million sq.ft. It will take about four years to build that kind of space. The office buildings would be built in the existing mixed-use developments,” Shrivastava said in an interview.
A mixed- use development may house retail, office and residential spaces within the same project. With this, Phoenix Mills joins large developers such as Lodha Group and Oberoi Realty Ltd which are building office towers to cater to rising demand, even as the residential property market stagnates.
In the nine months ended December, the BSE-listed firm generated around 67% of its revenue from retail business while commercial office accounted just around 4%. Around 30% of its overall revenue came from its hospitality and residential segments.
The new commercial offices would be built across all its existing “retail-led mixed used developments” in Pune, Bengaluru and Chennai.
Phoenix plans to add an office tower at the commercial area at Mumbai’s Lower Parel, where it operates High Street Phoenix mall and St Regis Hotel, Shrivastava said.
He did not say how much the company will invest to build these assets, but said it would be funded mostly through internal accruals.
Demand for premium office space is crossing supply in major cities.
According to a 19 February report by brokerage firm ICICI Securities, net absorption of prime office space in 2017 across seven cities including Mumbai, Delhi-National Capital Region (NCR) and Bengaluru stood at around 24 million sq. ft against a supply of around 23.5 million sq. ft during the year.
This year, net absorption of office space is likely to touch 28 million sq. ft, the report said.
Besides, the company is also on expansion mode to ramp up its retail business. Last year, Canada Pension Plan Investment Board ( CPPIB) said it would invest around Rs1,600 crore in Island Star Mall Developers Pvt. Ltd, a unit of Phoenix Mills.
Most of the funds would be deployed before the end of this year in purchasing land to develop malls or acquiring existing retail assets.
“Our rental income in the last financial year was around Rs 770 crore. Going by the indicators in the last nine months, this year’s rental income would grow at l east by around 11-12%,” Shrivastava said.
Gurugram’s unprecedented economic growth has led to accelerated urbanization