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Massive new inventory coming are prices in Noida set to stagnate or crash

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Massive new inventory coming are prices in Noida set to stagnate or crash

Last updated: November 25 2012
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  • Massive new inventory coming are prices in Noida set to stagnate or crash

    There are a few BIG projects that may be launched in Noida over next few weeks/months/years:

    1. Logix Sports city having 12000-15000 flats.

    2. Wave city centre has 8500 high-end flats including studio, 2BHK and 3BHK flats as per the info on websites of many brokers. Out of these 850 studio apartments have been launched and 2BHK and 3BHK may be launched in near future.

    3. 3C sports village is a 180 acres project. Assuming 100 flats per acre, 18000 flats may be there in this project.

    4. Jaypee is believed to have another 20000 flats that are yet to be launched but this is a big unknown factor as we don’t know the exact number and status of their sold, unsold and yet to be launched inventory.

    That is approx 61000 flats yet to be launched/sold.

    There are new projects like The Aranaya (2000 flats), where builders may have sold some inventory but a significant chunk may be there still to be launched.

    Then there is some unsold inventory in already under-construction projects that every builder must be holding on to with the hope of selling it at higher prices as the construction progresses.

    There may be other new projects that I'm not aware of yet but will be launched over the next few months or years.

    This is the situation only in proper Noida. I’m not taking into account the effect that Noida extn (GNoida) will have. NE issue may see full and final resolution after UP elections next year, if not sooner and chances are good that FAR will be increased for NE.

    All in all, a massive number of new projects of flats will be launched in Noida itself and builders will try to sell them all in next 2-3 years. The projects that were launched 2 years ago will be either complete or nearing completion in next 2-3 years. So market will have ample supply of both RTM flats and newly launched or under construction flats for next many years. May be for next 5-6 years?

    There are factors like jobs, metro and possible migration of people from Delhi to Noida, that may or may not happen.

    It is an undeniable fact that many/most of us who invested in new projects in Noida over the last 2 years have made good profits but the big question is that will this trend continue?

    A 1 year FD with say IDBI bank will give 11% cumulative return (pre-tax) with zero risk. That is the return that an investor must get on his investment in RE to make it worth the effort. For those who are investing in RE using home loans, break-even point is even higher.

    Are we going to see resale prices for flats in Noida stagnate or even crash over the next few months to years? Are we looking at a train wreck in slow motion?
  • #2

    #2

    Re : Massive new inventory coming are prices in Noida set to stagnate or crash

    These new launches are at higher price then current rates. Also the possession for these will take time. Existing good projects will always fetch good premium in during resale.

    Comment

    • #3

      #3

      Re : Massive new inventory coming are prices in Noida set to stagnate or crash

      My feeling is, price will stagnate for few more years (less than 10% appreciation is stagnation) ... until there is a game changer!!

      Interestingly, a game changer like NE Court cases actually helped to bump up the price in Noida and NE.

      A havoc in world economy (not like a small one like 2008) may affect also. 2008 recession had very little effect on India ... IT related guys will disagree but rest will not have any second opinion about that.

      So the answer is, no one knows future!! kis ko pata woh kaal zinda rahega?

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      • #4

        #4

        Re : Massive new inventory coming are prices in Noida set to stagnate or crash

        things are looking bad. I think prices might go down. Jaypee is offering a scheme in which we have to pay 15% in starting and then after 2 years emi will start. With such kind of schemes, everyone wants to take advantage of the inflation and this definately will lower the price.

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        • #5

          #5

          Re : Massive new inventory coming are prices in Noida set to stagnate or crash

          Originally posted by sourabhgoel2 View Post
          things are looking bad. I think prices might go down. Jaypee is offering a scheme in which we have to pay 15% in starting and then after 2 years emi will start. With such kind of schemes, everyone wants to take advantage of the inflation and this definately will lower the price.
          And in 2 years Jaypee will not start the construction work at site. And you end up paying EMI/Interest to bank for 3-4 years without the possession of your apartment.

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          • #6

            #6

            Re : Massive new inventory coming are prices in Noida set to stagnate or crash

            Dear punjabi,
            most of the projects are having a delivery time frame of 2.5 years to 10 years(townships of jp and wave). If u see, in 2011 there have been hardly any projects delivered. In 2012 as well i dont see more than 10-15000 flats being delivered. Prices keep rising before delivery as demand situation develops, buyers keep booking in under construction and investor re-sales are at its peak and this has been happening for last 1.5 yr. yes a lot of delivery is coming in 2013-14, i guess almost 60000-85000 flats. that is when we will see a correction in overheated properties(10-20%), but from those levels(2013-14) not from current levels. now its a matter of our guess as to what levels would noida be realistically in 2013-14.
            MM

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            • #7

              #7

              Re : Massive new inventory coming are prices in Noida set to stagnate or crash

              The figures might be less punjabi Bhai....
              as you mentioned 18k for 3C sports city - it does not have 18k units , approx 8k will be there.......and rest sports facilities...

              so i believe lesser in other project also...but definilely....still makes a huge figure..........

              Originally posted by ondabhai View Post
              My feeling is, price will stagnate for few more years (less than 10% appreciation is stagnation) ... until there is a game changer!!

              Interestingly, a game changer like NE Court cases actually helped to bump up the price in Noida and NE.

              A havoc in world economy (not like a small one like 2008) may affect also. 2008 recession had very little effect on India ... IT related guys will disagree but rest will not have any second opinion about that.

              So the answer is, no one knows future!! kis ko pata woh kaal zinda rahega?

              Comment

              • #8

                #8

                Re : Massive new inventory coming are prices in Noida set to stagnate or crash

                Originally posted by ondabhai View Post
                My feeling is, price will stagnate for few more years (less than 10% appreciation is stagnation) ... until there is a game changer!!

                Interestingly, a game changer like NE Court cases actually helped to bump up the price in Noida and NE.

                A havoc in world economy (not like a small one like 2008) may affect also. 2008 recession had very little effect on India ... IT related guys will disagree but rest will not have any second opinion about that.

                So the answer is, no one knows future!! kis ko pata woh kaal zinda rahega?
                I agree that 2008 didn't affect India much because India's internal macro economic fundamentals were on Right Track.
                Even so the effects were felt in terms of JOB losses (though small %), Stock Market Crash and zero wage hikes. We saw sharp rebounds mainly due to government intervention and American bail-oute packages.

                Current situation is bit tricky.

                Indian banks specially SBI is under scanner for high NPA .

                Telecom sector is stagnating and huge 3g license cost have added to the woes.

                Airlines sector in in trouble.

                High Inflation rates have brought down purchasing power of rupee.

                High Interest rates leading to weakening for demand for House and Cars.

                High fuel prices adding to less consumer spending
                .
                Weakening of rupee will add to import bill and considering the fact that our import bill is greater than export revenue, it will only lead further rise in inflation.


                Many of the factors listed above did not exists in 2008 so this time if any major world-wide economic downside happens , it would affect India hard and the recovery would not be as smooth.

                In fact many economists believe we have not even recovered from the recession of 2008, it was merely postponed and the effects we can see in EURO debt problem.

                Comment

                • #9

                  #9

                  Re : Massive new inventory coming are prices in Noida set to stagnate or crash

                  MM,
                  Just validating my understanding of your assesment...From what you are suggesting if a flat is for 100 now, it may go to say 130-140 by 2013-14. After 20 % correction from there it might dip and eventually settle at 112...

                  So, basically, it a 6% yoy rise from 2011 to 2014... Of course these are notional figures without taking into account any force majuere..

                  Originally posted by Munish Malhautra View Post
                  Dear punjabi,
                  most of the projects are having a delivery time frame of 2.5 years to 10 years(townships of jp and wave). If u see, in 2011 there have been hardly any projects delivered. In 2012 as well i dont see more than 10-15000 flats being delivered. Prices keep rising before delivery as demand situation develops, buyers keep booking in under construction and investor re-sales are at its peak and this has been happening for last 1.5 yr. yes a lot of delivery is coming in 2013-14, i guess almost 60000-85000 flats. that is when we will see a correction in overheated properties(10-20%), but from those levels(2013-14) not from current levels. now its a matter of our guess as to what levels would noida be realistically in 2013-14.

                  Comment

                  • #10

                    #10

                    Re : Massive new inventory coming are prices in Noida set to stagnate or crash

                    The current prices (even after sharp increase in last one year) on Noida Expressway are same as they were in early 2008.
                    So, there is quite a possibility that history may repeat itself. Its a great myth that the property prices always go up.
                    'LIVE FOR INDIA'

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