Is Faridabad the new kid on the block !?!

Talk of step fatherly treatment and Faridabad would be right up there when compared to the original son of the soil -Gurgaon! Haryana govt has definitely not focused adequately on developing Faridabad as an important growth center considering its strategic NCR location. Despite the state governments indifference, I feel, Faridabad is most certainly going to be an important source of RE growth over the next 5 years. Why? Because, whatever you do, you cannot take away its gene pool! It is afterall 20 minutes away from South Delhi locations such as Nehru Place, GK, Friends Colony, Maharani Bagh. In addition, Jasola is emerging as a significant business district in its own right- much like Nehru Place and Bhikaji Cama Place and is less than 20 minutes away from Faridabad. Some of the better hospitals of the city such as Apollo Hospital and Escort Heart Instt. are within 20 minutes driving distance from Faridabad. Ofcourse, the other positive factor influencing prices in Faridabad in the near term would be the implementation of the metro project. It was initially expected to have been implemented by 2010 but some "babu" in the govt office had another agenda and the metro is now expected to be in Faridabad by 2012.

Ofcourse, one has to be precise and careful when referring to Faridabad since Faridabad extends (on either side of Mathura Road) all the way upto Sectors 60/61 which are probably 45 -60 minutes from Apollo hospital and/or South Delhi. Therefore, all of Faridabad must not be viewed with the same lens. For the purposes of this particular writing, I will be focusing on an emerging investment destination in Faridabad called "Nahar Paar"-its name simply meaning the other side of the canal. The canal being the Gurgaon canal which separates old/existing Faridabad and this emerging destination. The Nahar Paar region is spread across approximately 3000 acres (extending from Sector 66 to 90) of which over 2000 acres has already been acquired by developers over the last several years. The largest land bank here is with BPTP (~1500 acres) followed by smaller players such as DD Motors (you know something is wrong with the markets when a company which doesn't even have a vague resemblance to RE business in it's corporate identity is one of the largest land bankers!), Era, Uppals, KLJ, Omaxe, etc.

In Faridabad, one can invest either in land or apartments depending on one's budget. I personally prefer apartments since they are easy to manage (even if you eventually want to sell out), are more liquid as an investment and easier to get a loan for (a RE investor's cocaine....more on that in a separate blog). I will evaluate a few of the options currently on the market and some caveats before entering the Faridabad market.

1. BPTP- They have multiple apartment projects on offer such as The Resort, Park Grandeura and Princess Park. The specifications are different for these apartments and therefore they are available at different price points ranging between Rs.1550-Rs.2250 psf. All prices are for 2BR's. 3BR prices may be different.

2. Omaxe-They have two projects on offer curently-Omaxe Heights in sector 86 and Omaxe Spa Valley in Sec 78. I think Omaxe Heights will only be available in resale and is currently available between Rs.1600-Rs.1700. The price varies depending on floor, availability, etc. Omaxe spa valley is their premium project and the price varies between Rs.2250-Rs.2300.

3.Era-Promoted by Era Constructions which is a respectable name in the construction business but new to property development. They are, however, listed on the stock exchange. Available between Rs.1450-1525 psf.

4. Uppals-Launched around 15th April,08 and currently available with only 10% down payment at Rs.1900 psf.

My order of preference is as listed above. However, avoid the temptation of spending on a luxury apartment in Faridabad (unless you want to live in it) since it is primarily a budget market and may not attract luxury buyers in the short to medium term. It is probably the only micro market 30 minutes from Delhi's border where you can still buy a brand new apartment for under Rs.30 lacs !! I think it is a steal and the only way for this market is up and up.

There are atleast 10 other developers in the Nahar Paar area of Faridabad most of whom I would avoid. They are new, inexperienced and driven only by greed and optimism. Don't get me wrong. I would love to support a good newcomer but in tough times hope without a plan could be like being in a boat without a rudder!

CAVEAT EMPTOR: This is where this market gets a little tricky especially when you compare it to Gurgaon. As investors or end users we are very often driven by the headline number when we get into a deal. The headline number I am referring to is the per sq foot rate. However, this may not be enough. You also need to look at the extras such as External Dev. charges (EDC), Infrastructure Development charges (IDC), Preferrential location charges (PLC), Interest bearing (or interest free incase of Faridabad!) maintenance security (IBMS), car parking and club charges. Faridabad has two charges which I have never seen in any development in Gurgaon, namely, EEC/FFC and electricity charges (electrical charges exist in Gurgaon but not charged per KVA!!). I'll try and make this simple-when you go scouting a deal, ask for two prices from the broker-per square foot price (the headline price we discussed earlier) and psf price of extras. Nobody will be able to give you the second price off the cuff because that question has probably not been asked before. But that's exactly what you need to know to ensure you are getting a good deal. The price for extras in Gurgaon is generally between Rs.250-300 psf. In Faridabad it is between Rs.450-600! Therefore, the headline price in Faridabad is attractive but not as attractive as it may appear at first. But I reiterate-still a great deal!

More later,