Over the last 2 decades, and more especially over the last 10 years, NOIDA has witnessed transformation from being a satellite town of Delhi to a self-sustaining city with sound social and physical infrastructure. The growth has been primarily driven by increased activity in IT/ITeS and industrial developments within the city over the past 20 years.
After coming into administrative existence in 1976, initial growth in Noida was primarily driven by manufacturing and support services. However, over the last 2 decades, the region has witnessed IT & ITeS-led growth and emerged as an alternative to Gurgaon as a cost-effective office destination.
Residential Real Estate Dynamics
During the decade gone by, Noida has witnessed consistent infrastructure upgrades in terms of road and penetration of MRTS (Metro lines), which has attracted buyers towards all areas of the city.
“During the last 10 years, Noida has emerged as a thriving housing market with the launch of over 1.92 lakh residential units. It witnessed major activity during the period 2010 to 2014, accounting for ~ 70% of the organized new age residential supply of the city, with average quarterly launch of ~ 7,500 units and average quarterly absorption of ~ 6,500 units. During this phase the capital value exhibited growth at a CAGR of ~ 12%,” says Ashutosh Kashyap, Associate Director, Valuation and Advisory Services at Colliers International India.
After this 5-year period, the region witnessed a slump in real estate activity with dip in launches as well as absorption. The effect got more pronounced post demonetization, i.e. in the years 2017 & 2018, wherein the average quarterly new launches dipped to ~ 500 units. During this period, most of the absorption has been in the form of secondary purchases, while absorptions even in primary markets were either with projects closer to completion or with developers of repute.
“With regards to capital values, the residential segment has not returned much over the last few years. The capital values over the last 2 years have clocked moderate growth at city level (CAGR ~ 3%), with some outliers being present in the form of launches by reputed players, who have been able to command premium in the region, primarily on the basis of their execution track record,” says Kashyap.
Trends To Watch Out For
Owing to significant existing unsold stock (31 months to inventory) coupled with the impact of COVID-19, the region is expected to witness resistance in terms of capital value appreciation. However, “marquee and premium positioned projects from reputed developers will draw attention of larger pool of buyers and might be the outliers in terms of demand and capital values that they achieve. The demand can be expected to be driven mostly by end-users, which in turn would imply a larger share of absorption to be directed towards projects closer to completion or deals in the secondary market,” says Kashyap.
The fundamental drivers of residential growth such as increased leasing activity and in turn employment, improvement in road and metro infrastructure, upcoming airport, etc., would imply consistent demand in the residential segment. With operational metro line along the Noida Expressway and increased employment options along the expressway, the micro market can be expected to account for most of the launch and absorption.
Ashish Sarin, CEO, AlphaCorp, says, “The Noida real estate market is transforming into a hub of lifestyle projects. Emerging as the fastest evolving city of NCR, it has developed as a perfect blend of residential and commercial projects along with major infrastructural advancements like proposed FNG Expressway and proximity to proposed airport at Jewar. Owing to the immense potential in the region clubbed with the increased number of HNIs, Noida has been witnessing an upward demand in the luxury housing segment. Apartments of Rs 1 crore and above have a distinct customer segment, which opts for aspirational projects. This category values aspiration over budget and any new project with desired features and amenities will always witness demand from buyers.”
Dinesh Jain, MD, Exotica Housing, says, “Noida is a hub of premium housing. Yet, it offers affordable rates in comparison of any other region of NCR. Noida has very limited land bank available around expressway and central Noida. Both are favourite destination for premium and high-end housing. Due to excellent connectivity of metro and road, growing infrastructure, social structure for education and health, commercial and industrial investment, demand of premium housing is rising year on year. Future projects like Film City, international airport, industrial clusters, freight corridors and manufacturing zones will further boost demand in the region.”
(Source: Financial Express)
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