Rise of a promising real estate sector

THE National Capital Region (NCR), which covers Delhi, Gurgaon, Noida and a host of other smaller cities, is the hub of India's real estate sector.
Today, the NCR covers an area of almost 60,000 square kilometres across the union territory of Delhi and the states of Haryana, Uttar Pradesh and Rajasthan and spread across nearly two-dozen districts.
Not surprisingly, it is the biggest and also one of the most vibrant real estate markets in India. "Real estate development in the NCR is far higher than anywhere else in India," explains Aman Gehlot, Director, Ambience P Ltd, one of the leading developers in the region. 
The three major hubs in NCR include New Delhi/Delhi, Gurgaon and Noida. Besides this, there are smaller satellites including Ghaziabad, Faridabad, Rohtak, Sonepat and Panipat.
NCR also attracts the maximum investment in India - whether in terms of infrastructure development, real estate segment, manufacturing and services, or healthcare and education.
It has one of the finest metro systems in the country, the Delhi Metro, which is expanding rapidly covering both Gurgaon and Noida. 
Gehlot points out that the surge in demand for real estate saw a lot of new entrants in the segment in recent years. "Supplies increased drastically, but demand was pretty stable," he says. "You had a mismatch and over the past few years there has been a huge inventory of unsold stock in Delhi-NCR."
According to Gehlot, one of the primary reasons the Indian government introduced the landmark Real Estate (Regulation and Development) Act (RERA) was to regulate the Delhi-NCR market. "Investors have gone off the market, but end-users are very much there," he adds.
About two to three years ago, investors would pay an initial amount adding up to 15 to 20 per cent of the total cost of an apartment and buy it during the pre-launch phase. Later, once the construction began, they would sell it at a premium and exit the project.
With RERA in force, most of the investors have disappeared from the market. "Things do take time to settle down, but they will smoothen over the coming months," says Gehlot.
Many of the satellite cities surrounding Delhi have also realised the need to first put up infrastructure and then encourage real estate development. "They have realised the importance of connectivity for the development of satellite cities, which also need to have the necessary infrastructure in place," he adds.
Ambience is predominantly active in Delhi-NCR. Set up in 1986 by Raj Singh Gehlot, who is the Chairman, Managing Director and a chartered accountant, it took up redevelopment projects in south Delhi. "We still do it and buy small plots in tiny south Delhi colonies," says Aman Gehlot, his son. "We then redevelop it, add floors and sell it in the market."
The group shot into prominence in the early 1990s, after it began procuring land on the Delhi-Gurgaon border. The first development took place in 1999 and the group established the Ambience Mall, which is one of Asia's largest malls with an area of nearly 1.8 million square feet.
Since then, it has been an impressive journey for the group, taking up residential, office, retailing and hotel projects. "Our portfolio includes two million square feet of office space, two malls with a combined size of 2.9 million square feet and two hotels with a total of 900 rooms," says Gehlot.
The company owns the malls and rents out space; total occupancy is more than 95 per cent, he adds. The company has several other residential projects that are being developed across Delhi, Gurgaon and Noida.
It has two ongoing residential projects in Gurgaon, which are in the upper luxury segment. It includes Ambience Creacions, a gated condominium that sprawls across 18 acres.
The group also owns the Leela Ambience Gurgaon Hotel & Residence and the Leela Ambience Convention Hotel in Delhi. The company has also forayed to Udaipur, where it is developing a golf course-cum-resort. "Construction work has already started there and we expect the golf course to be in operation within a year," says Gehlot. "We will probably develop a five-star hotel there later on."
Though it has a diversified portfolio spanning various segments of the real estate and hospitality sectors, the group has not been dependent on external funding from private equity funds or international investors.
"The real estate industry is becoming more transparent," explains Gehlot. "In the past, some buyers were expecting abnormal returns. But this will not happen in the future."