F1 and the real estate formula
F1 is not a short-term residential demand driver but a destination play. It has brought on the map a remote area not considered a part of an established development corridor
The “orchestral cacophony’ of beastly Formula 1 machines have ruled over Yamuna Expressway two times in a row now. There’s no doubt that the sport has led to large-scale urban development in the area and also given a boost to residential real estate in the mid to the long term. This will continue despite the F1 boss Bernie Ecclestone recent announcement that the Indian Grand Prix may not be part of next year’s racing calendar.
The F1 is a great anchor for developers as returns will not come from the event but out of the real estate monetisation of the township. The impact is akin to the setting up of the Maruti factory that brought thousands of people to Gurgaon in the early ’90s. “The global event is an excellent anchor strategy to bring a far flung area not considered part of an established development corridor into the mainstream,” say real estate experts.
People have invested in the area with the long-term view of getting high returns over the years when the area is fully developed and has realised its potential. Take the case of Parbir Singh, who is into car rental services and has invested in Supertech’s Up Country project. He got interested in investing in the area soon after he went to watch the first F1 race with his family in 2011. “I invested in a 3BHK apartment in the area because of the great infrastructure it offers. I bought an apartment on the 15th floor that has a view of the manmade beach in the complex, the Night Safari and even the F1 track,” he says. “I’m hoping that once the project is complete, I’ll use my apartment as a guest house where my
clients, on their way to Agra, can enjoy the Night Safari or the F1 event if it is on,” he says.
Studios, serviced apartments etc are products that will do well in the area once the local economy develops. In the case of Yamuna Expressway, there are other drivers such as the three universities that are already operational and others that are being planned. These will go a long way in developing this area’s potential as an education hub.
The real gains will emerge when the entire facility is developed into a live, work and play environment, when it becomes a destination, say experts.
The event is a great anchor for developers in the area. For them, returns will not be out of the F1 event per se but out of the real estate monetisation of the township. F1 will be the much-needed magnet for people which draws people out of the Capital.
The impact will be akin to the setting up of the Maruti factory that brought thousands of people to Gurgaon in the early ’90s and to the Mahindra World City in the outskirts of Chennai that was set up in the mid ’90s and hosted automobile majors such as Ford, BMW, Volvo and Hyundai.
Sepang, 25 km from the Malaysia’s capital Kuala Lumpur, hosted its first Grand Prix in 2010. The city’s grand prix track was built on a 260-hectare swamp.
Istanbul has built a track in a desolate outlying part of the Turkish city, while the circuits at Yas Marina in Abu Dhabi and at Marina Bay in Singapore are new residential and business districts on reclaimed land