Led by reports that Noida is by far the most affordable location in and around Delhi-NCR, Ramesh Vats was on a house hunt in the market. He found that his perception about the Noida market was by and large true, until a local agent took him to the stretch of Sector 70 to 79. Vats was surprised, as many of the properties in this region were priced above Rs one crore. Moreover, these sectors had fewer affordable properties, as compared to premium and high-end projects.
The market resembled New Gurgaon, in terms of its price points, he recalled. “However, the number of transactions in Noida’s Sectors 70-79, are way higher than those in Gurgaon or New Gurgaon. Even the secondary market transactions, are quite healthy, over here. More importantly, the prices in this stretch have been firm, despite the overall slowdown in economy and some correction in other neighbouring markets,” says Vats.
Any prospective buyer in Noida, who is not constrained by budget, would be tempted to buy an apartment in Sectors 70-79. Most of the projects that have come up in the last six to seven years, belong to the premium category, with ultra-modern facilities. Moreover, among the newly-developed locations, habitation has been faster in this region.
The reason behind the premium pricing
This raises several questions: What is driving the markets in these sectors? Why are most of the new launches in the premium category? Will these sectors merely add to the existing inventory pile-up?
Developers attribute the high price of properties in the stretch, to the high cost of land. Analysts feel that due to its strategic location and the resultant faster absorption of premium homes, the developers have been encouraged to launch more upscale projects. However, the demand for better infrastructure facilities, will rise, once all the projects are delivered, they maintain.
Nikhil Hawelia, managing director of the Hawelia Group points out that the real estate sector is presently witnessing a slowdown. Nevertheless, the major portion of the demand – in the affordable category – is still alive.
The price of land in sector 70 to 79 of Noida is high, which makes these sectors costlier for the end-user. Flats in this region are ranging from Rs 60 lakh to Rs 1.50 crore, which is hardly a part of the current demand, he elaborates.
“The surplus supply in these sectors will be consumed, when the confidence of the upper-middle class buyers in the economy returns. As far as infrastructure is concerned, Noida Authority has taken many initiatives and already put in place the infrastructure for power, water, roads, sewerage, etc.,” he adds. However, when the demand picks up, certain infrastructure bottlenecks will need to be addressed urgently, he says.
Vineet Relia, managing director of SARE Homes, argues that Noida’s Sectors 70-79 are not the only markets to witness supply surplus. According to him, as multiple projects were launched in earlier years, and off-take of flats was slow due to the nationwide real estate slowdown, a surplus of housing units was but natural. “With connectivity and infrastructure issues also in the picture, it may take some time, before these issues are addressed to the satisfaction of buyers,” he adds.
Nevertheless, end-users and investors seem to be confident about the premium segment’s long-term growth and appreciation in these sectors. Most of the new launches in the premium category are in the price range of above Rs 6,000 per sq ft, which is quite attractive, from the standpoint of average property prices in Noida. Average rental values, at Rs 12 per sq ft, is also among the best in Delhi-NCR.
(The writer is CEO, Track2Realty)