CHANGING PATTERN OF REAL ESTATE ECONOMICS - MEERUT

Second largest city of NCR. 17th largest city. Ranked 242 in world as fastest growing urban

area. 2nd fastest developing in U.P. After noida. Ranked in top 10 cities in India in income tax

payment. 14th fastest developing city in India. 5th most vibrant city in India leaving behind

Mumbai and Delhi

ABOUT THE CITY- MEERUT

◦ Connectivity◦ infrastructure◦ Connectivity ( metro , rail road)◦ Demographics◦ migration◦ Demand and supply◦ Interest rates.◦ Financial penetration◦ Connectivity with physical and social infra.◦ Affordability (income)

FACTORTS THAT EFFECT REAL ESTATE

BETTER CONNECTIVITY Meerut – dehradoon expressway.

Delhi -Meerut expressway .(to be completed by 2014)

High speed train (NCR planning board)

Meerut airport (bhim rao ambedkar airport)-extension of current operation

Upper Ganga canal expressway.

Outer ring road (Meerut development authority)

FACTORS AFFECTING REAL ESTATE IN MEERUT

RECENT AND PROPOSED DEVELOPMENTS - MEERUT

RRTS ( RAPID RAILWAY TRANSMIT

SYSTEM ) AS PER NCR PLANNING BOARD

HIGH SPEED TRAIN FROM MEERUT TO DELHI

A STEP BY NCR PLANNING MAINLY FOR-:•Thousands of daily commuters to DELHI , NOIDA , GURGAON.

• POPULATION SHIFT FROM DELHI-NCR TO OUTER NCR- mainly due unaffordable price rise.

•Further improving the connectivity.

Delhi -Meerut expressway .(to be completed by 2014)

OTHER DEVELOPMENTS Meerut – dehradoon expressway

Upper Ganga canal expressway.

Inner ring road (Meerut development authority)

New ISBT (Meerut master plan), baghpat road.

Dedicated freight corridor. (part of DMIC)

BHIM RAO AMBEDKAR AIRPORT

Extension of current air strip.

Mainly for industrial and commercial purposes.

Effective ,as it will reduce air traffic of Delhi airport, due to proximity.

(Demand report of NCR planning board, AAI, air India, MDA )

BHIM RAO AMBEDKAR AIRPORT

Dedicated Freight CorridorA Dedicated Freight Corridor has been conceptualized by Indian Railways

with the objective of speeding up freight train operations and achieving higher productivity through better utilization of railway assets and achieving greater customer satisfaction - Meerut region is part of the Eastern Freight Corridor, from Kolkata to Ludhiana via Lucknow, Kanpur and Aligarh.

Gas pipeline projectGail Gas Ltd, a wholly owned subsidiary of Gail India Ltd has opened an

office at Meerut for executing Rs 308-crore gas pipeline project for the city. The 80-km-long network of steel pipes called the Steel Grid, is scheduled for completion in the next 3 years when the city will be linked to Dadri-Bawana-Nangal pipeline from Muradnagar. The CNG operations will start much earlier through mobile carriers.

SOCIAL AND COMMERCIAL INFRASTRUCTURAL DEVELOPMENTS

Transport NagarA new Transport Nagar site as proposed in the master plan has

been identified adjacent to Vidya Knowledge Park, about two kilometers on Baghpat Road. Meerut Development Authority will execute the project.

New interstate bus terminalMeerut master plan envisages relocation or shifting of two bus

terminals in the heart of the city to other viable spots to ease heavy traffic within the city. With Baghpat Road identified as the new site, Bhainsali Depot of UPSRTC and Baghpat Bus Stand are likely to be relocated here. In future, Sohrab Gate Depot of UPSRTC and Hapur Bus Stand could also be relocated near Lohia Nagar. Both the projects will be in PPP mode

SOCIAL AND COMMERCIAL INFRASTRUCTURAL DEVELOPMENTS

Residential schemesAffordable land schemes at- Lohia nagar Shradhapuri phase 2 Sainik vihar Pallav puram Ved vyas puri Defence enclave Pandav nagar Raksha puram.

Commercial schemes Small and large commercial plots.

Daurala master plan

Meerut development authority

Meerut development authority

Meerut is one of the important industrial towns of western Uttar Pradesh

Meerut has about 23,471 industrial units, including 15,510 small-scale units and 7,922 cottage industries

Meerut is home to some prominent regional pharmaceuticals companies like Perk Pharmaceuticals Limited, Mankind Parma & Bestochem.

Meerut is one of the major manufacturing regions for sports goods in India. The city is especially famous for the manufacture of cricket goods with SG being the largest Indian cricket goods manufacturer and exporter operating in Meerut. Meerut is also the largest manufacturer of musical instruments in India

Hub of paper industry. Biggest market for fold making in Asia government initiative Uttar Pradesh State Industrial Development Corporation (UPSIDC) has two industrial

estates in the city, namely Partapur and Udyog Puram. Mohkampur industrial area is a private initiative.

Demographics (economy)

2000 hectares of land is being proposed for industrial development near Delhi–Meerut expressway.

Investment from outside Meerut has started pouring in as Delhi–Mumbai freight corridor and east freight corridor will be intersecting very near to Meerut, making it a cost effective destination for setting up industries.

Future prospects of development of special economic zones.

City ranks high in income tax payment , so SEZ development, will attract industrialists.

REAL ESTATE AND LOCAL ECONOMY

In 2011, Meerut had population of 3,447,405 of which male and female were 1,829,192 and 1,618,213 respectively. There was change of 15.01 percent in the population compared to population as per 2001. In the previous census of India 2001, Meerut District recorded increase of 24.06 percent to its population compared to 1991.

The increase in population is mainly due to increase in geographies of city, and migration.

The migration levels have increased in recent years from areas surrounding Meerut namely -mawana,baghpat,khatauli,muzzafarnagar, hastinapur, garh,hapur.

In the past two years another trends have been notified of migration of young population(working) from NCR towards Meerut mainly due to affordable cost of living and improved connectivity.

Migration

As per Morgan Stanley report Meerut stands second in terms of financial penetration, a new bank branch is opened every 15 day in Meerut, mainly because of increasing consumption .

Number of ATM’ s and bank branches have increased considerably, which offers more loan options to both developers and end users.

FINANCIAL PENETRATION

RESIDENTIAL Townships, group housing and sports city by SUPERTECH.

ERA LANDMARK (residential and retail)

ANSAL, sushant city and ansal town.

TDI

GOODWIN BUILDERS.

Along with more than 100 developers have entered into market.

CURRENT REAL ESTATE - MEERUT

Number of jobs increased in recent years. (RENTAL) More nuclear families.( FINAL USERS) Number of businessman . Top tax paying city. (INVESTORS) Daily LAKHS of commuters to Delhi, gurgaon and noida, so

residential development on upcoming expressways can be feasible.( AFFORDABLE SEGMENT)

BIG EDUCATION HUB. Delhi- Meerut expressway, partapur road is a big education

hub having 30-40 colleges and 1 university.(RENTAL HOUSING)

Better connectivity and proximity induce more future investment & migration

WHY RISE IN RESIDENTIAL DEMAND

Number of industries.

Hub of sports industries INDIA

Biggest market for gold making in ASIA

Paper industry.

With upcoming freight corridors and expressways, more feasible .

COMMERCIAL & SEZ’s

RETAIL AND OFFICE SPACE - MEERUT

With increase in financial penetration, it senses more opportunities for malls and supermarkets, as disposable income of Meerut ranks much above than other major cities.

Increase in consumption is highest in India in year 2010-11. It opens opportunities for malls, hypermarkets, and

supermarkets with foreign players entering like LULU, WALMART, and CARRIFOUR on doorstep waiting for changes in FDI policies.

The prices of office space have considerably increased. New offices spaces have been developed for telecom and

financial sectors. Meerut still lacks in IT-ITES sector . Earlier sale model was only prevalent in

retail malls- KNIGHT FRANK

RETAIL

SAMPLE SIZE A survey was conducted mainly with the residents of Meerut, and

residents of the other greater NCR residents who are interested to invest into Meerut real estate.

Residents of Meerut

Residents of muzafarnagar, baraut,panipat, Ghaziabad.

Sales executives of residential real estate developers at Meerut.

Sales executives of commercial and retail real estate developers.

Sales and marketing officers at upcoming and under construction new projects at Meerut.

THE ROAD AHEAD – MEERUT

DATA COLLECTION METHOD Data was collected mainly by using primary and secondary methods of

data collection.

PRIMARY METHODS: Face to face interviews

Questionnaires.

Telephonic survey through brokers.

Survey through reference.

Survey through e-mail.

SAMPLING METHODThe following stratified sampling methods were followed-:Face to face survey.

Telephonic interview.

SECONDRY METHODS Data collected through company and broker

websites, which were not provided by sales executives.

Information collected from Meerut development authority.

sources- HDFC RED BRICK AND HOMES CONSULTANTS

DATA COLLECTION METHOD

THE QUESTIONARE’s QUESTIONARE FOR SALES MANAGER OF DIFFERENT DEVELOPERS

NAME OF DEVELOPER: ANAND NIKETAN

NAME OF PROJECT: TRA DEVELOPERS

PROJECT COMPLETION: 2013

ESTIMATED DATE OF POSESSION :2013

VACANCY: 70-75%

SOLD OUT: 20%

SEGMENT: TOWNSHIP

PRODUCT MIX: VILLAS, SINGLEX , DUPLEX

PRICE RANGE: 27-42 LAKHS

REASONS FOR PROJECT: INDIVIDUAL PLOTS, SINGLEX, DUPLEX, RISING DEMAND FOR INDIVIDUAL HOUSES FROM FAMILY SHIFTING FROM CITY TO OUTER AREAS.

USP OF PROJECT: CONNECTIVITY, SOCIAL AND PHYSICAL INFRASTRUCTURE PROXIMITY, LUSH GREEN TOWNSHIP WITH 80% PARK FACING UNITS.

MIX OF- BOTH

END USER

INVESTOR

RANK THE FOLLOWING IN ORDER OF PERFORMANCE:

QUESTIONARE FOR RESIDENTIAL HOUSEHOLDS

(1)NAME: PRERNA SINGH

(2)HOUSEHOLD INCOME:

3-5 LAKHS

(3)SELF OWNED PROPERTY= YES

(4) WHAT FACTORS DO YOU CHOOSE BEFORE SELECTION OF HOUSING SEGMENT?

LOCATION

CONNECTIVITY

AFFORDIBLITY

(5) WHAT TYPE OF RESIDENTIAL PRODUCT MIX ARE YOU GOING FOR?

INDEPENDENT HOUSES

(6) THE PRICE RANGE OF YOUR PROPERTY?

MORE THAN 60 LAKHS

(7) AREAS THAT ATTRACT YOUR INVESTMENT?

SAKET

SHASTRI NAGAR

(8) REASONS OF SHIFTING FROM YOUR PRIOR RESIDENCE ?

BETTER LOCATION

INCREASE IN LIVING STATUS PROXIMITY WITH SOCIAL AND PHYSICAL INFRASTRUCTURE

HOUSEHOLD INCOME

TYPE OF PROPERTY

FACTORS THAT AFFECT SELECTING THE PRODUCT MIX.

RESIDENTIAL PRODUCT MIX YOU INTERESTED IN.

PRICE RANGE

AREAS THAT ATTRACT YOU TO INVEST.

REASON OF SHIFTING FROM PRIOR RESIDENCE.

FACTORS FOR RESIDENTIAL RESEARCH (DEMAND SIDE)

WHAT TYPE OF PROPERTY YOU WANT TO SHIFT INTO

RATING THE FACTORS THAT YOU DESIRE IN YOUR RESIDENCE.

LOAN FASCILITY

RATING THE FACTORS THAT AFFECT HOUSING DECISION

GOING FOR SELF OWNED OR RENTAL

WHEN ARE YOU PLANNING TO MOVE.

RATING THE DEVELOPERS PRESENT IN CITY

FACTORS FOR RESIDENTIAL RESEARCH

DEVELOPER NAME OF PROJECT PROJECT COMPLETION DATE POSSESION DATE VACANCY / SOLD OUT SEGMENT PRODUCT MIX PRICE RANGE REASON FOR PROJECT USP OF PROJECT MIX OF END USER/INVESTOR RANKING THE AMENITIES TARGET CUSTOMERS ATTRACTED

CURRENT SUPPLY OF RESIDENTIAL- A RESEARCH

ANALYSING THE DEMAND the avg. household income ranks between 4-6 lakhs as per survey

conducted.

Residents are interested in buying a property , though their has been a drift of shift of youth generation from NCR to Meerut due to low rental rates and improved connectivity.

Customer gave most preference to LOCATION , CONNECTIVITY , AFFORDIBLITY ,before selecting housing segment.

3 bhk and independent housing units were the favorites.

The price range most favorable was.30-45 lakhs.

HOUSEHOLD INCOME

below 3 lakhs3-5 lakhs5-8 lakhsabove 8 lakhs

HOUSEHOLD INCOME

0

10

20

30

40

50

60

70

80

SELF OWNED PROPERTY

SELF OWNED PROPERTY

WHAT TYPE OF RESIDENTIAL MIX YOU GO-ING FOR

1 BHK2 BHK3 BHK4 BHKINDEPENDENT PLOTSINDEPENDENT HOUSESINDEPENDENT FLOORS

PRICE RANGE OF YOUR PROPERTY

BELOW 10 LAKS10-20 LAKHS20-30 LAKHS30-45 LAKHS 45-60 LAKHSMORE THAN 60 LAKHS

Roorkee road, Delhi road ,bye pass road were most desirable living and investment choices.

Movement from Meerut old city to new developers for amenities and connectivity.

Better location , proximity to work place, more facilities headed the results.

Developer apartments along with individual plots were preferred over authorities and local builder.

loan facilities' were preferred by customers.

An average of 12-18 months was time to move to new residence.

ANALYSING THE DEMAND

AREAS THAT ATTRACT YOUR INVESTMENT

ROORKEE ROADBYE PASS ROADDELHI ROADGARH ROADSAKETSHASTRI NAGARBEGUM BAGH

REASONS FOR SHIFTING FROM PRIOR RES-IDENCE

NEED FOR MORE SPACEBETTER LOCATIONAFFORDIBLITYINCREASE IN LIVING STATUSMORE FASCILITIESPROXIMITY WITH SOCIAL AND PHYSI-CAL INFRA.

WHAT TYPE OF PROPERTY YOU WANT TO SHIFT INTO

DEVELOPER APPARTMENTSLOCAL BUILDERINDEPENDENT PLOTSAUTHORITY(MDA)

PEAC

EFUL

LOCAT

ION

LOW

DEN

SITY

POW

ER B

ACKU

P

PARKI

NG

SECURIT

Y0

2

4

6

FACTORS THAT YOU DESIRE IN YOUR RESIDENCE

FACTORS THAT YOU DESIRE IN YOUR RESIDENCE

YES NO 0

10

20

30

40

50

60

70

80

ARE YOU GOING FOR LOAN FASCILITY

ARE YOU GOING FOR LOAN FASCILITY

PRIC

E

CONNECTI

VITY

PROXI

MIT

Y

AVAI

LIBL

ITY

OF LO

AN

FLEX

IBLITY

IN A

MOUNT

PAYM

ENT

RATE

OF IN

TERST

RESAL

E VA

LUE

CLARIT

Y OF

TITL

E

PROXI

MIT

Y W

ITH S

OCIAL IN

FRA.

0

1

2

3

4

5

6

HOW MUCH THESE FACTORS AFFECT YOU

HOW MUCH THESE FACTORS AFFECT YOU

WHEN ARE YOU PLANNING TO BUY A PROPERTY

WITHIN 3 MONTHS3-6 MONTHS6-12 MONTHSMORE THAN YEAR

SUPE

RTECH

ANSA

LSER

A

INDUS

VALL

EY

GODWIN

BUIL

DERS

LOCAL

BUIL

DERS

MDA

0

10

20

30

HOW MUCH WILL YOU RATE THE CURRENT BUILDER

HOW MUCH WILL YOU RATE THE CURRENT BUILDER

Currently more than 100 developers are present in Meerut periphery.

Stock of 22,000 housing units is offered in period of 3 years.

Major developments are –

Ansal mega townships and other group housing by ansal. Townships and group housing by supertech. Townships by era landmark. Gaur and TDI have also purchased huge land banks, looking at

demand –supply pattern.

Major developments at roorkee road( local developers)

Delhi road , Delhi dehradoon highway.

ANALYSING THE SUPPLY

The prices at various projects at dehradoon –Delhi expressway varies from 1200-1800 (affordable) , 2000-2200 rs per sq/ft( high segment).

The prices at projects at Delhi road varies from 1700-2000 rs per sq/ft.

Hapur bye pass road is a new property investment zone developed in past three years.

Hapur bye pass road offers affordable housing segment. Townships have vacancy rates of 50-60 %.

Land prices at Delhi road , roorkee road, sardhana road , garh road , hapur road increases by 2-3 times with infrastructural developments.

ANALYSING THE SUPPLY

0

1000

2000

PRICES OF PROJECTS AT VARIOUS LO-CATIONS

PRICES OF PROJECTS AT VARIOUS LOCA-TIONS

Supply side

Office space are mainly formed by plaza and complex which are mix of retail and commercial.

The rents rates have increased immensely mainly due entry of new retail and office( TELECOM and FINANCE SECTOR) .

Within a period of 12-18 months prices have doubled, mainly due

to increasing demand. following are rental ratesAbu lane 180-200Begum pul 90-110 New commercial spaces at shastri nagar and madhav puram.PRICES 45-70

ANALYSING DEMAND AND SUPPLY OF RETAIL AND OFFICE SPACE

Denial permission to conduct survey at some sites.

Lack of knowledge on part of respondents with regard to current market.

Improper transference of information by several sales manager.

PROBLEMS ENCOUNTERED

New infrastructural development has surely boosted real estate market in recent 3-4 years.

Better connectivity and affordable living and low rentals as compared to NCR area’s has induced at present young generation to move to Meerut and ghazi bad region.

Abnormal price rise in delhi-ncr, opens new investment options for investors with healthy returns.

New residential developers have entered into market ,still lack of commercial office space as minor IT/ITES presence.

Retail developments have increased manifolds, with 12 new mall developments.

Retail boost mainly due to increased financial penetration, new jobs and and changing culture patterns of population.

With airport development , options can be opened for hospitality sector which is still at ground levels in Meerut.

KEY OUTCOMES