What Ails Noida Real Estate?
Neha Sharma (name changed on request) is earning a monthly rent of Rs 15,000 for a 3BHK unit she owns in Noida. Sharma, a journalist by profession, pays a monthly EMI (equated monthly installment) of Rs 30,000 for this unit. What makes one curious about Sharma is the fact that she lives in a rented house in Gurgaon with her husband and the couple pays another Rs 27,000 as monthly rent. Most would find the couple's financial planning skills as questionable. However, Sharma does not seem to mind.
“At the time of investing, we relied on an upcoming Metro network, which has yet to make its way in the locality. While my husband travels by car, we do need an effective public transport system in place to live in that locality. You cannot solely rely on a car for all your travel needs,” says Sharma.
“In case, you have to take an auto, the driver can ask for any amount that suits his fancy to take you from one place to another. And then, there are safety concerns, too. The locality where we have our house is sparsely populated and travelling alone does not look like a safe option so far,” adds Sharma.
According to media reports, the upcoming metro corridors between Noida and Greater Noida, and City Centre and Sector 62, are likely to become operational by end of 2017. While this means the work would be completed ahead of the deadline, investors cannot wait for the process to complete. Even then, not all the localities will have easy access to Metro stations and will have to depend on private transport to reach there. Nevertheless, the presence of a Metro network would most certainly trigger a rise in rents.
But, connectivity is not the only concern that is forcing investors to rent out their properties in Greater Noida and Noida extension. Leave alone social infrastructure, even basic civic amenities are hard to find. Owing to poor waste management, plush apartment buildings and heaps of garbage dumps lie side by side. The state of traffic control is similar.
“If you thought people do rash driving in Gurgaon, you have to go to Noida to clear your doubts. Traffic rules are hardly followed as most signals lie unmanned,” says Abhinav Kumar, Sharma's husband.
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According to an India Today report, there are only 140 traffic cops, along with 100 home guards deployed to manage traffic in Noida. Out of these 240 cops, only 40 are allowed to penalise violators.
As a result, the rental returns in Noida fall only between one and five per cent, the lowest when compared to other top cities. Worse still, there has been a consistent depreciation in rental returns over the years, data show. This is because tenants are aware of the pressure landlords are facing, and are constantly negotiating to pay lower charges. Oversupply of property had also been detrimental to property values.
Despite its flaws, Noida real estate market has garnered a large number of home buyers - both end-users and investors who were lured by the variety that the market had to offer. With Real Estate Law taking shape and regulator coming to monitor pain points, there is no doubt that the market will be cleansed of project delays and defaults. The earlier, the better. Timely delivery of homes would also mean that social and physical infrastructure - hospitals, schools, malls, roads and waste management would be taken care of at a faster pace. Till now, unsold stock has been detrimental to the growth of social infrastructure.
Recently, Noida authority chairman called a meeting of officials to brainstorm about how to make the city a better place by improving the supply of basic facilities and cleanliness. Let us see what shape things take from here on.