Both Gurgaon and Noida are today billed as much sought after real estate destinations. Having emerged as industrial hubs of the NCR, these bustling suburbs of Delhi have also emerged as hot IT spots, triggering residential and retail real estate boom and offering great investment opportunities. The lack of newer and quality residential, retail and office developments in Delhi has triggered the realty boom in Gurgaon and Noida.
Gurgaon has come up as one of the most prominent outsourcing and off-shoring zones attracting big corporates and MNCs. The city also boasts of a great resource pool, and this coupled with high earnings makes Gurgaon a haven for retail and residential developments.
Already nicknamed as the ‘City of Malls’, Gurgaon is fast becoming a cosmopolitan destination with high-end residential and commercial developments.
Noida is closely competing with Gurgaon. Flanked by Delhi and Ghaziabad, it is one of the most planned cities. Noida offers a pollution-free environment, high standard of living and a supportive industrial atmosphere.
A favourable policy environment too is driving huge commercial activity turning Noida into a top-notch IT destination. Moderate population density, well-managed infrastructure, sufficient power supply and good connectivity are boosting residential realty, especially as the area is more cost-effective than Gurgaon. The fact that Noida is now following Gurgaon’s footsteps in mall development has ensured that the city becomes a good investment destination.
The natural transition from industrialisation to corporatisation has led to residential and commercial office boom in Gurgaon. As a result it is now experiencing exponential growth in retail and hospitality sector.
With its boundaries touching Delhi and Rajasthan, Gurgaon is strategically located on the National Highway 8 with proximity to airport and excellent road connectivity that includes the Delhi-Gurgaon eight-lane expressway. Four new road links are also on the anvil along with the Western Expressway connecting Gurgaon with Faridabad, Sonepat, Noida and Ghaziabad. The Metro Rail link too is expected to better Gurgaon’s connectivity with Delhi.
Proactive initiatives by the state government have led to the growth of knowledge-based industries in the area. This has, in turn, created demand for office space and subsequently for residential properties. If industry experts are to be believed, the growth of Gurgaon’s real estate rental trends is primarily driven by expansion plans of the IT/ITeS and BPO sectors.
However, despite all these favourable factors, highly deficient infrastructure of Gurgaon is proving to be a major dampener.
Connectivity is one of Noida’s major trump cards. The DND Fly-over has brought Noida and Greater Noida really close to Delhi and has provided a major fillip to real estate growth in this region.
Noida is one of the largest planned industrial townships in Asia. Set up in 1976, with a view to develop an ‘Integrated Industrial Township’ for industrial growth of the area, under the Uttar Pradesh Industrial Area Development Act, it best symbolises harmony between human habitat and industrial enterprise.
Noida also continues to be a preferred destination among home grown IT companies primarily because of great connectivity with Delhi and abundant talent pool available in the nearby catchment area of Indirapuram, Ghaziabad etc.
Noida, especially Greater Noida, scores over Gurgaon from the infrastructure development point of view as well. The upcoming expressway running through Noida/Greater Noida, Gurgaon, Faridabad and Sonepat; the Taj Expressway connecting Greater Noida with Agra; and the proposed Metro Rail link with Delhi are further set to create truly world-class infrastructure. A single apex development authority, which is responsive to the development needs, has also aided well planned, smooth and hassle-free urban development of Noida/Greater Noida.
Not withstanding all these growth drivers, poor law and order situation is a major deterrent to investor-friendly profile of Noida.
Gurgaon has been the main focus of realty investments in the NCR. It has been termed as one of the most overheated markets and residential property prices, on an average, doubled for all categories till the middle of 2006 starting from the initial months of 2004. The average price has jumped from about Rs 2,100 per sq.ft. for a mid-range apartment to about Rs 5,000 per sq.ft. within a span of three years.
Experts believe that short-term speculators drove up the prices. However, fundamentally, Gurgaon has always been very strong as many new corporate entities have moved in. On an average, tier-I developers have pre-booked orders for office space requirement of 40 million sq.ft. These have leased out to corporates. The resultant spurt in the number of jobs has given a fillip to residential and retail development.
The commercial realty demand continues to exist mainly because of the shortage of A-Grade office space supply in New Delhi and sealing of commercial properties in residential areas.
The markets have, however, seen signs of correction in the past year. Following these corrections, there is strong curiosity among investors about the Gurgaon-Manesar Development Plan 2021. Under this plan, 21,733 hectares of additional area has been added in the form of ‘urbanisable area’ to cater to a projected population of 37 lakhs. This includes 14,930 hectares of residential and 1,409 hectares of commercial area. In view of rising demand, an industrial area of over 5,441 hectares has been proposed along the express highway adjacent to IMT Manesar.
Property prices in Noida have also shot up in the past taking advantage of the short supply in the main capital region. But Noida is a ‘value for money’ destination, whereas Gurgaon is preferred for premium housing.
However, the past three years have seen northward movement in the Noida property rates. Lots of new demand for housing merit’s preference for Noida due to its cost advantage and manpower.
On the lines of Manesar, Greater Noida is coming up as one of the most planned cities of India. The developments have been clearly demarcated for specific use and there is no intervention of government agencies in change of land use. This has ensured very good infrastructural support in terms of road network, schools, hospitals, knowledge parks and other amenities. Five big knowledge parks have been MOUs have been signed with the government for development of in-house IT parks in these knowledge parks by top MNCs. These, in future, would bring in very strong fundamental demand for residential and retail segments in Greater Noida.
Developers like Unitech, Omaxe, Eldeco and others have made forays in Greater Noida with a number of good projects. The prices in Greater Noida saw quite an upsurge till mid-2006 but have been stable for the past one year.
With high inflow of supply in Gurgaon over the next two to three years, there would be a plethora of projects for investment considerations. This would ensure further signs of correction in some residential segments in Gurgaon. A thorough analysis of the project and investment is recommended so as to meet expectations on returns on the projects in the new Master Plan and hence only tier-I and tier-II developers should be preferred. The return on
While there have been lots of positives about investing in the Greater Noida area, the time frame for investment should not be less than three to five years and an average return of about 12-17% can be expected over a longer period of time. The liquidity in Greater Noida area today, because of heavy supply from developers, is low and would only improve when the corporations start setting up offices here. For long-term investments, Greater Noida is a better bet than Manesar (Gurgaon).
When investing in either Gurgaon or Noida, one should look into several key considerations. The foremost consideration is whether one would like to invest in agricultural/industrial land, commercial or residential real estate.
One also needs to decide about the categories in residential (apartments, villas, plots) and commercial (retail, office, industrial) real estate. In terms of sub-categories, before making an investment, one must decide whether one would like to go for small, medium, large size apartment; small or large retail formats; small or large industrial plots; and IT or non-IT office space.
The investment decision should be taken in terms of capital value of each category/sub category of investment and scope of improvement in capital values. One must weigh pros and cons of each category/sub category with relevance to the two cities. One should compare the investment perspective for each city with category specifics by way of rental yield, capital appreciation and net return on investment.
There are other equally important comparative considerations in terms of infrastructure development, cost of living advantage to determine buying potential and regulation frame work (stamp duties, restrictions on sale/purchase, registration, property tax, regulation policies). One should also do comparative analysis in terms of development or construction time and in terms of rental yield (assured returns or pre-leased option).
While it is important to prioritise the city and the category, it is critical to understand the fundamentals governing the real estate growth there. The time frame with which an investment is done must be pre-defined before decision is taken. A wrong decision would end up not giving expected returns or give less.
Source: Realty Plus
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