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Dalal Street

Noida: Affordability is key to flattish sales

Monday, April 07, 2014

Absorption rate has remained choppy since the last 7-8 quarters. We foresee this trend to continue given contrasting market forces. On the one hand, Noida offers amazing infrastructure, connectivity and affordability; whereas on the other, the city struggles with poor migration, commercial leasing, project delays and high unsold inventory. A clear trend has emerged in Noida over 2011-13 wherein new sales have remained primarily limited to sectors within Noida city and sectors with direct access to Noida Expressway.

The rise in unsold inventory levels has been relentless approaching 100k units. Given current sales run-rate, Noida will require 7-8 quarters to clear this unsold inventory. We maintain our negative view on Noida except for sub-markets of Noida city and areas under sector 110. Extensive project delays and political
problems have restricted investor interest to locals only. We would recommend end-users to prefer ready-to-move-in units compared to new launches.

Noida Office Market
The rising rentals and lack of supply in prime micro-markets of Gurgaon has made Noida attractive for prospective clients. In the past 6-9 months, we have seen a notable increase in absorption in Noida along the Noida-Greater Noida Expressway. We expect the trend to continue given good quality supply of IT SEZ
office space at a 30% discount to Gurgaon and better infrastructure in Noida. However, the rental recovery in Noida might take more time.


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