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Sep 20, 2013, 02.39 PM IST | Source: Jones Lang LaSalle

Delhi-NCR realty: What ails Sonipat, Panipat and Faridabad?

Panipat and Sonipat have traditionally been industrial and business towns, typified by the presence of several SMEs - and, in the case of Panipat, petrochemical and textile industries.

Sonipat And Panipat

Technically, there are certain favourable factors for the realty markets of Sonipat and Panipat - proximity to Delhi and connectivity through NH1 being the primary ones. Nevertheless, these areas have not been able to position themselves as real estate hubs of any significance, and their realty markets have seen only moderate growth so far.

It should be remembered that real estate and economic prosperity are factors that augment each another. Economic development translates into employment opportunities and increased employment boosts an area's realty market, which in turn accelerates the economic growth of the region. It is against this yardstick that these two areas need to be evaluated for their current real estate potential.

Panipat and Sonipat have traditionally been industrial and business towns, typified by the presence of several SMEs - and, in the case of Panipat, petrochemical and textile industries. Literacy levels in these two areas have remained relatively low - as can be expected from localities whose primary economic drivers are SMEs and industries. As a result, the income levels of the population residing in these towns have never been able to breach the 'average' mark.

The additional drivers that would catalyse increased real estate demand - increased employment opportunities in a higher-profiled class of workplaces, which would result in increased income levels - have been notably absent. Sonipat and Panipat have been unable to make any kind of headway in positioning themselves as corporate hubs. Indeed, there is no corporate presence at all to be seen in either of these locations.

Another important factor - the availability of cheap and skilled workforces (which is crucial for development of a realty market and an area's ability to attract corporates) is conspicuously absent in these areas. The local, native population has consistently displayed a lack of aspiration in terms of transcending their traditional employment opportunities. Nor is there any significant influx of migrant population to help raise the profile.

Yet another vital ingredient for a real estate success story that is missing at Sonipat and Panipat is the availability of cheap surplus land. Since these are essentially small towns, no land parcels of significant magnitude are available. Although many residential projects and townships have come up in the vicinity of Sonipat, this residential supply has not resulted in new commercial activities. Thus, most of this not inconsiderable supply is lying vacant. Only investors have shown some interest in these projects, as end users lack the economic means to pursue home ownership even if they plan to settle there.

That said, this rather gloomy scenario at Sonipat and Panipat could take a turn for the better in the future. As the many new infrastructure initiatives such as the KMP-KGP Expressways and metro connectivity being pursued in these areas take shape and form, the realty fortunes of Sonipat and Panipat will certainly start improving.


Faridabad

Faridabad presents a similar picture. Fundamentally, this is an industrial town whose only other economic driver has been a certain amount of agricultural activity. Unfortunately, the employment generation potential of the existing industries at Faridabad has reached a saturation level; this area now is in serious need of other sustainable forms of commercial activity - not to speak of infrastructure up-gradation - for next level of development and real estate growth to take place. 

NO doubt, the trend of real estate demand within NCR shifting to alternate locations is likely to continue. In the process, these three areas are by default lined up for increased appeal, largely because of the availability of comparatively cheaper land for residential and commercial real estate development. However, the pace of growth - and the sustainability of this pace - will remain constricted until these regions are able to complement real estate demand with other forms of commercial and economic activities that generate enhanced employment opportunities.

A stepping-up of infrastructure initiatives and development, Government policies promoting the establishment of SEZs and business parks, a greater focus on law and order and the availability of healthcare and education facilities are some of the other factors that are required to increase these locations' potential to be the next real estate destinations.

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