Should Noida be your investment destination?
It does have potential as investors holding on for some time to their properties are likely to be looking for exit opportunities
Wi th the Centre deciding to notify a sharply cur t ailed ecosensitive zone around the Okhla Bird Sanctuary within a week, nearly one lakh homebuyers in Noida waiting for two long years will finally get possession of their apartments in the coming months.
Both homebuyers and developers have welcomed the move to restrict the sensitive zone around the Okhla Bird sanctuary (100 metre from the sanctuary boundary on three sides, and 1.27km in the north). “The decision will enable allottees to get possession of the apartments and allow developers to complete projects.” For those waiting in the wings ever since the National Green Tribunal (NGT) imposed a ban on con- struction in the sensitive zone this might be a good investment opportunity as clarity on the NGT issue will have many investors wanting to exit quickly from properties they have been holding on for long. Buying apartments at 2012 prices in this area is a good option, say real estate experts.
Till date, transactions in the sectors affected by the NGT ban in Noida are at a standstill. Going forward, prices are likely to go up marginally (not more than 10%) for projects that are of good quality, have an existing social infrastructure and are ready to move in. This would constitute around 10% of developer projects and around 30,000 units. “The price band of ₹ 4,200 to ₹ 4,500 is a great price considering the fact that there would be Metro connectivity in the area in the coming years,” says Anckur Srivasttava of GenReal Advisers.
A substantial part of the stock in this market, however, is held by investors who may be desperate to sell. Around 30% to 40% property buyers in the area were investors who would not want to take possession or pay stamp duty. These units may be offloaded at a 5% to 10% discount in the secondary market. Generally investors hold a property for not more than a year but in this case they have stayed invested for at least three years. Any exit is welcome. This liquidity in the market will improve activity and also keep prices in check for the next few months.
It should also be n o t e d t h at a majority of projects in this mar- ket are not yet complete. Developers who were using the NGT as an excuse for the delay will now be under pressure to hand over possession and so the market is likely to see a number of units delivered over the coming months.
There are three categories of developers who are likely to emerge in the coming months. Besides those who have completed their projects and are waiting for the occupation certificates (which the Noida Authority has promised to hand over within 40 days), about 60% developers in the market are those have been unable to complete projects due to cash flow issues. They may bounce back once they get funding and clear their arrears with the authority. The third category that buyers need to be cautious about are those who do not have the financial wherewithal to complete their projects.