Brand land going places in north India

Brand land going places in north India
The Hindustan Times, January 7, 2010, Page 14

AS INDIA COMES OUT THE GLOBAL DOWNTURN, THE DEMAND IN REAL ESTATE SECTOR HAS RETURNED AND THE PRICES OF RESIDENTIAL PROPERTY IN NORTH INDIA ARE STEADILY GOING UP SINCE SEPTEMBER THIS YEAR. DEVELOPERS HAVE RAISED PRICES IN MOST OF THE MARKETS IN NORTH INDIA.

When it comes to development in the real estate sector, North India takes a comfortable lead as compared to other parts of the country with Delhi, Gurgaon, Faridabad, Punjab, Haryana, Himachal Pradesh, Uttar Pradesh, Madhya Pradesh and Rajasthan leading the pack.

Much of the real estate development work has been concentrated in the top 38 cities of Northern India including Delhi, Gurgaon, Chandigarh, Noida, Shimla, Ambala, Jaipur, Ludhiana, Indore, Rudrapur, Ajmer, Bikaner, Kanpur, and Agra among others.

The past few years, before the recent economic slowdown, have seen an unprecedented growth in many of the urban centres in India and most of the cities in Northern India have been at the forefront of this real estate boom creating consumer confidence, investment & employment opportunities and growth of businesses.

According to a report prepared by India Brand Equity Foundation and Ernst &Young Pvt. Ltd., the Indian real estate industry is currently estimated to be US $ 48 billion, with a CAGR of 30 per cent. The total economic value of the market is estimated to be US $ 4045 billion, accounting for four to five per cent of the GDP. `The consistently growing IT/ITes sector, increasing presence of large foreign businesses in India, the globalisation of Indian corporates and the rapidly increasing consumer class provide a huge market potential and are the key growth drivers of this sector’. Rapid urbanisation has also been fuelling the real estate boom in India, providing huge opportunities to builders, developers and investors. As a consequence to the government relaxing FDI regulations, foreign investors too have joined this boom along with private equity funds, NRIs, and High net worth individuals (HNI) driving investments in real estate.

Needless to say, the real estate market in India is still in early growth stage and can be segmented into residential, commercial, retail and hospitality asset classes with an existing demand-supply gap across all segments for quality real estate.

Before the world was hit by the recent recession, the real estate market in Northern India was booming. In fact, investment in real estate market had seen a massive increase in the last seven years with the average return on investments touching around 40-60% per annum. But the economic downturn and its crippling effects lead to an almost 20-40% fall in prices, with most of the consumers preferring to postpone their decision of buying property till the situation stabilised.

However, as India comes out the global downturn, the demand in the real estate sector has returned and the prices of residential property in North India are steadily going up since September this year. Developers have raised prices of their products in most of the markets in north India. According to a new report prepared by realty consultant Cushman Wakefield, prices however are `still lower than what they were a year ago. As the market has revived, a large number of developers have jumped in the fray with new launches and projects’.

DELHI ­NCR The Delhi ­ NCR real estate story has become a legendary tale. Real estate business in the National Capital Region (NCR) started when builders and developers started spreading their wings towards Delhi’s suburbs, viz. Gurgaon, Noida, Ghaziabad, Faridabad, Greater Noida and places like Kaushambi and Indirapuram. The rising demand for residential accommodation ably supported by the rising disposable incomes, lower rate of interests, other fiscal incentives and rapid urbanisation encouraged real estate developers to move beyond city limits towards smaller towns that are well connected with larger cities and satellite towns which have emerged as business and IT hubs in the past few years. From Gurgaon, the real estate boom also reached East Delhi and to places like Kaushambi and Indirapuram which were once considered down-market. Strategically located between three cities (Delhi, Ghaziabad and Noida), Indirapuram’s infrastructure is being seen as its biggest strength. According to realtors, before the recession, property rates in Indirapuram alone registered a 60-70 per cent appreciation. Construction of malls (like Shipra Mall), townships, numerous service apartments and business suites sent the property prices soaring and heightened the snob value of this place and many real estate developers are constructing business suites and corporate parks here as a part of their upcoming projects.

New players like the Amrapali Group have completed several projects Greater Noida, Indirapuram and other East Delhi locations, spreading over more than 100 acres. Evidently, places near Noida like Indirapuram, Kaushambi, Vaishali and Vasundhara in Ghaziabad and Greater Noida have come up as an alternative as accommodation in Noida and Gurgaon has gone beyond the reach of middle class.

Greater Noida is now coming up in a big way as an industrial and educational hub. Major players are now focussing on developing infrastructure here as the place offers good connectivity and enough unexplored land.

Ansal API, one of the oldest real estate players, is developing independent bungalows, premium floors, highrise apartments at Megapolis, small and large offices in Corporate Park in Noida and IT offices in the IT SEZ in Greater Noida. “In India, there is still a big gap between demand and supply in the housing sector. As economic cycles change, the pending demand only shifts from one segment to other or within the sub-segments of the same asset class. With over 42 years of experience behind us, we have seen these kinds of cycles before as well. In the present scenario, we are focussed on the affordable housing segment and have set ourselves a target of building 10000 homes in this category across the Northern India region where we are mainly present as of now,” states Rakesh Kaul, Chief Operating Officer, Ansal Hi Tech Townships Limited.

New companies like the 3C Company are also focussing on Noida and Greater Noida by developing `green buildings’. “Currently, Lotus Boulevard and Lotus Boulevard Espacia are the current residential projects that we are working on. Adjacent to each other, spread across 40 acres, collectively these form India’s largest green residential estate in sector -100, Noida. We are also nearing completion of Oxygen Boulevard, which is a green IT SEZ in sec-144, Noida. With 2200 plug & play work stations and over 7 lakh square feet of ready to fit out space available, this project is spread across 25 acres.

The team is also gearing to launch another green residential project in Sec-110, Noida,” informs Vidur Bharadwaj, Director, The 3C Company.DEVELOPERS REJOICE AS MARKET’S LOOKING UP According to the latest report prepared by realty consultant Cushman Wakefield, `property values in NCR has climbed up with the return of investors and end users interest in the realty market in the third quarter ending September 2009. Certain suburban markets like Noida and Gurgaon witnessed even higher growth due to heavily discounted prices in the previous quarter ending June - particularly in the new launches’. `After a sharp decline in the last few quarters, capital values have started to strengthen and register marginal appreciation across most micro-markets. Cyclical demand with festive season has resulted in strengthening of prices. The launch of new projects catering to the mid-segment witnessed heightened activity resulting in price escalation. Gurgaon and Noida are the key locations to witness this activity and registered the highest growth, 19% and 16%, respectively, during the quarter.’ RISING DEMAND FOR LOW DENSITY HOUSING Low density housing is also gaining tremendous popularity in the residential real estate segment as it entails lower risk for the developers and they can also meet deadlines since the development comprises of low-rise, low-density development and with major concentration on development of basic infrastructure, the speed of delivery is much faster compared to high-density development.

Understandably, real estate developers like the Jaypee Group, Vipul and Fire Capital Fund are attracting buyers with a number of such niche projects.

Low-density housing is premium priced units as compared to group housing and offers a range of entertainment, recreational and other facilities to the customers apart from lush greens and well-spaced dwellings. Significantly, most of these are on the outskirts of cities in Greater Noida and Gurgaon.

Jaypee Group’s 452-acre Jaypee Greens Township in Greater Noida is one of the first examples of low density housing wherein out of the total area; only 70 acres have been used for dwelling development. Besides, Jaypee Group has also announced the launch of India’s first Sports City on the Yamuna Expressway in Gautam Budh Nagar. The Sports City will have in total 12 Districts and each would be based on a theme. Approximately 875 acres of land in the Sports City will be used in providing sports facilities like motor race track, go-karting facility, stadiums for various sports and other recreational facilities. Property developer Vipul is also coming up with its `Vipul Tatvam’ villas in Gurgaon, a project which has just 255 villas spread over 50 acres, wherein homes are priced between Rs 2.2 crore and Rs 6 crore.

BURGEONING GROWTH IN OTHER TOWNS AND CITIES Apart from Delhi-NCR, other parts of Northern India are also witnessing major activity as far as real estate development is concerned with a slew of projects in the pipeline by old and new developers. The real estate boom is not confined to Delhi ­NCR alone as developers and investors have already gone beyond NCR and other big cities like Mumbai and Bangalore and started developing townships, business towers, shopping malls etc. in smaller towns like Mohali, Rudrapur, Sonipat, Manesar, Bhiwadi and Jaipur. With this new trend, the real estate sector in the country has entered its second phase, the next level of development and it’s these smaller towns that are being touted as `destination next’ for those interested in buying property for residential purposes or for investing in this sector.

Another reason for moving towards Tier III cities is that the main city and other satellite towns and suburbs like Indirapuram, Noida and Gurgaon are virtually exhausted in terms of new lands and prices of properties in these areas have hit the roof and there is but little scope for further appreciation in the prices in the short to medium term.

Real estate developers like Omaxe, Eco Terrain, Today Group, Ansal API, Alliance Nirman, MDLR, GTM Builders and AJS builders are constructing major townships in small towns like Agra, Amritsar, Punjab, Hapur, Kufri, Muzaffarnagar, Jaipur and other smaller towns. Bhiwadi, near Gurgaon is developing rapidly as an industrial town where many SEZs have been constructed or are underway. Mohali and Derabassi in Punjab are also developing speedily and real estate developers like Parsvnath Developers and AJS Builders have come up with townships here as well. Omaxe has already made its presence felt in smaller towns by developing residential and commercial projects in Sonipat, Rohtak, Bahadurgarh, Gurgaon, Palwal and Faridabad in Haryana; Noida, Greater Noida, Ghaziabad and Lucknow in UP; Rudrapur in Uttarachal; Amritsar, Ludhiana and Patiala in Punjab.

Alliance Nirman too has come up with townships in Hapur, Rudrapur and Gurgaon and developers like Assotech, GTM Builders, Piyush Group, AJS, Vipul Infrastructure, Suncity and NHIO etc. have also followed suit.

Meanwhile, these are just a few names to exemplify the plethora of quality real estate developers that are going to change the way we live and work. Real estate boom is here to stay and the government, the business houses and the common man ­ all have contributed towards making this dream a reality.