5 Factors That pushed Noida's Real Estate Market Rapidly

The prices in the Noida real estate market has been increasing rapidly for the past 5 years. The prices in the regions such as Noida, Greater Noida, Yamuna Expressway and Noida Extension have shown a spike up to 166%. The prices in these cities saw a rise of:

     •  Yamuna Expressway: 166.7%
     •  Noida: 98%
     •  Greater Noida: 34.3%
     •  Noida Extension: 40%

Source: 99acres.com and Proptree.co.in

But why have the prices in Noida and these regions experienced such a sudden increase? What are the aspects pushing the prices to appreciate more and more… Or is it just a bubble? Let's examine the main causes of this escalation.

5 factors that are influencing the rapid price increase in Noida real estate market.

1. Increased land acquisition cost 

The land acquisition cost in Noida has been extremely expensive. The reason for this rapid increase is the growing consumer demand, which includes the need for larger carpet areas, clubhouses, parks, or other sports amenities, as well as landscaping for improved views.

In addition to these demands, the demand for low-density projects after COVID has seen a record surge. Commercial properties have further amplified this need. The rapid digitalization, coupled with government initiatives like Startup India and the advocacy for local and digital India, has compelled citizens to establish an increasing number of businesses. 

The sudden increase in businesses and startups has further amplified the demand for offices and retail shops, contributing to the rapid increase in land costs in India. The high demand for spaces and limited land availability in urban areas led to a rapid increase in land acquisition costs, forcing developers to raise the overall project cost. 

2. Drop in the tenure of land dues’ repayment

Local authorities have dropped the tenure for repayment of land dues significantly, which has forced developers to pay the huge amount in a shorter time span. In regions such as Noida and Greater Noida, the repayment saw a sudden drop from 8 years to 90 days. This led developers to increase the cost of their projects in order to meet the required repayment deadline. 

Authorities have taken this decision to resolve the land payment disputes between builders and authorities, which led to the delayed project.  The buyers appreciated this decision, but it also prompted developers to infuse more investment in a shorter time span, indirectly influencing the overall project cost.

3. Improving Infrastructure

The infrastructure around Delhi has surpassed Delhi itself in terms of development. Cities like Noida and Gurugram have significantly advanced in terms of development and connectivity. Noida maintains a low density and meticulously plans its city, considering factors like traffic, connectivity, density, projects, and other aspects that impact our daily lives. This further contributes to the escalation of prices in Noida. 

4. Need for bigger size

In Noida, the size of apartments is getting bigger and bigger. This is because people now want larger homes with better features. Apartments are being built with bigger rooms, nicer designs, and more advanced technology.

Many buildings have large clubhouses, which offer extra spaces for enjoyable activities like swimming or playing sports. Some homes even have a grand double-height entrance, making them look more impressive.

Smart features, like automatic lights and security systems, are also becoming popular. All these changes are making homes in Noida more luxurious, with more space and better facilities than before. This also adds some extra cost to aquire a property in Noida.

5. Luxury segment in Demand

The average income of people in India has increased, leading to a rise in salaries in IT and other industries. Growing industries and businesses have also infused a large chunk of money into people’s pockets. This pushed people having no home to buy a new one or someone who lives in an old small house to upgrade into a new one.

The sudden increase in demand outpaced the available inventories, and the rapid price hike made people willing to pay more for their preferred units, instilling confidence in the developers. This led to an increased project price and overall base prices of the inventories. 

Apart from all these factors, there is one more factor here: the developer’s reputation. People are ready to pay more to a reputed developer such as Godrej, Ace, and Max in Noida than invest in a project with a low-profile developer and risk their hard-earned money. 

Conclusion 

We expect further growth in Noida's real estate market, given its significant affordability compared to Mumbai, Delhi and Bengaluru. With the ongoing development in Noida and the creation of new jobs, demand for both residential and office spaces is rising.

The absorption of office space in Noida is particularly strong, reflecting a positive trend for future growth. This indicates a favorable chance for further appreciation in property prices in Noida, making it a promising investment opportunity in the near future.