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Boom town : NOIDA

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Boom town : NOIDA

Last updated: March 15 2011
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  • Boom town : NOIDA

    Boom town

    Noida is home to the biggest real estate phenomenon India is witnessing.
    Barely 20 km from the heart of Delhi, across a flyover called Mahamaya which establishes the territorial claim of Uttar Pradesh Chief Minister Mayawati and off the eight-lane highway across Noida, is Shivom Gangwars makeshift office on a motorcycle! Balancing his diary on the bikes slippery seat, he rattles off the facts and figures of what hes selling a "dream house&". Every now and then he points to the area behind him where a blue tent, much like a circus big top, stands with Amrapali Heart Beat City written across. At the moment, this is 32.5 acres of barren land. "But in less than three years, the project will be ready. This will then be the most sought-after property, well-connected with all key areas of Noida and Delhi,&" says the senior portfolio manager with Investors Clinic, a real estate brokerage.
    Gangwar is an important link in the biggest residential real estate play ever to have happened in the country. There are thousands like him on the rolls of hundreds of brokers who, in turn, sell houses made by over three dozen developers in Noida (this includes Greater Noida).
    Statistics from PropEquity, a firm that compiles and analyses real estate data across India, show that by 2014, Noida will have 190,123 new houses and apartments almost 40,000 more than what Gurgaon, Navi Mumbai, Gachibowli (Hyderabad) and Hinjewadi (Pune) collectively offer. Developers, on their part, reckon the count could go as high as 500,000. Shanghai, the biggest real estate market this side of Greenwich, does about 300,000 houses a year.
    The development provides jobs to lakhs of workers, thousands of architects, every bank worth its credit line and over a dozen ad agencies. The 500,000 houses will consume about 3 million tonnes of steel (rods, bars and angles) and 9 million tonnes of cement. To put it in perspective, India produces about 30 million tonnes of construction steel and around 260 million tonnes of cement in a year. Noida is big business also for makers of tiles, glass, bathroom fitting, electric cables and switches, water purifiers, and so on, who are ready to offer discounts of up to 10 per cent on large orders from Noida.
    HDFCs Noida branch bustles through the day with customers. The countrys largest provider of home loans is desperate to get a larger office or open another branch to cater to the swelling volumes of business. Private equity funds like JP Morgan, Landmark Holdings and Red Fort Capital have put their money on Noida.
    Noida started buzzing a little over two years ago. To cope with the slowdown, the Noida Authority ruled that developers needed to pay only 10 per cent of the land cost upfront the rest could be paid in installments over seven years. Other sops, too, were thrown in. Then, all land for group-housing projects is bought from farmers and sold to developers by the Noida Authority. This is unlike neighbouring Gurgaon where the developer not only has to buy land directly from farmers but also get the permission from government to use it for realty. Liberal construction norms also help developers pack more flats in a plot in Noida than elsewhere. These steps have sent residential real estate prices crashing from Rs 5,000 per sq ft three years ago to Rs 3,000 per sq ft now. Last years Commonwealth Games greatly improved connectivity between Delhi and Noida. No wonder, the market has exploded.
    This has opened the sluice gates for everybody. Vidur Bhardwaj of 3C is thus a green architect he is constructing 10,000 homes in Noida. "I am a developer by default,&" he says. Anil Sharma of Amrapali, who is building 50,000 flats in Noida, could pass off anywhere as an academic with his long list of degrees M Tech (IIT Kharagpur), MBA, LLB and PhD. Panch Tatva, a new project, has been promoted by a bunch of chartered accountants.
    Most Noida developers are local and not national operators Jaypee, Amrapali, Assotech, Supertech, 3C, Prateek, ATS, etc. The reason: while developers like DLF, Unitech, Raheja and Hiranandani are focused on luxury, the bulk of the sale in Noida is happening at around Rs 2,800 per sq ft. "Real estate is a localised game where the builder has to engage with the state government,&" says Ajit Mishra, managing director of wealth management company InvestCare. "Bigger brands are more comfortable dealing with fewer states. The Rahejas and Hiranandanis are at ease in Maharashtra."
    By far the biggest developer in Noida is Jaypee with the 1,162-acre Wish Town, 5,000-acre Sports City and residential projects across 425 acres. All told, it is building more than 50,000 flats in Noida and hundreds more are on the way. Jaypee, discloses Uttar Pradesh Infrastructure & Industrial Development Commissioner Annop Mishra, got 6,250 acres from the state government as an incentive to do the Yamuna Expressway between Delhi and Agra. Its site office runs a cafeteria where snacks and beverages are on the house.
    The business model of the developers is straightforward. The land costs up to Rs 1,200 per sq ft and the development cost adds around the same. With an average sale price of Rs 2,800 per sq ft, this leaves a decent gross profit margin of about 16 per cent. Little wonder then that Noida developers can all be seen driving around in Bentleys, Porsches and BMWs. None of them, of course, lives in the flats he has built, preferring the old world charm of a kothi or a farmhouse.
    Since the space has got crowded, many developers have taken on board celebrities for endorsement. Mahendra Singh Dhoni bats for Amrapali, Sushmita Sen promises to be your neighbour in Assotech, Kailash Kher tells you no place is better on earth than Anthem Infrastructure, Kapil Dev lends his face to Panch Tatva and Gautam Gambhir endorses Rudra Palace Heights. Darsheel Safary of Tare Zameen Par is the "happy healthy childhood&" face of Palm Olympia. "I would like to see more developers emphasise green areas and sports facilities,&" says Kapil Dev. The chartered accountants behind Panch Tatva handled Devs accounts; the cricketer was always a ready choice.
    Sharma claims enquiries have jumped at least 15 per cent since Dhoni was brought in. He buys media radio, newspaper and outdoors worth Rs 50 crore a year. Most developers set aside up to 5 per cent of the project cost for advertising and marketing overall, they are known to have a budget of over Rs 400 crore. (The total real-estate annual ad spend in the country is about Rs 1,000 crore.) But they know thats not enough to convert enquiries into purchases. "You cannot have high quality, timely delivery and profit all at once. We have decided to sacrifice profit for the time being,&" says Sharma. Thus, while most builders are happy to leave the construction to contractors, Sharma chooses to do it himself.
    Of course, gimmicks too are being thrown in. Jaypee is building a whole township around its upcoming Formula One race track. One builder recently took prospective buyers up in a hot air balloon to show them the view from the exact location of the apartment they wished to buy. Another builder, Supertech, is offering the "experience of beachside living&" at a "beach village&", and is also building the tallest high-rise of North India, aptly called North Eye. Amrapalis Heart Beat City promises personal lifts that will take you right up to your lobby. It also has the Dhoni Sports Academy for residents.
    Developers, of course, dont go to buyers directly; they work with brokers. These brokers have a huge database of buyers, which cuts the go-to-market time for developers. There are hundreds of brokers in Noida, though only about a dozen are large. They underwrite the flats, whole towers at times, and then sell them to buyers. This hedges the risk of the developer. So, most developers are ready to pay up to 5 per cent commission to brokers, but intense competition has made the brokers pass on almost all of it as discount to buyers.
    Brokers, in turn, have armies of sub-brokers. It is they who contact prospective buyers. SMS alert is the chosen medium each can cost between 3 paisa and 30 paisa. "Approximately 10 million SMSes are sent when a new project is launched,&" says Ahad Kamran, the director of Jakasa Homes & Houses, a firm that underwrites large projects. "We have a dedicated team to look after the SMS aspect of marketing,&" says Vivek Sawhney, director, Investors Clinic. The moment an unsuspecting person calls any of its numbers mentioned on a property advertisement, his number is fed into the Investor Clinic server. And then heaven help him every time a new project comes up, the server bombards him with SMSes.
    Investors Clinic started with a group of five-odd people in 2006; it now has about 800 employees on its rolls and sells an average of 1,200 properties a month. Such are the stakes that it too has felt the need to have a brand ambassador of its own Yuvraj Singh. "Hes aggressive and when it comes to sales, so are we,&" says Sawhney. To leverage its sales force, Investors Clinic has ventured into construction and is coming up with Sanskriti Apartments, a 700-unit project in Greater Noida. "I would call it reverse integration,&" he says. With the industry in Noida getting bigger, it also wants to set up a real estate school that will offer a two-month crash course in how to become a smart, informed worker in the real-estate business.
    How long will the party continue? Developers claim Noida has attracted buyers from all over India people who come to Delhi and its suburbs for jobs or education or after retirement and this is unlikely to stop in the near future.

    There will be chaos once the law of business cycles catches up with Noida.
  • #2

    #2

    Re : Boom town : NOIDA

    itna kaun padega yaar....thoda short me likho...conclusion aur summary likho...

    Comment

    • #3

      #3

      Re : Boom town : NOIDA

      Summary is noida will beat other NCR towns within 5 years.Cheers .

      Comment

      • #4

        #4

        Re : Boom town : NOIDA

        Originally posted by LChand View Post
        itna kaun padega yaar....thoda short me likho...conclusion aur summary likho...
        ;-) Ha h aha ha

        Comment

        • #5

          #5

          Re : Boom town : NOIDA

          Does it means, it is right to invest at Noida at this time ? or it means Noida is suffering from Over supply and stay away from it ?

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          • #6

            #6

            Re : Boom town : NOIDA

            Originally posted by Gagan Singh View Post
            Does it means, it is right to invest at Noida at this time ? or it means Noida is suffering from Over supply and stay away from it ?

            People always looks for right or affordable price. If noida will give them affordable price then certainly people will move from gurgaon and dwarka to Noida.

            But noida will have to create good commercial,good jobs, good schools and industrial sector then only people will move from dwarka and gurgaon.

            Only development in residential sector will not work. Development in industrial sector also required

            Comment

            • #7

              #7

              Re : Boom town : NOIDA

              Originally posted by KB_may2010 View Post
              People always looks for right or affordable price. If noida will give them affordable price then certainly people will move from gurgaon and dwarka to Noida.

              But noida will have to create good commercial,good jobs, good schools and industrial sector then only people will move from dwarka and gurgaon.

              Only development in residential sector will not work. Development in industrial sector also required



              A sensible post after many.... good conclusion....

              Comment

              • #8

                #8

                Re : Boom town : NOIDA

                100% Agreed.

                Originally posted by KB_may2010 View Post
                People always looks for right or affordable price. If noida will give them affordable price then certainly people will move from gurgaon and dwarka to Noida.

                But noida will have to create good commercial,good jobs, good schools and industrial sector then only people will move from dwarka and gurgaon.

                Only development in residential sector will not work. Development in industrial sector also required

                Comment

                • #9

                  #9

                  Re : Boom town : NOIDA

                  Noida authorities have done very good work to bring many residential projects in past few years.

                  Can someone through a light on the their efforts and results so far for attracting various industries and job creation aveneues to support these residential projects.....

                  Comment

                  • #10

                    #10

                    Re : Boom town : NOIDA

                    Originally posted by Tejas Bhai View Post
                    Can someone through a light on the their efforts and results so far for attracting various industries and job creation aveneues to support these residential projects.....
                    G harondabhai had initiated a thread on the IT companies present in the Noida / Greater Noida region.

                    Click here.
                    Last edited March 12 2011, 01:13 PM.

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