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| Sealing in Noida set to drive down residential rents |
| Dilasha Seth / New Delhi Jan 29, 2012, 00:17 IST |
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Commercial real estate rentals may go up by 15 to 20 per cent in Noida, following the sealing drive in the area, according to industry analysts and representatives.
Developers are looking at projects at commercial complexes with renewed interest now, pointed out an industry source.
But residential areas of Noida, which falls in the national capital region (NCR), may see a price correction by around 20 per cent.
The Supreme Court had on December 4 ruled that all commercial establishments operating from residential premises in Noida must move out in two months. With the deadline of two months approaching in a few days, Noida authorities have sprung into action, issuing notices to commercial establishments operating in the residential areas.
The move is being hailed by developers. According to them, demand for approved commercial space was not high in Noida as most banks and other establishments preferred residential areas. Commercial establishments and banks used to opt for residential areas as rentals were considerably lower there.
As the demand for approved commercial space goes up following the sealing drive, the category is set to witness an increase in rental and sale value. But residential areas are likely to see a dip in value as commercial ventures are being forced out from there.
Establishments facing action include nearly 104 bank branches, 60 nursing homes, and 50,000 other establishments, including more than 250 showrooms, according to Noida authorities.
The authority has announced a relocation plan for the banks to commercial spaces, but not for others. “The land price for approved commercial projects is four times the land price of residential,” said R K Arora, managing director, Supertech.
That results in a 50 per cent higher rental in commercial as compared to residential. “For example, if you pay Rs 100 rental in a residential area, you have to pay Rs 200 for the same space in an approved commercial area.”
Will the sealing drive lead to chaos in Noida? No, argued developers.
According to the master plan for Noida, 5 per cent of area is set for building commercial space, 35 per cent for green cover and roads, 20 per cent for industrial, 20 per cent for residential and 5 per cent for institutions. An executive of a real estate firm said this 5 per cent was more than enough to accommodate commercial establishments. In fact, he said, there were no takers for commercial spaces till now, which is finally set to change. “Due to cheaper options available, these places used to go unused.”
John Thomas, regional director, Realistic Realtors, said: “We will see a minimum of 15-20 per cent hike in rentals and sales value in the affordable commercial spaces and a similar fall in prices in the residential areas, which were valued on commercial rates.”
Commercial spaces close to residential areas in Noida are likely to see demand going up in bulk, according to analysts.
Aman Gupta, executive director, RG Group, said banks would look for a nearby place to where they were running right now, as banks follow guidelines of a bank branch in a particular radius catering to people of one region . “Banks would not like to relocate to a place very far off from where they were operating now.” Same goes for unorganised players, according to him. They have clients in a particular region, and so they will not be comfortable going too far off, according to Gupta.
The sealing move in Noida is making realty players in the region take the opportunities in commercial space more seriously now.
“Yes, after assessing the demand, we plan to come forward with more commercial projects. We already have a few in Noida,” said Arora of Supertech.
Gupta of RG Group said, “We have commercial projects in Delhi, but not in Noida. We will be exploring good commercial projects in Noida, and will go for it.”
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