The Indian realty space is in the spotlight again. The commercial and residential market in Mumbai has been very subdued. Several developers and experts feel the recovery of the Mumbai property market is still a little distant.Prime Property takes a look at the National Capital Region (NCR).
The NCR is often called India's most speculative market. It is a large market covering New Delhi's suburbs Gurgaon and Faridabad in Haryana, as well as Noida, Greater Noida and Ghaziabad in Uttar Pradesh.
Analysts often say that nearly 50 percent of the investments in the NCR is driven by investors. Knight Frank points out a sluggish demand and fewer project launches in the NCR.
Nearly 35,000 residential units were launched from October 2012 to March end of 2013. That's a dip of 31 percent year-on-year. So in light of weaker demand, it does seem as if developers have kept a check on new launches.
The liquidity crunch being faced by real estate companies is yet another reason. Developers continue to cope with the pressure of finishing delayed projects, thus very much on the prowl for funds to finish construction. Knight Frank says Noida in UP has witnessed a steep dip in launches in the second half of FY12.
It pegs 135,000 residential units have been announced in Noida, of which nearly 20 percent or 27,000 apartments are unsold. Knight Frank says Noida's loss has been neighbouring Greater Noida's gain. Greater Noida envisaged as a self sufficient city mushrooming along the Yamuna Expressway and today viewed as a more affordable market. Here is the Knight Frank outlook and prevailing price per square foot.
Mudassir Zaidi, regional director-North, Knight Frank India says, “ In Noida we have weighted average price of about Rs 5,200 and in Greater Noida we have an average with the price of about Rs 3,100. There is a significant difference in terms of the kind of end users or investors that they cater to. Greater Noida is roughly available at 50 percent of what Noida is available at. ”
Now the worrying part is that the NCR residential market has an estimated 140,000 unsold units, out of which 66 percent are concentrated in Noida and Greater Noida. Also there have hardly been any launches off late in the Rs 25 lakh to Rs 50 lakh bracket, which is what had primarily attracted buyers to Noida in the first place.
Gurgaon or the Millenium City is perhaps NCR's best performing micro market. Here you have more expensive properties when compared to Noida and Greater Noida. There's massive development around the proposed 25 kilometre-long Dwarka Expressway near the border of Delhi and Gurgaon.
Despite the expressway's construction being stalled, there was significant buyer interest. This part of Gurgaon is now referred to as new Gurgaon. It has attracted all the big builders, from Indiabullsto Mahindra Lifespace to Tata Housing to Sobha developers.
According to Knight Frank 120,000 units have been launched in recent times in Gurgaon and New Gurgaon, out of which 19 percent or 23,000 apartments are unsold. Now even though the percentage of unsold inventory in Gurgaon is the same as Noida, Gurgaon scores higher in sales velocity. On an average 5,000 residential units are sold in a quarter in Gurgaon, and that's double of what is sold in Noida.
Mudassir Zaidi, regional director-North, Knight Frank India: In terms of price appreciation Gurgaon is a market which has seen very good appreciation. In terms of yearly numbers we have seen around 30 percent rise in terms of numbers in Gurgaon area.
In terms of new Gurgaon area there has been about 50 percent on an average in terms of price rise. On an average last year there have been projects getting launched between Rs 4500-5000. The numbers right now are about between Rs 6,000-6,500 or so.
That has been most exciting in terms of price increase. Faridabad, also in Haryana, is a much smaller market with about 25,000 units available. But there are expectations of more launches once it is connected with Delhi and Gurgaon via the metro.
Mudassir Zaidi, regional director-North, Knight Frank India says, “Faridabad has an weighted average price of about Rs 3,300. I would expect that in times to come and the interest in the market increases, we see a number of developers look at launching projects in that region. I would expect the weighted average price to start inching up significantly. The kind of projects that have been offered right now are the high end. We are largely seeing middle income projects that are being launched out there.”
Ghaziabad, another small suburb is seen as a cheaper alternative to Noida. Knight Frank pegs total units on sale at 74,000 but it does have a high unsold inventory at 32 percent. The average price here is around Rs 3,100 per sq foot. So which is a better bet, Faridabad, or Ghaziabad?!
Mudassir Zaidi, regional director-North, Knight Frank India says, “I expect appreciation to be in the range of about 10 to 15 percent. It won’t be as much as what it is available in Gurgaon but it will be decent. So between 10 to 15 percent what I expect the appreciation to be about 10-12. I would think that in the times to come Faridabad should re-pick up well compared to Ghaziabad? ”
Earlier this month, Jaypee did a site visit in Noida with analysts and investors, including those from influential brokerage firms like CLSA. Jaypee Group's executive chairman Manoj Gaur was also present.
Earlier this month, Jaypee did a site visit in Noida with analysts and investors, including those from influential brokerage firms like CLSA. Jaypee Group's executive chairman Manoj Gaur was also present.
Jaypee Group's most ambitious project has been the construction of the 165 km long six lane Yamuna expressway connecting Noida with Agra. Besides nearly getting nearly 4,000 acres from the Uttar Pradesh government for building that expressway, the company also got around 6,000 acres divided in five land parcels, all for real estate development.
All of this was hived off and listed as Jaypee Infratech in 2010. So far Jaypee had launched one of these parcels, the one in Noida, which goes by the name of Jaypee Wish Town. Jaypee had got a lot of flak from buyers for being late by up to four years with projects here.
This January, Jaypee Infratech had called off its offer for sale on account of poor market conditions. No doubt the analyst meet is a pre-cursor to Jaypee Infratech's fund raising plans, which the company will have to undertake before June which is Sebi’s deadline of meeting that minimum 25 percent public float norm. Manoj Gaur had told Prime Property last month that Jaypee Infratech would cut its Rs 6,800 crore debt by Rs 2,000 crore quite soon.
How that would be achieved was unveiled at the analyst meet. The company will pare its debt be selling nearly 400 acres of land to mid-sized developers and HNIs. Besides that, there have also been two recent launches.
Launchpad
Few minutes from its Gautam Buddh F1 Grand Prix Circuit, Jaypee has launched Sunnyvale Homes, a project comprising of residential plots. These plots will be part of Jaypee Greens, Sportcity township, and the base price has been fixed at Rs 27,200 a square yard. There are five plot sizes available, with base price ranging from Rs 41.61 lakh to Rs 65 lakh.
Possession is 18 months after the provisional allotment letter is issued.
Possession is 18 months after the provisional allotment letter is issued.
Analysts feel the price tilts on the more expensive side, but the premium is for accessibility via the expressway and also for being so closely linked with the F1. Jaypee though says it has got a great response and may even hike prices.
The company had also recently launched studio apartments at the Sportscity. Jaypee says the first phase of this project, Buddh Circuit Studios, was made up of 1600 apartments and sold out within four days. The base price was Rs 3,290 per sq foot.
Jaypee is now gearing up for Phase II. The base price of that has been increased by Rs 100 to Rs 3,390 a square foot. So if the specifications remain the same, the studio apartments will cost just shy of Rs 19 lakh and Rs 25 lakh
Analysts are divided on what they make of the project. The price is attractive, it’s again very accessible via the expressway and its sales pitch includes the connection with the F1. But the studio apartments are obviously small. So are buyers the actual end users that will work in the vicinity. Or are the buyers who are investing hoping to lease out these apartments to those very professionals.
