Noida has few takers for office space, despite being more affordable than Gurgaon. This inference can be drawn from a recent study by an international real estate research group. Experts attribute it to a lack of support infrastructure for businesses in this city.
According to the report by Colliers International, the office market in Noida witnessed 0.5 million sq ft of space absorption only till the second quarter of 2015, with expansion and relocation being the primary demand drivers - all thanks to big players like Big Basket, Cognizant and We Technologies.
However, in Gurgaon, approximately 1.8 million sq ft of office space was absorbed just in the second quarter of 2015, about 60% more than the previous quarter, says Colliers.
The report further states that there could actually be no demand for office spaces in Noida and the trend could continue to exist for the next few quarters. This indicates that it could be a good bargaining time for those IT and ITeS tenants to seek discounts while striking fresh lease deeds.
"Despite the slump, some big projects have recently been completed in Noida like the NPX Tower by Urbatech in Sector 153; Elixr Tower by Cosmic Group in Sector 127; an independent building in Sector 16A. But no new project has been launched," Surabhi Arora, associate director (research) at Colliers International India, told TOI on Tuesday.
According to experts, Noida's disadvantage as a corporate location springs from its lack of infrastructure. Gurgaon scores over Noida when it comes to proximity to an airport, law and order situation, power scenario and accessibility, they say. While the proposal to build an international airport at Jewar was shelved recently, Gurgaon's proximity to IGI International Airport, barely 20km away, gives the city an edge over Noida.
"Oversupply of office spaces may be the reason due to which the rent and purchase price have gone down in recent times in Noida and Greater Noida. One disadvantage Noida has is unavailability of an international airport. Availability of an airport, good connectivity and lower rent than Delhi and Gurgaon can help recover value for the office space market in Noida in future," Deepak Kapoor, president of Credai (western UP), said.
"Business is about saving time, and increasing productivity. With the airport so far away, Noida has been suffering a distinctive disadvantage. There are traffic jams, distances are huge. Why would anyone come here? People do not mind paying extra rent and leasing out in Gurgaon because it works for the IT ad ITeS companies. The future of IT driven business looks bleak in Noida until major infrastructure development takes place here, like the Jewar airport," Vipin Malhan, president of Noida Entrepreneurs Association, said.
According to Amit Modi, director ABA Corp and vice-president of Credai (western UP), Gurgaon takes up the major chunk of corporate office space demand the NCR because of its location and proximity to the airport. "Noida, with its affordability advantage may see a renewed interest from mid-size players from IT/ITeS sector which also happens to be the largest occupier of office space in the NCR, followed by the e-commerce segment and manufacturing sector," he added.
However, Colliers says the proposed six-lane elevated flyover signal-free drive from Sector 41 to SEZ Phase II could bring about a change in the situation. "There is a lack of demand in Noida's office spaces. One of the major reasons is the distance factor. The Noida Authority has plans for a six-lane elevated flyover signal-free drive from Sector 41 to SEZ Phase II, which will be ready by 2017. This could make a difference in the flow of companies into the city," Arora said.