Noida SMEs diversify into realty business

As per market reports, more than 100 small and medium enterprises (SMEs) in Noida have diverted from their field and have entered into the sector of real estate, over the last 5-6 years.
Market reports state that the locality of Noida Phase II experiences a high concentration of manufacturers and exporters. The businesses of such people have gone downhill in the last few years, which have forced them to turn to real estate.

Reasons behind the scenario

Most of the SMEs have turned to the real estate sector to garner higher returns and to diversify their businesses in an efficient manner.

Small and medium enterprises in the country take almost five to six years, to have a breakeven in the business. However, in real estate sector, profits are earned by the completion and launch of a project, which gets completed within a year or two. This is one of the reasons why SMEs in the city are focusing on the real estate trends and markets.

Noida Phase-2 industries’ Association Vice President, Mr. IS Jha, said that small enterprises in Noida enter realty in two ways – one by collaborating with developers by providing plots to develop a property, and the other when a unit owner takes a more hands-on approach. In the former case, the revenue is shared between the plot owner and the developer, while in the latter case; the unit owner first develops a space with the help of a contractor and then sells it within a certain period of time, like one to one and a half years.

PJB Khorana, President of Noida Phase-2 Industries Association said that poor infrastructure is one of the reasons for such a shift, apart from profitability. SME owners get cheaper loans than realtors, on behalf of their unit and its assets, which they can use for realty business