Small Homes Turn Away Noida-Greater Noida Homebuyers

A joint study conducted by Housing.com and Makaan.com, leading real estate advisories, revealed that homebuyers, between January 2017 and March 2017 and the same period in 2018, on an average, demanded bigger homes. In early 2018, the average size of the homes that were being considered for a purchase stood at 1,300 square foot (sqf), up by four per cent when compared to early 2017.

So, are Indian homebuyers getting what they want? Here is what the report say:

The micro-markets of Noida and Greater Noida that have immense potential in terms of jobs and housing capacity have lagged behind for long when it came to sales. However, the recovery is visible and homebuyers are back again enquiring about residential projects in this housing zone but the real question that emerged is, why did these micro-markets remain the most stressed for the longest time? The joint study revealed that while Noida and Greater Noida did provide affordability, the size demand was compromised.

In 2018, Noida homebuyers demanded homes that were on an average 1,320 sqf in size, a slightly upward movement when compared to 2017 when the ask was 1,305 sqf. On the supply side, however, the demand was not met, at 1,260 sq ft in 2018 and 1,290 sq ft  in 2017.

In Greater Noida, while the demand is for homes with an average size of 1,320 sqf, the supply stands at 1,160 sqf only. In 2017, too, while the demand was for a property sized 1,365 sqf, the average supply stood at 1,140 sqf.

This imbalance is due to the staggering pace of the property market over the last few years, developers have focussed, perhaps more on the price factor than on the space needs. Moreover, in cities such as Mumbai and Delhi, homebuyers were keen on the affordability factor given that the prices are too high, therefore real estate developers offering new projects were willing to cut down on the space to add a price benefit. However, for an affordable property market like the National Capital Region (NCR), this strategy is more a loss than gain.

Time to count blessing & weigh the odds

There is no doubt that the Noida-Greater Noida belt is an affordable housing and commercial hub. Hundreds of start-ups, back offices, multinational companies, schools, colleges and malls have set up shop here. This has resulted in a jump in housing demand. Investors from Delhi and other parts of the national capital region (NCR) have put their money in here, hoping for good returns in the mid to long term. While end-users have also made the most of the price advantage, there is no dearth of tenants who may be college students or working professionals with their jobs in the vicinity. Property developers in turn took to rampant construction and starting 2008, there have been multiple launches until recently when the Real Estate Regulatory Authority (RERA) came up as a watchdog, trying to regulate a haphazard and unruly market with transparency issues and many project delays.

At this juncture, homebuyers lured by price discounts often headed to unstructured sellers who compromised on the quality of construction. The recent example being the building collapse in Greater Noida’s Shahberi Village where the raw materials used for the construction and inadequate strength of the building have been blamed for the tragic collapse injuring many and causing the death of three residents.

At the same time, in order to lure investments into the twin city, the authority has announced rebates on the registration of commercial and institutional properties. For apartment buyers, surcharges on power backup or lift facilities have also been waived while on some other facilities, the charges are down by nine per cent.

Further, there is no hike on the circle rates in Noida or Greater Noida. The attempt is to revive the market.  Brijesh Narayan Singh, district magistrate, Gautam Buddha Nagar spoke to the media, “This year, we have proposed not to raise the circle rates. We have decided to arrive at a balance between calculating compensation for farmers and providing relief across property segments. We have decided to propose a rebate on stamp duty across five areas where additional duties are imposed in case of group housing.”

While the advantages of investing in the Noida-Greater Noida property market may be many, make sure you side with a reputed builder’s construction only. Meanwhile, such developers will need to provide what homebuyers are demanding- affordable and space efficient, liveable homes. Until then, the problem of unsold inventory will persist. Developers undertaking new constructions should be mindful of this.