The situation developing in Noida might force buyers to `wait and watch' before they decide to invest in this city
The New Okhla Industrial Development Area(NOIDA) is located in Gautam Budh Nagar district of Uttar Pradesh and was created under the UP Industrial Area Development Act. It is a well planned city and is located close to Ghaziabad and Delhi. It is bounded by the NH-24 bypass in the north, in the east by river Hindon, in the west by river Yamuna and is the meeting point of the rivers Yamuna and Hindon in the south. The area is easily connected to Delhi and Gurgaon via the Metro.
Lately, Noida has witnessed exponential real estate growth on account of IT/ITES sector growth in the area.
A number of software and BPO companies like Adobe System, TCS, ATC Labs, Interra, Global Logic CSC, HCL, etc, have set up their base in the city. It also has software technology parks and Special Economic Zones.
Only sectors 44-50, 51, 52, 62, 75, 76, 77, 78 and those along the Noida Expressway are considered for new residential development.
Ongoing projects Players such as the Amrapali Group, Logix Group, Jaypee Group, Omaxe Ltd, 3C, Paras Buildtech India have forayed into the area. Popular formats prevalent in the area are 2BHK and 3BHK and have been designed as per the requirements of the middle income group (Source: KPMG's analysis). Some developers are also focusing on constructing 4BHK residential apartments.
The projects consitute a mix of highand low-rise buildings. The sectors 45-50 consitute group housing projects, while sector 137 and 150 typically have integrated township projects. (Source: KPMG's analysis) Lately, there has been an upsurge in affordable housing projects in Noida, with an increase in the floor space index (FSI) to 2.5x from 1.5-1.75 x earK lier (Source: Noida Authority).
The locations around Noida command capital values in the range of R3,000 per sq ft to R6,500 per sq ft (Knight Frank and KPMG Analysis).
During the financial debacle in 2009, the demand for housing decreased.
Rental values vary as per the location. On an average, a 2BHK apartment in sectors 44-50 command a monthly rental value in the range of R7 per sq ft to R12 per sq ft, while the Noida Expressway sectors command a rental value of R5 per sq ft to R9 , per sq ft (Source: KPMG's analysis). The road ahead Silicon City by Amrapali Group, Stylome by Prateek Group, Lotus Zing by 3C, Kasa Isles, Kensington Boulevard and Kalypso Court by Jaypee Group are some of the upcoming projects categorised under premium housing. Most of the ongoing projects in the location were launched in 2008-09 and are expected to be completed by 2014-15 (Source: KPMG Analysis).
During 2009-10, many new sectors were explored by developers in Noida and projects were launched at affordable prices. Fresh residential supply of about 5,000 to 6,000 units are expected to come up in Noida by end of 2011 (Source: KPMG analysis). Further, it is expected that by 2014 about 35,000 to 43,000 units will come up, equivalent to a space of approximately 135 to 150 million sq ft of residential apartments will be available for the middle income group (Source: PropEquity and KPMG Analysis). The supply scenario does not take into account any implications arising from any applicable judicial pronouncements or regulatory clearances. Of this supply, about 70% will be 2BHKs and 3BHKs, while the remaining will be accounted by 1BHKs, 4BHKs and 5BHKs.
With this expected supply, the Noida residential market is expected to boom. However, the recent Supreme Court verdict on Noida Extension might have an impact on capital values and expected supply of Noida (primarily on the Expressway) as well. Currently, these developments have created a sense of uncertainty among the buyers and investors. Buyers might prefer to adopt a `wait and watch' approach in the short to medium term, to invest in the location, potentially impacting the real estate scenario in the region.
