The Haryana government’s law reserving 75% of private sector jobs with monthly pay of up to Rs. 50,000 for people of the state will impact Gurgaon’s real estate sector and accelerate the trend of companies shifting to Noida due to high costs, industry experts said.
The law will affect both office space and residential property in the Gurgaon market, which had started showing signs of recovery after being hit by the Covid-19 pandemic, according to real estate developers and international property consultants.
Noida had taken over Gurgaon in terms of share of office space leasing in the National Capital Region in the past few months and is set to gain further following the move by the Haryana government.
“Many cities in India flourished due to highly talented and hard-working immigrants. The increasing trend of having reservations for domicile workers in private organizations can seriously impact residential and commercial sector real estate growth in many cities of India,” said Anuranjan Mohnot, managing director of Lumos Alternate Investment Advisors.
“Though the judiciary will finally decide on constitutionality of such legislation, such proposals may seriously dent ease of doing business in India. It can impact foreign direct investments in sectors like IT and also the government’s own policies of ‘one nation, one market’ get questioned,” Mohnot added.
Office space leasing in the NCR was severely affected by the Covid-19-induced lockdown and fell to a net 3.27 million square feet in 2020 from 10.82 million sq. t. in 2019, according to a report by property consultant JLL.
Noida continued to lead the recovery in office space leasing in the NCR with a 64% share in the last quarter of 2020.
“Companies have already started talking about moving to Noida as forcibly hiring locals will impact the business. Once companies start moving, office space leasing will be directly impacted. It will also impact warehousing, which is largely based out of Gurgaon and nearby areas of Haryana,” said an international property consultant, requesting anonymity.
The Haryana State Employment of Local Candidates Act, 2020, applies to private companies, societies, trusts and partnership firms.
“The law will pose a challenge to recruitment agencies who are hiring entry-level blue-collar staff. Gurgaon was attractive for MNCs because it offered a good talent pool. Now, if companies start moving, the impact on real estate will be direct,” said Anckur Srivasttava, chairman of real estate advisory firm GenReal Property Advisers.
New supply of office space and competitive rents are driving occupier demand in Noida. On an annual basis, office space consumption in Noida remained largely at par with 2019 levels.
According to a report by Knight Frank, Noida recorded gross office leasing of 1.1 million sq. ft. in the first half of 2020.
Synopsis
The law will affect both office space and residential property in the Gurgaon market, which had started showing signs of recovery after being hit by the Covid-19 pandemic, according to real estate developers and international property consultants.
Source: Economictimes.Indiatimes.com