Luxury housing trends: Why are real estate developers launching ₹5 crore-plus apartments in Noida?
Noida real estate market: As cost of land and construction hit the ceiling, builders up their game in Uttar Pradesh’s most promising township
Noida is fast shedding its image as Gurugram’s poor cousin, so much so that prices of recent luxury housing projects seem to be almost on par with new launches in the millennium city. The city’s premium offerings are being lapped up by people wanting to upgrade from ‘kothi’ living to a ‘condo’ lifestyle, investors, non-resident Indians, not to mention entrepreneurs who have made it big in the industrial town.
Improvement in the law and order situation and overall perception about Noida has been further enhanced by the government's push for business and infrastructure development. Gautam Buddh Nagar is now home to several IT and consulting firms, not necessarily back-office companies.
Infrastructure development, especially the upcoming Noida International Airport, an extensive network of roads, railways, and new metro corridors are likely to improve connectivity in the coming years and also impact property prices. This has led buyers to invest in new housing projects in Noida, most of them being in the ₹5 crore-plus range.
Also Read: 7 things real estate investors should keep in mind before buying property in Greater Noida and Noida
The increase in price of new launches is also a function of the cost of land. Since 2022, real estate developers who were earlier required to pay only a minimum 10 percent at the time of purchasing land and the rest over a period of five to seven years, now have to make the total payment within 90 days of the allotment. This has made land purchase not only expensive but also scarce, say real estate developers.
“The only option now is to launch ultra luxury housing units with a plethora of amenities to make the project economically viable,” they said.
Developers such as Experion, M3M, Godrej, County Group, Gaurs Group and Max are offering ultra-luxurious apartments and since real estate prices in Noida have shot up, speculators and investors have entered the fray in the hope that they would make a profit, said real estate brokers active in the area.
Increase in the cost of land has led to developers launching luxury projects in Noida
Of late, established developers in Noida are launching projects in the more than ₹5 crore range. This is because land has become scarce in Noida.
“Supply of land parcels in Noida has dried up. Besides, developers have to now pay for the land upfront. Secondly, the Master Plan lays down that only 19 percent of the land can be utilized for residential projects. All these factors have led to prices of land shooting through the roof, which in turn has had a bearing on prices of new launches,” said Manoj Gaur, chairman and managing director of Gaurs Group.
Amit Modi, Director, County Group, opines, “Land has become expensive and scarce in Noida. It therefore makes economic sense to construct large-sized apartments and load them with amenities.
“Noida is no longer a poor cousin of Gurugram. The company’s project in Sector 115 offers apartments in the range of ₹9 crore to ₹13 crore. The size of apartments vary from 4700 sq ft to 7000 sq ft,” he said.
“Improvement in Noida’s profile coupled with large-scale infrastructure projects, not to mention an increase in leasing of A Grade office spaces has changed the way an investor looks at Noida today,” said Mudassir Zaidi, Executive Director at Knight Frank India.
Earlier, two-third office leasing would take place in Gurugram, and only one-third in Noida. This has changed over the years and several corporates are considering Noida as an important market. This has had an impact on the housing market as well. New projects now offer a lifestyle not seen in the city before, he said.
“Several developers are eyeing the ultra-luxury housing opportunity and buyers are responding to it. Cost of land is a major factor and so is the cost of construction. It has gone up from ₹4500 per sq ft before Covid to 7000 per sq ft now. It therefore makes sense for developers to up the game and make a higher end product rather than work with low margins,” he said, adding “the city is still working on its image of being a poor cousin of Gurugram. It is still a work in progress but having said that a huge gap has already been plugged.”
“Noida is now a prime spot for both residential and commercial investments. In the past few quarters, Noida has picked up pace in terms of pricing and luxury project launches. This city has mostly been an end-user market with more gradual price increases as compared to Gurugram. However, the trend has seen a slight shift in the past few quarters with growing investor interest,” said Dhruv Agarwala, Group CEO, Housing.com and Proptiger.com
Noida International airport and property prices
The recent escalation in demand and pricing in Noida is largely due to substantial infrastructure upgrades across the city. A significant factor that may be driving this growth is the Jewar airport, which is set to become a major catalyst for further development and investment in the region, he said.
Saurabh Garg, co-founder and chief business officer at NoBroker points out that Noida and Greater Noida have become the focal points for luxury real estate development. The demand for uber-premium apartments in these regions is booming, and several factors contribute to this trend.
The region's infrastructure is more developed than many other areas in Uttar Pradesh and even Delhi, making it a highly desirable destination for homebuyers. Another factor is the upcoming Jewar Airport, which is poised to transform the area into a major commercial hub, attracting even more residents and businesses. For buyers from Faridabad, Ghaziabad and Delhi looking to upgrade, Noida stands out as an appealing option, he adds.
Who are the buyers?
Those buying into these luxury projects are primarily those wanting to upgrade to condo living. Most of them are investing proceeds from the sale of their bungalows in Delhi or Noida into these luxury projects. This is not to say that there are no end-users. Developers point out that several Noida-based entrepreneurs, contractors, service consultants, not to mention NRIs are also investing in these projects.
Some local brokers point out that the Noida market has outpriced itself, especially when it comes to new luxury launches. “Prices of new launches have touched rates in Gurugram,” said Pradeep Dwivedi of Empire Realty Solutions, adding there are very few first time homebuyers buying into these projects.
For the middle class wanting to buy an apartment in Noida with a budget of ₹1 crore, resale/secondary market is the only option. “These buyers may get a few options in Greater Noida West in this budget,” he said.
Is there a bubble in the offing?
Real estate experts don’t see a bubble yet.
According to Zaidi, property prices have not increased manifold since COVID. In terms of compound annual growth rate, prices may have increased by around 7%. It should also be noted here that the ₹5 crore segment did not exist in Noida before the pandemic. This is not a bubble-like situation as there’s not too much stock in the market.
Agreed Gaur, “this will not lead to a bubble. Across Noida, Greater Noida and Ghaziabad, the total inventory of ultra luxury homes is not more than 5000 units. The supply is still limited. Besides, developers are not racing to launch many projects. The pace has slowed down over the years. Developers are launching fewer projects than in the past. The focus is more on delivering quality projects on time,” he added.