The Uttar Pradesh government recently announced that a Film City would come up on a 1,000-acre plot along the Yamuna Expressway, barely six kilometres from the proposed Jewar Airport and an hour’s drive from Delhi.
The site is located in Sector 21, along the Yamuna Expressway in Gautam Budh Nagar. According to the presentation, of the 1,000 acres, 220 acres will be kept aside for commercial activity.
The site is also located close to the proposed logistics hub in Noida — a dry port and freight corridor — thus ensuring transport facilities and movement. The region will also boast of an international electronics city and a global financial hub in the coming years.
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The Jewar international airport is expected to be functional by 2023. Reports have also said that the entertainment city may take off by next year.
The government is said to be considering three models to run the film city. They are: a private partnership on a revenue-sharing model; giving the mandate to Film Bandhu, UP’s nodal agency promoting film production and the State’s film policy; handing over the project entirely to the Yamuna Expressway Authority.
Hopes of a revival
As with any mega infrastructure project, the proposed film city may drive employment and help revive the property market, which has taken a beating after the Covid-19 pandemic. Also, considering the benefits that accrue from price appreciation in the residential, commercial and retail sectors, the issue is: will homebuyers and investors consider putting their money in projects around the neighbourhood?
While this is expected to revive the fortunes of the Noida, Greater Noida and Yamuna Expressway real estate market, which has taken a beating, especially after the Covid pandemic, the real benefits in terms of price appreciation and increased infrastructure activity will only be witnessed once construction gets underway, say real estate experts.
Besides the commercial segment, which is expected to see a spurt in demand, the residential category that may benefit from this project would be the studio apartment category. Commercial and retail spaces may also witness traction.
“Like any mega infrastructure project, the proposed film city, too, will help in reviving the property market in nearby areas like Noida, Greater Noida and Yamuna Expressway. However, the ‘real’ benefits in terms of price appreciation and heightened real estate activity in residential, commercial and retail will be seen only once the project sees visible signs of construction or nears completion,” Santosh Kumar, Vice Chairman, Anarock Property Consultants, told Moneycontrol.
Boost for Noida, Greater Noida
Since the site is strategically located close to the upcoming airport, Delhi and even Mathura, it will have a positive impact on Noida and Greater Noida’s office space market as various production houses and associated companies should be lining up to set up their offices.
“Noida’s realty market has been witnessing a surge in office leasing for the last couple of years, and, according to a recent industry report, it touched a new high by outperforming Gurugram for the first time,” said Ashish Arora, Director–Distribution, Viridian RED.
An ANAROCK research report says that the Yamuna Expressway has seen launches of approximately 50,100 units between 2013 till date, of which over 19 percent is ready-to-move-in while another 19 percent is expected to be ready within the next 12 months. The remaining 62 percent is expected to take more than one year to complete.
For homebuyers wanting to invest in ready-to-move-in units in the area, physical infrastructure and the commute could prove to be a challenge.
“Gone are the times when people would buy a project on paper. There need to be tangible signs of development with some clear, significant commitments from anchor occupiers for the film city. The airport development should progress in full steam and the social and physical infrastructure, including mass transportation, should be in place for prices to see a steady appreciation trend,” explains Anckur Srivasttava of GenReal Advisers.
If all these factors are in place, then prices could steadily inch up 15-20 percent to the Rs 3,500-Rs 3,800 per sq. ft. range, he adds.
The average property prices are currently around Rs 3,000 per sq. ft., while the average size of properties is 1,200 sq. ft. Real estate today is no longer an investment proposition as there are only end-users in the market and therefore comparison with returns on mutual funds and gold may not be apt.
“Real estate has to be bought from an end-user perspective as there are no speculators today. People are buying property to move in themselves and not looking at it from an investment perspective,” confirms Srivasttava.
Homebuyers should also factor in Noida and Greater Noida’s delivery track record.
Developers in the NCR are struggling with cash flows as Covid-19 has halted the sales recovery witnessed in H2 2019. The National Capital Region (NCR) has become India’s central district for incomplete housing projects. It is not just about stuck projects of the Unitech Group, Amrapali Group and Jaypee Group, which have been getting mainstream attention because of ongoing court battles.
Nearly 50 percent of unsold residential inventory in the country is under high risk of being delayed or is susceptible to price correction or both, a report has said.
Nearly 33 percent of projects in the MMR (Mumbai Metropolitan Region) and 59 percent of projects in the NCR fall in high and very high execution risk categories, a report by Liases Foras on execution and price correction risk on residential markets in India has said.
No ecosystem for habitation
Fund diversion, lack of regulatory oversight, confusing land buying rules, abundant supply, a credit crunch and collapsing returns have turned large parts of Noida, Greater Noida and Gurgaon into unfinished, deserted ghost towns. Another reason for the NCR’s massive inventories is that in many of the areas where these projects have come up, the ecosystem for habitation is missing.
“The basic social fabric is missing. This was not a big issue as long as the market was thriving due to demand from investors who put in money only to exit. But with the market now depending only on end-user demand, the sustainability of some projects is a big problem for some developers,” said Mudassir Zaidi, Executive Director, (North), Knight Frank (India).
There continue to be issues with the law-and-order situation. Delayed land compensation issues and the dues real estate developers owe authorities are among other factors that buyers need to keep in mind before investing in the area.
Real estate experts are of the view that for homebuyers looking at a four- to five-year horizon and not wanting to move in immediately, investing in a residential property in the area could be an option. But for those working from home and scouting for ready-to-move-in options right away from a liveability and infrastructure perspective, there are opportunities available in markets such as Noida Extension in Greater Noida, Raj Nagar and Crossings Republik at similar prices.
“If there is an under-construction project coming up on the Yamuna Expressway, it may be a good idea to invest because the property market would develop along with airport infrastructure and the film city, not to mention the logistics hub planned in the vicinity. Employment opportunities and demand may pick up in the area by 2024,” says a real estate broker active in the area.
Bhupindra Singh, Managing Director, Regional Tenant Representation (RTR) & Office Services (North) at Colliers International India, points out that historically, cities were based on riverbeds, whereas today city development is all about expressways, connectivity and airports.
With work going on currently on the Golden Quadrilateral, the national highway network connecting Delhi, Kolkata, Mumbai and Chennai, and work on the Delhi–Mumbai Industrial Corridor Project in progress, this region may become the nodal point for north India.
According to Srivasttava of GenReal Advisers, the Yamuna Expressway is a mid-to-long term bet. Both the airport and the film city are projects that will take five years to develop.
Can it become India’s Canary Wharf?
At a time when the focus is on working from home, access to social infrastructure within the vicinity is important. “As far as investors are concerned, they may not want to immediately invest in the Yamuna Expressway, because they are not sure when the real estate story is likely to play out from the exit perspective,” he explains.
“If the government is serious about promoting this area and bringing end-users into the real estate fold, it should simultaneously announce public transportation projects, and extend the metro line all the way to the airport and the proposed film city. This should be done with a finite timeline and money committed,” he says.
Right now, the stretch is likely to appeal to buyers with limited budgets and those working in the area. To put it on the city map, the government should look at turning it into a services hub, creating social infrastructure in the area similar to what was done in the case of the UK’s Canary Wharf, he says.
As far as the film city is concerned, one may have to wait and watch to see which sponsors and brands come forward to set up shop in the area. All these factors will influence which housing category — MIG, LIG or HIG —is likely to do well in the region. The density of retail activity may also increase, he said.
Also, compared to Gurgaon, which is a two-dollar market, Noida is a one-dollar market. While the availability of talent is similar in both locations, there may be increased efficiency in running operations in Noida.
“Organisations desirous of setting up offices here may find it economical to provide residential accommodation to employees as part of their compensation as there is abundant housing supply available at reasonable prices,” Singh explains.
It is interesting to note that the Uttar Pradesh government had in August 2013 approved a proposal for a Night Safari on a public-private partnership (PPP) model. This was to be India's first and the world’s fourth Night Safari project. It would have been developed on 250 acres of land adjoining the Gautam Budh university (GBU) campus, along the Yamuna Expressway. This had led to several real estate developers launching and promoting projects, with the Night Safari becoming their unique selling proposition.
The Greater Noida Authority recently scrapped the project and offered the land for the Film City project.
“The approach this time around is different. Night safari was meant to be created as a tourist destination but a film city is aimed at purely creating employment in the area,” says Singh.
Film city projects in AP and Maharashtra
The other two micro markets where film cities are located are Secunderabad, which houses the Ramoji Film City, and Goregaon, Mumbai, where Filmistan is situated. The former is an integrated film studio complex located in Hyderabad and is spread over 1,600 acres. The latter is a 40-year-old development.
The development of office complexes and commercial buildings in Goregaon, over the years, has attracted occupiers as well as homebuyers to the suburb, driving residential prices northwards. According to Colliers Research, the micromarket of Goregaon accounted for 13 percent of the city’s gross absorption in H1 2020 (January to June), driven by banking, financial services and insurance (BFSI) and IT-BPM companies.
Ramoji Film City was set up around 25 years ago. Land prices started appreciating in the area only about seven to eight years ago, after connectivity improved.
Land prices were in the range of Rs 500 per sq. yard when it started and currently they are at around Rs 4,000 per sq. yard, depending on the development zone and the authority that the land parcel comes under, local brokers active in the area told Moneycontrol. They added that the site has primarily witnessed plotted development.
Secunderabad is in the north-eastern zone of Hyderabad. Residential locations in the vicinity include Sainikpuri, Mettuguda, Malkajgiri and Tirumalgherry. Several central and State government offices such as Indian Railways, the nuclear fuel complex, Electronics Corporation of India Limited (ECIL), defence establishments and local State government offices are located in the area.
With infrastructure projects such as Hyderabad metro rail and local MMTS services touching Mettuguda, Malkajgiri, Neredmet and other locations, strong residential demand is emerging in the affordable housing segment, which is priced at less than Rs 40 lakh, consultants told Moneycontrol.
Many industrial and warehousing developments are also located along the Kompally-Medchal road in the area, they said.
“Most modern film cities require larger layouts and massive planning due to which they can come up only on the outskirts of main cities. As is the case with Universal Studios located in Singapore, these areas are major employment and tourism hubs. The Noida film city, too, once developed, may lead to job creation and attract migrants to settle in the area. It may also become a major tourism attraction,” says Ritesh Mehta, Senior Director & Head – West India, Residential Services, JLL India.
Having said this, the Noida Film City development offers a long-term opportunity. The area may also fetch attractive rentals once the facilities are up and running. “Investors can look at smaller formats such as studios as an investment. Hotels and high-street formats are also likely to do well in this area but over a four- to five-year period, provided development takes off as planned,” he adds.