Prime Minister Narendra Modi is laying the foundation stone of the Noida International Airport at Jewar in Gautam Buddha Nagar district on November 25, setting the stage is set for its construction.
Real estate experts say that once operational, the airport will be a game-changer not just for the Noida and Greater Noida markets, but also areas such as the Yamuna Expressway, where demand has so far been lacklustre, more so on account of the COVID-19 pandemic.
However, real benefits in terms of price appreciation and increased infrastructure activity will come in only once construction starts and basic facilities such as the metro are in place, experts said. The ‘real’ impact of the second international airport in the National Capital Region (NCR) will be felt in 8-10 years, as was the case with the Delhi airport.
“For an area to become end-user centric and liveable, a massive infrastructure project like Jewar international airport can definitely make a huge difference. Such projects are invariably followed by more real estate developments including housing, commercial and hospitality,” said Santhosh Kumar, vice chairman of Anarock Group.
The expectation is that the new airport, like any mega-infrastructure project, will boost economic activity around the Noida and Greater Noida regions. Once completed, Noida International Airport will not only ease traffic at New Delhi’s Indira Gandhi International Airport (IGIA) but also create job opportunities in Noida, Greater Noida and along the Yamuna Expressway.
These markets have reeled under tremendous pressure over the past three to four years and require a fresh injection of opportunity and intent to overcome this slump, Kumar explained.
For the area to come up, construction activity at the airport must start and until that happens, the potential of other real estate developments such as residential, commercial or retail property will remain on hold.
“To be sure, developers who had hoped to cash in on this mega-project when it was announced several years ago bought large land parcels in the vicinity. It will be a long-term growth catalyst. As of now, the nearby areas including Noida, Greater Noida and Yamuna Expressway still have more than enough existing inventory,” he added.
Amit Modi, director of ABA Corp, a realty company, said the inauguration of Jewar airport is expected to be a game-changer for Noida. It will help establish the city on the global logistics map and the region will reap economic multiplier benefits and open up employment as well as opportunities in the construction business.
Mudassir Zaidi, executive director-north, Knight Frank India, agreed and said that ever since the project was announced, there has been a slight buoyancy in the market.
“As the progress of the project becomes definitive, interest in the region will start building up. However, that does not mean that there will be a sudden surge in real estate activity. Developers have and will scout for land opportunities in the region. With construction progressing, prices too may see an impact,” he said.
Residential and commercial projects will not take off immediately but will take time. However, real estate activity may build up once facilities such as an airport-metro link are in place. Right now, it is a futuristic destination and not something to be considered for decision-making on an immediate basis, he added.
About the project
Noida International Airport is being developed in public-private partnership mode. The UP government claims that when it is completed, the Jewar airport will be India’s biggest. It will be developed in four phases, with the entire project estimated to cost Rs 30,000 crore ($4 billion), according to officials.
The airport is expected to start operating by September 2024. Spread over 1,330 acres, it will initially have two runways. The first phase will entail an investment of Rs 8,914 crore and the initial annual passenger handling capacity will be 12 million, according to reports. The amount excludes the cost of land acquisition, rehabilitation, and resettlement.
Yamuna International Airport (YIAPL), a subsidiary of Zurich Airport International AG, will develop the airport. The concession period is 40 years.
Noida International Airport (NIAL), owned by the UP government and other entities, will have a 1 percent “golden share” in YIAPL and the right to appoint two directors on the YIAPL board.
The UP government and the New Okhla Industrial Development Authority (Noida) will each have a 37.5 percent stake in NIAL. The Greater Noida Industrial Development Authority and the Yamuna Expressway Industrial Development Authority (YEIDA) have a 12.5 percent stake each in the company.
The airport will have an integrated cargo hub with a focus on cutting costs and time for logistics. Noida and New Delhi will be connected to the airport through a metro service as well as roads and highways such as Yamuna Expressway, Western Peripheral Expressway, Eastern Peripheral Expressway and Delhi-Mumbai Expressway.
The airport will be linked to the planned Delhi-Varanasi High-Speed Rail, enabling people to travel between Delhi and the airport in 21 minutes. The airport will house a state-of-the-art maintenance, repair and overhauling service.
The UP government said that a Film City would come up on a 1,000-acre plot along the Yamuna Expressway, 6 km from the proposed airport and an hour’s drive from New Delhi. The Film City project is expected to spur residential as well as commercial property development in the region. Of the 1,000 acres allocated for the Film City, 220 acres will be kept for commercial activity.
The site is also located close to a proposed logistics hub in Noida — a dry port and freight corridor — thus ensuring transport facilities and movement. The region will boast of an international electronics city and a global financial hub in the coming years.
Real benefits
While some real experts said the airport will improve the fortunes of its surrounding areas, others said the real benefits will accrue after 8-10 years.
“Jewar airport will act as a pivotal factor in the overall growth of Noida and Greater Noida regions in the coming times. The airport will provide the much-needed connectivity to these areas, which will bolster real estate sentiments across asset classes,” said Ankita Sood, head of research at REA India. “We already see that residential demand in the micro-markets around the upcoming airport has gained momentum, with September 2021 surpassing 2020 levels despite the setback of the second COVID-19 wave.”
“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,” said Kumar of Anarock.
Both Greater Noida and Yamuna Expressway have seen a lot of speculative activity in the past few years. While these areas always looked promising for users, liveability was a challenge.
As a result, several housing projects along the Yamuna Expressway are unoccupied and have largely become ghost towns. The residential stock that came up in these areas was mostly inhabited by students of nearby universities.
The new airport is expected to attract more end-users and lead to steady, genuine capital appreciation rather than mere speculation, experts said.
However, investors may not want to immediately start investing in the Yamuna Expressway region because they are not sure when the real estate story is likely to play out from the exit perspective.
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.
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, experts said. Prices will not start increasing immediately.
“The airport is not coming up tomorrow,” cautions Zaidi of Knight Frank India.
Greater Noida itself has more than 40 percent of the units in the NCR. While construction of the airport will help revive the market in this region, prices will not shoot up overnight. If at all, they will only go up by 2 to 4 percent, but gradually, he said.
According to Anarock Research, the average price of units in Noida is Rs 4,780 per square foot. In Greater Noida, it is Rs 3,320 per sq. ft. and along the Yamuna Expressway, it is about Rs 3,350 per sq. ft.
Commercial activity
Experts said office spaces will eventually pick up and inevitably proliferate in the region as rentals will be relatively cheaper than in Gurgaon and New Delhi.
Warehousing and residential sectors are expected to get a shot in the arm first, followed by the commercial sector, but all this will take over five years, said Zaidi.
Gurgaon, especially its commercial and residential markets, benefited more than Delhi from the existing airport, despite Noida having better infrastructure, he added.
Challenges
For homebuyers wanting to acquire ready-to-move-in units that may come up in the area in a few years, the infrastructure and commute could prove to be a challenge.
Homebuyers should also factor in the delivery track record in Noida and Greater Noida. Allegations of 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 the ecosystem for habitation is missing in many areas where these projects have come up.
Developers in the NCR have been struggling with cashflows after COVID-19 halted the sales recovery witnessed in the second half of 2019. The NCR has become India’s central district for incomplete housing projects. It is not just the stalled projects of the Unitech Group, Amrapali Group and Jaypee Group, which have been getting mainstream attention because of court battles.
Delayed land compensation issues and the dues that real estate developers owe the authorities are among the other factors that buyers need to keep in mind before investing in the area.
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