A day after the Swiss firm Zurich Airport International AG received security clearance from the Centre for developing Jewar airport in western Uttar Pradesh, real estate consultants say that in COVID-19 times, the first activity to perhaps take off would be land acquisition, especially for warehousing.
The Zurich Airport International AG, on November 29, was selected as the concessionaire for developing the greenfield Jewar airport in the NCR region. Jewar Airport or the Noida International Greenfield Airport, will come up in 5,000 hectare area when fully constructed and is estimated to cost Rs 29,560 crore. On completion, the airport is expected to be the largest in India.
On May 19, Uttar Pradesh Principal Secretary SP Goyal tweeted: "Glad to share that Zurich Airport International AG has got the security clearance for the development of the Noida International Greenfield Airport at Jewar."
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This clearance will now pave the way for the concessionaire to sign an agreement with Noida International Airport Limited, the government's nodal agency for the project.
“As things return to normal, activity along the stretch may gradually start gaining momentum. Only preparatory, early stage activities such as land acquisition may take off first, particularly for the purpose of warehousing and supply chain to start with," Mudassir Zaidi, executive director – North, Knight Frank India, told Moneycontrol.
Other activities such as housing, commercial or hospitality may take time, he said.
"The airport is expected to act as a catalyst for a well-rounded and comprehensive real estate development along the Yamuna expressway and surrounding regions. From a real estate perspective, the proposed international airport (and other infrastructure initiatives planned alongside) and abundant land availability offer several opportunities for developers and investors - residential projects, commercial complexes, industrial and warehousing facilities and manufacturing hubs," said Anshuman Magazine, Chairman & CEO – CBRE India, South East Asia, Middle East & Africa.
In recent years, growth in the warehousing sector has been primarily driven by 3 PL companies (third-party logistics that refers to outsourcing of e-commerce logistics processes including inventory management, warehousing) and e-commerce firms owing to consolidation and upgradation to modern facilities.
Currently, India's warehousing sector market had robust absorption volumes of around 37 million sq ft in 2019. However, new leasing activity in 2020 is expected to witness a sharp decline of around 40 percent compared to 2019, a report by KPMG in India has said.
Having said that, post COVID, with e-commerce companies capitalising on pent up demand and focus on essential categories, warehousing is expected to witness a relatively steeper recovery in comparison to other real estate asset classes, the report said.
The warehousing sector witnessed an investment exceeding $200 million in the year 2019, mostly accounted by large deals in tier-1 cities. Further, foreign investors and top Indian developers have formed platforms for development of investment grade warehousing spaces.
Impact of Jewar to be visible only after 8 to 10 years
The new metro rail corridor, Yamuna Expressway, Eastern Peripheral Expressway and the planned rapid rail network will also play a major role in improving the accessibility of this region from all parts of NCR.
Experts say that once operational, the airport will be a game-changer - not just for Noida and Greater Noida markets, but also in areas such as Greater Noida and across the Yamuna Expressway, which are areas that have seen lacklustre demand.
However, the impact would not be immediate but be visible only after eight to 10 years, they caution.
The abundant land availability offer several opportunities for real estate developers and investors and that - residential projects, commercial complexes, industrial and warehousing facilities and manufacturing hubs.
It should be remembered that 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 end-users, liveability was a challenge. As a result, several housing projects along the Expressway remained unoccupied and were largely ghost towns. The residential stock that came up in these areas was mostly inhabited by students who attended universities in the vicinity.
With the new airport coming in, this market may attract more end-users and see steady, genuine capital appreciation rather than mere speculation, real estate experts said.
Despite being more affordable than Gurgaon and Delhi, Greater Noida and the areas along Yamuna Expressway did not become end-user driven markets due to unimpressive infrastructure.
"Logistics would come up in the nearby areas followed by ancillary activities related to the airport. Warehousing is expected to get a shot in the arm first followed by the commercial sector, but all this will take over five years," said Zaidi.
To cite an example, Gurgaon, especially its commercial and residential markets, benefited more than Delhi from the existing airport, despite Noida having better infrastructure, he added.
According to Anarock Research, the average price of units in Noida is Rs 4,780 per sq ft. In Greater Noida it is Rs 3,320 per sq ft and on the Yamuna Expressway, it is in the range of Rs 3,350 per sq ft.
The first phase of the airport would be spread over 1,334 hectare and cost Rs 4,588 crore. The project is being managed and operated by the Noida International Airport (NIAL), a special agency floated by the government.Follow our full coverage of the coronavirus outbreak here