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October 26, 2012 7:33 pm
In 1985, Vijay Sharma spent Rs250,000 on 3,600 sq ft of land in Gurgaon, a satellite town emerging from the wilderness an hour outside New Delhi. In 2002, he accepted an offer of Rs4m for the plot and spent a good few months feeling smug about his profits. Today the parcel is worth more than 10 times that figure and Sharma is spending Rs130,000 (£1,500) each month renting a three-bedroom apartment in the area.
Property prices outside the Indian capital have been soaring for some years now. Economic models dictate that where there is a growing population and limited land a rise in property prices is inevitable, leading to urban sprawl. Though an economist wouldn’t consider the phenomenon noteworthy, anyone living in Delhi – Sharma, especially – would beg to differ.
Gurgaon and Noida are two satellite towns, to the southwest and southeast of Delhi respectively. Initially catering for overflow from the capital in the 1980s, they now attract investors in their own right. Several multinationals have set up shop and modern, self-sufficient developments have sprung up. And apartments are available for between Rs2,000 (£23) and Rs15,000 (£173) per sq ft, far more reasonable than anything in Delhi itself.
Saurabh Gupta, the chief executive of PropertyWala.com, a popular real estate website in India, says, “There is not much space left in Delhi, so the properties are very costly, ranging from Rs7,000 (£81) per sq ft up to as much as Rs100,000 (£1,157) per sq ft. Even then, the location may be very crowded.”
Yet new builds in these new towns come with their own problems.
“Development in Gurgaon is not managed; as the local government doesn’t control the sale of plots, farmers sell directly to builders,” Gupta says. “In Noida, the authority purchases land from farmers and gives it to developers, so there is proper infrastructure – roads and sewage – before construction takes place.”
Knight Frank is currently selling properties in Jaypee’s Pebble Court development in Noida. These 4,600 and 4,900 sq ft, four-bedroom apartments are priced upwards of Rs73m (£844,000) with access to pools, a clubhouse, rooftop gardens and barbeque pits.
Delays and disappointments come with new builds all round the world, but investors require special patience in India. Some choose to pay up only at construction milestones or to include penalties for tardiness in contracts.
One couple tell a long and frustrating tale of squatters and intimidation. They sold a plot of land in Gurgaon in 2008, only to receive a panicked phone call from the buyer some 18 months later. There was a new lock on the gate. A squatter had taken possession using forged documents to claim he had bought the plot in 2003. Though the property has been returned to the rightful buyer, the squatter has since launched a civil case that is sapping the owners of time and money.
The social fabric of the Delhi area is being woven afresh by this urban sprawl. With prices high and turnover low in Delhi itself, residents there are mostly the wealthy families that have owned the land for generations, or diplomats that take on embassy homes. Meanwhile, Noida and Gurgaon attract newer migrants drawn by the IT businesses and call centres based there.
The more upmarket developments in these two hubs also cater for expats and wealthy locals looking for space and amenities that the Lutyens zone in Delhi can’t compete with. Gurgaon is also conveniently close to the international airport.
Knight Frank has 15,000 sq ft apartments for sale in Krrish Group’s The Eiffel development in Gurgaon. Priced from Rs280m (£3.2m), these six bedroom properties come with access to a clubhouse, gym, spa and pools, as well as room service and housekeeping facilities. 3C’s Lotus Peak development in Noida includes 4,405 and 4,490 sq ft, four-bedroom apartments at Rs7,750 (£90) per sq ft, with access to a private pool, gym and tennis court.
“In the 1990s, private development took off and there were collaborations with architects from Hong Kong and Singapore who brought in concepts that fulfilled the need of the hour,” says Mudassir Zaidi, a regional director at Knight Frank. He refers to the gated communities that pervade Gurgaon and to some extent Noida. These self-contained developments include gyms, swimming pools, pharmacies and immaculate lawns alongside the private homes. Such compounds would not look out of place in Miami or Marbella, and yet the blocks contrast starkly with the shanties and potholed streets that surround them, a reminder of the stark economic inequality in this society.
However, the social rift between the residents of Delhi and its surrounding settlements is slowly being eroded by improved connectivity. “There have been huge advances with the roads and the metro in the past 10 years,” says Zaidi. “Now, you can stay farther from the centre and your commute time doesn’t increase substantially.”
Somewhat incongruously, this connecting infrastructure was slower to develop than the infrastructure in Noida and Gurgaon itself. Shopping malls and restaurants have popped up in these areas, along with the office space that provides employment, deeming the links with Delhi somewhat irrelevant. And it now remains to be seen whether these peripheral settlements will actually pose a threat to Delhi over time, draining demand and activity out of India’s capital city.
● Prices are significantly lower than central Delhi
● Gated communities offer security and modern amenities
● Metro and flyovers are improving connectivity with central Delhi
● Lack the prestige of central Delhi
● New builds come with risk of delay
● Roads into central Delhi are heavily congested at rush hour
What you can buy for ...
£100,000 (Rs9m) A three-bedroom apartment with marble flooring
What you can buy for ...
£1m (Rs90m) A large independent house in a premium area
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