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Residential Properties

Indian Real Estate News : Delhi NCR
Hot spot
Source: Jul 13, 2011
Delhi's eastern neighbourhood is witnessing a residential realty boom with both demand and supply zooming, making it the largest concentration of real estate activity.

Chances are that, of every 10 real estate related SMS you receive, seven or eight will be for projects coming up in Noida or its vicinity that includes Greater Noida. On the face of it, this is a clear indication that Delhi's eastern neighbourhood is witnessing a residential realty boom with both demand and supply zooming.

Not so long ago, unheralded Gurgaon became one of the hottest realty markets ever, often described as India's emerging Singapore because of its high-rise dotted skyline. Today, the mammoth scale of construction and the number of residential projects being announced and coming up in Noida and Greater Noida have turned it into the largest concentration of real estate activity. According to data from PropEquity, a real estate consultancy, Noida has a total of 146 upcoming housing projects that will offer 104,916 dwelling units spread across 158,946,000 sq ft.

The range of lifestyle residential projects is alluring. From golf course living and sports cities to man-made waterfront villas -you name it and Noida has a project to show. Want to live close to the clouds? Well, north India’s tallest structure is also coming up here.

Part of the reason for this mushrooming growth of residential projects in Noida is its proximity to both central Delhi areas such as Connaught Place and south Delhi colonies such as Sarita Vihar and New Friends Colony. Helping in no small measure are access roads from Mayur Vihar in east Delhi, the Noida toll road (DND Flyway) from south Delhi and the access from Kalindi Kunj that connects Sarita Vihar.

"Noida and Greater Noida have witnessed a rapid infrastructure development in the recent past. Today it is an industrial and service hub and thus a preferred destination of choice for end users and investors. The arrival of the Delhi Metro and the proposed international airport are added advantages of this region," said Mohit Arora, director, Supertech.

The infrastructure is not just limited to the township's connectivity to the national capital but also within. As Unitech's vice president R Nagaraju explained, road connectivity even within Noida is extremely good. "What also helps is that the entire planning of the township is under one authority."

In contrast, Gurgaon, whose pace of development outstripped all other NCR satellite towns in the 1990s and the first decade of the 21st century, is probably reaching saturation point now, especially the area around DLF Cyber City, Golf Course Road, Golf Course Extension Road and Sohna Road. Property prices in these areas in Gurgaon -not less than Rs 4,500 per sq ft-reflect a short supply of fresh housing stock.

The only area in Gurgaon where prices are lower than this rate is the upcoming Northern Peripheral Road, commonly known as the Dwarka-Gurgaon Expressway, along which a number of residential projects have been launched. However, the expressway itself would take a few years to become operational whereas in Noida, road infrastructure is already developed, making the commute between Delhi and Noida easier.

Noida's development, as in the case of other NCR towns such as Gurgaon and Surajkund in Faridabad, was triggered to a large extent by the shift in population pressure in Delhi.

"The speed of development in any area around Delhi depends on its connectivity with the capital and the travel time taken in reaching important destinations within Delhi. Since all these facilities are effectively present in Noida, with expressways providing congestion-free movement of traffic, developers have moved to these sought-after destinations and are providing housing in all price segments," points out Ashwani Prakash, executive director, Paramount Group of Companies.

What has probably helped Noida become a favoured habitat is the affordability factor when compared with prices prevalent in other NCR townships such as Surajkund and Gurgaon. A reason for this is that many of the early settlers in Noida were people working in and around central Delhi, which is primarily dominated by government departments and ministries, unlike Gurgaon where the workforce comprises people working in the private sector, mainly multinationals. That could also explain why a majority of the projects in Noida catered to the mid-income range, compared with Gurgaon, which had more of upscale and premium housing projects.

Moreover, certain policy decisions taken early on helped Gurgaon steal a march over Noida as the preferred destination for MNCs. "Earlier, in Noida, the policy used to be to give land for self-development for commercial purposes wherein the end-user and the owner were the same, against the policy in Gurgaon where leasing out to tenants was allowed. If you take the case of MNCs, they do not want to own real estate and prefer to operate on the rental model," explains Nagaraju.

However, he adds that the policy in Noida has also changed to something similar to the one prevalent in Gurgaon, resulting in MNCs gravitating towards the Uttar Pradesh township. "Earlier, only domestic companies were setting up base in Noida," says Nagaraju. This helped in changing the demographic profile, bringing in working class professionals who could live and work in the same area, rather than commute from Noida to Delhi and back.

This in turn has helped raise Noida's perception value among buyers of residential real estate and that, Nagaraju says, is the reason why some of the better developed and established areas of Noida are nearly as expensive as Gurgaon today.

That has also prompted developers such as Unitech and Supertech to venture into premium housing projects such as Burgundy and North Eye, respectively. North Eye incidentally is billed as the tallest residential building in north India. "The earlier mindset of Noida being not as upmarket as Gurgaon is slowly eroding with the launch of upper segment housing projects that are seeing good demand," says Santhosh Kumar, India CEO-Operations, Jones Lang LaSalle Meghraj, a real estate consultancy.

There is, however, growing concern that with developers-both big and small-making a beeline for Noida, the potential for an oversupply situation developing is more real than imagined. Due to the proliferation of housing projects, real estate prices have become depressed from the highs of early 2008 after which the slowdown set in. While the weighted average price in Noida in the first quarter of 2008 was hovering at Rs 4,867 per sq ft, the average price in the first quarter of this year was Rs 4,046 per sq ft.

"Over the last two years, while sales volume has grown, supply has also gone up as many developers have launched projects in Noida. The presence of so many developers has ensured that prices remain competitive. While prices have increased, they have not gone up sharply," says Nagaraju.

Kumar says the overdose of launches over the last five to six quarters has resulted in an oversupply of accommodation in Noida. "This has led to prices remaining range-bound even though good absorption levels have been recorded in this micro-market," he says. In fact, he says that the last quarter has seen a perceptible slowdown in new launches as the existing inventory is seeing large vacancy levels and a demand slowdown. "Currently, it’s the older projects that are being advertised," he remarks on the slew of SMSes that are flooding mobile phones.

That may not be such a bad deal for people looking for a house to live in.

Tag: Real estate in delhi, noida properties, property in gurgaon
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