What really triggered the crisis in Noida Extension was the misuse of the emergency clause of Land Acquisition Act of 1894 by the Greater Noida Industrial Development Authority (GNIDA) to forcibly acquire land from the farmers. And now GNIDA has admitted that it committed a blunder in acquiring land in Shahberi village under Noida Extension, against the consent of 80 per cent of the farmers.
The first salvo was fired by the Supreme Court, which quashed a 2007 notification of the Uttar Pradesh government to acquire 156.3 hectares of land in Shahberi village (Noida Extension), leaving 6500 home buyers with Rs100 crore of investment in the lurch. The Supreme Court also ordered that the land be given back to its original owners as it was acquired by invoking emergency clause and by denying land owners the right to file objections.
The apex court charged the GNIDA of changing land use of acquired land from industrial to residential purposes. It directed that the money invested by the home buyers be refunded. Another crippling blow was dealt when the Allahabad High Court quashed the state government’s notification of acquiring 589 hectares of farmland in Patwari village in Noida Extension. In Patwari, 14 projects of 11 builders were affected. While builders had invested close to Rs2000 crore in real estate projects in Patwari village, home buyers had sunk in Rs4000 crore to book 20,000 houses. The High Court, however, deferred the hearing of land acquisition of around 1700 hectares, across seven villages in Noida Extension and asked to sort out the issue out of court through negotiations between GNIDA and farmers.

What further complicated the matters was that the farmers from villages falling under Noida and Yamuna Expressway launched an agitation for higher compensation and better rehabilitation package of their acquired land.
So much so that the Noida agreement reached between authorities & farmers representatives has run into rough weather because of some farmers representatives rejecting the agreement. The agreement envisaged regularisation of Abadi (residential) land & allotment of 5 per cent of developed plots to farmers whose land was acquired. There was no enhancement in compensation.
The new demands of a section of farmers opposing the agreement include regularisation of Abadi land of those whose land was acquired before 1997 as well as 5 per cent developed plots, besides plots for landless farmers and employment for the children of farmers whose land was acquired. They are also demanding enhanced compensation.
Authorities are, however, expressing their inability to take corrective measures with retrospective effect, dating back 30 years. Otherwise also, the Noida Authority may find it tough to arrange 700 acres of land required to be given to farmers in lieu of promised developed plots equivalent to 5 per cent of acquired land. The Noida Authority has only 300 acres of land reserved for housing projects and the rest it may have to arrange from Greater Noida Authority. The implication of foregoing 300 acres of reserved land is that it will badly hit residential projects.
Farmers from villages around Yamuna Expressway whose land was acquired in 2006, have threatened to move court if they are not paid higher compensations and their Abadi land is not regularised, endangering Expressway, Formula I Racing Track, besides other real estate projects along the Expressway corridor.
The Yamuna Expressway Authority is developing 50,000 hectares of Yamuna Expressway land up to Zevar where an international airport is proposed. For the first phase development 6000 hectares of land has already been acquired out of which 2500 hectare has been earmarked for residential development. A world-class Sports City will also be developed under 1000 acre Special Development Zone (SDZ).
Greater Noida Development Authority (GNIDA) had received a lot of flak on the ground that the land acquired for industrial development was diverted to developers for residential developments at hefty rates, making huge profits.
GNIDA officials scotch these charges. They say that under the Master Plan they do not just allot land to the industry but develop it as a township, earmarking land separately for institutional, residential, commercial and industrial areas. It’s only that sometimes they shift the industry to the area away from residential zone.
GNIDA authorities flatly deny that they have made huge profits by selling land to builders. They acquired land from farmers at Rs1000 per sq mt and sold to developers at Rs10,000-11,000 per sq mt. But GNIDA officials say that they spent huge money on internal and external development of the area, waived off IDC & EDC charges to home buyers and gave institutional and industrial land at hugely subsidised rates.

What will be the impact of Noida Extension impasse on the peripheral locations in the NCR. Sachin Sandhir, MD, RICS India says that there is no dearth of residential demand in the market which bodes well for peripheral markets around Noida/Noida Extension. “We are already seeing an upsurge in demand in Kundli region which is undergoing some major infrastructural and real estate development. Even other markets in the NCR region particularly Ghaziabad will see higher demand albeit exercised with some degree of caution.”
Manoj Gaur, MD Gaursons and President, CREDAI – Western UP, says that Ghaziabad is already witnessing a sudden surge in demand due to ready-to-move options. Crossing Republik which was facing low demand for two years, has now kicked off amazingly. “Though Kundli and Faridabad match Noida Extension in price points, they have the disadvantage of distance and connectivity. Gurgaon may not get benefited as prices there are more than double of Noida Extension.”
Santhosh Kumar, CEO, Jones Lang Lasalle India, believes that Ghaziabad and Faridabad markets being closer in price points to Noida Extension, will benefit from the demand shifting to these sub markets and any latest or prospective demand for Noida Extension will be shifted to these markets. Kumar adds that Kundli though physically far from Noida Extension, by virtue of being a low-cost destination with improved connectivity is expected to witness same spillover of the demand.
Prashant Kaura, Founder Director, GenReal Property opines that the gap between demand and supply in housing will increase. Adds Pradeep Jain, Chairman, CREDAI – National, “Demand in NCR markets like Ghaziabad, Faridabad, Kundli and Gurgaon will see an upsurge, particularly for affordable housing since the supply of affordable housing in NCR is very limited.”

Affordable options

With uncertainty looming large over Greater Noida/Noida Extension, home sales here have come to a standstill and home-buyers are looking for other affordable options in the National Capital Region, closer to this area. According to Anuj Puri, Chairman, Jones Lang LaSalle, India, because of the tense situation, it’s natural for the demand to fall big time and the situation will remain fluid till some concrete solution emerges.
But then Noida Extension’s loss is the gain for other affordable housing destinations like Ghaziabad and Faridabad. According to CREDAI – NCR, demand in these areas has gone up and even there’s a price increase.
Take the case of Ghaziabad. Here, not just the demand has gone up significantly, even the prices have firmed up. According to Rohit Raj Modi, Director, Ashiana Homes, prices have appreciated by as much as 15 per cent. Significantly, the Raj Nagar Extension Builders’ Association decided to hike prices by Rs200 per sq mt.
Ghaziabad offers a variety of residential options close to Noida Extension, at the matching rates. What’s more, investment is safe here as unlike Noida where developers bought land from the Authority, in Ghaziabad, developers directly buy from farmers.
Now Ghaziabad, comprising of Indirapuram, Vaishali, Kaushambi, Vasundhara, has come up as a popular destination for budget homes. Indirapuram is being extended by another 229 acres. In Raj Nagar Extension, 50,000 houses are coming up over 500 acres in the next 3 years.
Metro connectivity to Vaishali and Kaushambi, has given a big boost to Ghaziabad property. And now its future connectivity to Noida via Indirapuram and to Delhi via New Bus Depot, Ghaziabad, will give a new fillip to real estate in this part of the NCR.
Two integrated townships – Crossings Republik on NH 24, close to Noida Extension and Raj Nagar Extension are a big draw with low-cost home buyers. Complete with ultra modern housing, shopping malls, club, schools, etc, Crossing Republik is being developed by seven builders over 500 acres at a cost of Rs3000 crore, to house one lakh people. The Phase I spread over 300 acres will get completed in year’s time. Here, affordable property is available in the price range of Rs20-40 lakh.
Raj Nagar Extension, another affordable group housing destination being developed by a number of real estate players, near NH58, offers houses in the range of Rs14-40 lakh, at the rate of about Rs2000 psf.
Faridabad which is undergoing makeover from an industrial city to a bustling NCR suburb with high class modern residential and commercial developments is yet another good bet for low-cost home buyers.
Big time developers like Ansals, BPTP, Omaxe, Parsvnath, Vipul, Mahindra, Eldeco are all there changing the face of the city, with rapid infrastructure upgradation and improved connectivity leading to property appreciation.
The development of Taj Expressway Corridor near Sector 80, is underway with over 20,000 dwelling units in the pipeline.
New Faridabad or Nehar Par area has emerged as a hot affordable housing destination with prices ranging between Rs1900-2200 psf. “Faridabad would now be explored more seriously especially as Metro will vastly improve access to the part of Faridabad”, says Prashant Kaura, Founder Director, Gen Real Property.

Costly homes

However hefty increase in compensation to farmers in Noida Extension is bound to make homes there more expensive. “Builders will have no choice but to hike the rates. So, the projects which are yet to be launched by builders or unsold stock will be put up in the market at higher rates to maintain a profitable trajectory for business,” says Harmit Chawla, MD, HD Corp Realty.
Avdhesh Goyal, Director, Earth Infrastructures says that developers in Noida Extension have been selling flats at the rate of Rs1,800-1,900 psf. “And considering Rs400-450 per sq ft of land cost and Rs1,200 psf of construction cost and other charges, the developers have been doing business with low-profit margins. And now with enhanced land cost and limited supply, I expect 20 per cent price hike in the next 3-6 months.”
Rajesh Goyal, MD, RG Group says that prices in Noida Extension/Greater Noida would see an increase of Rs 500-1,000 psf in the near future.
Santhosh Kumar says that some kind of price rise has already been visible and this has slightly dampened the demand. “A further price increase may be seen here though affordable locations may not see much price appreciation due to price-sensitive market.”

Future of affordable housing

The enhanced compensation to farmers in Noida Extension will have an adverse impact on affordable housing in the region.
Harmit Chawla says that this issue is not being addressed which could leave the future of affordable housing in lurch. “The solution and its timing will play an important role with regard to impact on affordable housing. However, I foresee project delivery timeliness getting impacted as a result of cash flow management problems. ”
Noida Extension had emerged as a mecca of affordable housing in not just NCR but in entire India, thanks to some progressive policy initiatives like increase in Floor Area Ration (FAR) and liberalised density norms. Moreover, home buyers were given a big relief by waiving off Internal & External Development charges. As a result of that 2 BHK-3BHK houses were available for Rs20-30 lakh.
R P Tyagi, President Noida Extension Flat Buyers Welfare Association is worried that the present land trouble may badly hit the affordable home destination of Noida Extension. “Considering the acute shortage of affordable dwelling units in the NCR, Noida Extension holds great promise as a low-cost housing destination. Authorities have already spent hundreds of crores on infrastructure development. Lot of money has been paid as stamp duty for the execution of lease deed and construction work has already started in most of the projects. In such a scenario, displacement of about one lakh flat buyers will further add to the already acute housing shortage in the NCR.” P S N Rao, Professor of Housing, School of Planning & Architecture, New Delhi and Chairman, National Association of Realtors (NAR) India is concerned that the Noida land trouble and the proposed land Acquistion Bill will have an adverse impact on housing across the country. “The enhanced compensation and rehabilitation package to farmers will considerably push up housing prices as land cost is a major component and we can reduce construction costs through alternative technologies to a limited extent. All this will provide a severe blow to affordable housing.”
Realty experts believe that if the impact of Acquisition Bill has to be contained in terms of rising home prices, favourable policy initiatives like increase in FAR, liberalising density norms and promoting tax-free housing enclaves on the lines of SEZs, need to be taken.

With the uncertainty looming large, what’ll be the impact on investment potential of Noida/Greater Noida/Noida Extension. Real estate experts have a divided opinion. Pradeep Jain, Chairman, CREDAI National says that it’s too early to speculate until the matter is resolved. Sachin Sandhir has a cautious stance. “Consumers will be skeptical in investing in Noida and Noida Extension area, at least in the near future till the judicial aspects of the land acquisition are sorted out and existing consumers receive some reprieve and clarity on the issue.”
Harmit Chawla is of the opinion that investment in this market will not be profitable. “Investment returns will get impacted in the coming months as prices will firm up. And with projects still away from delivery, there will not be a healthy resale market. This means returns are less and spread over little more time. Hence, notional annualised return percentage will see a dip.”
Santhosh Kumar advises against investing in this market which is in a flux.
Anshul Jain, CEO, DTZ India discounts any big investment risk, though there will be less demand over the next two quarters. Prashant Kaura, Founder Director, Gen Real Property is upbeat about the profitability of investing in Noida and surrounding areas as there’ll be 10-15 per cent increase in prices depending on project, locality, construction status and quality of construction. Avadhesh Goyal believes that it’s good time to invest for long term with high risk appetite. Manoj Gaur says buyers are currently looking at property in trouble free-zones and in final stages of completion. “It is important to regain the confidence of buyers in the region. As the construction activity picks up, they’ll feel assured of the safety of their investments in Noida Extension.”
Gaur feels that once things get clearer, end-users should once again start buying homes and demand should come back especially as Noida/Greater Noida has an inherent advantage of an affordable home destination with excellent connectivity and infrastructure.

Considering the complexities and legal implications, what’s the way out of the current impasse?
Santhosh Kumar is of the opinion that a solution more inclusive in nature could be possible through negotiations, once the status quo is created though no solution at the moment looks likely that can satisfy both developers and buyers. “One view could be that the Greater Noida Development Authority is penalised to compensate the landowners at a court fixed price and all other factors remain the same as earlier. If the original land owners are paid the compensation as per market rates and other benefits by the developers, the project cost will rise which in turn will impact the buyers and affordability of this area will be lost. If developers choose to scrap their projects, buyers will suffer on account of costs incurred so far. Developers may be compensated by the Authority. For the buyers, the blow will be more of losing an affordable place of residence close to Delhi. Also, in case of loan disbursal, the buyer will have to incur the interest cost on the disbursed amount. They are likely to get back the initial booking amount but may lose out on their dream of owning a house.” Sachin Sandhir thinks that while there are some stop-gap arrangements being proposed specifically where the authorities continue to maintain that more land is available for development within these affected markets, it’s doubtful that these alternatives will completely address the fundamental concerns of aggrieved consumers. “This is simply because providing alternatives to such a large number of consumers is not practically possible. Even in cases where cash refunds are being advocated, it seems unlikely that such strategies will work considering developers are quite cash-strapped. Bearing these aspects in mind, it will be definitely a while before the market in this area sees some level of normalcy.”
Honey Katiyal, MD, Investors Clinic, agrees that the problem is complex as it deals with the rights of farmers vs the rights of flat owners. “The entire episode has caused frustration among the property buyers who now find their dream of owning a home going haywire. The builders are doing their bit by compensating buyers but the government should also contribute towards compensating losses borne by the builders. My advice to the home buyers is show patience and wait for the final decision.”
Manoj Gaur adds that it’s important to regain the confidence of buyers in the region. “As the construction activity picks up, they’ll feel assured of the safety of their investment.” Pradeep Jain sumps up on a positive note. “ I do not think there can be any problem going forward as both buyers and developers understand that acquisition of land has been done through the legal process and issues shall be resolved amicably at the earliest.”
A few recent positive developments have raised the hopes of a solution to the ongoing imbroglio. One such important development is the display of solidarity by the buyers with real estate developers.
Home buyers of projects falling under Shahberi and elsewhere in Noida Extension, who were earlier demanding refund, have now put their lot behind developers and are jointly fighting for a solution.
Buyers have realised that after getting refund, they would not be able to get equally affordable house of similar level, elsewhere. There were also problems about the interest rate and the timing of the refund. There was increasing realisation among buyers that cash-strapped developers could find it difficult to refund money. Also, with farmers disputing more and more land acquisitions, shifting to other projects is also not a very safe option.
Buyers have now come to terms with the reality that their fate is intertwined with developers. And developers on their part have assured that even if they have to pay enhanced compensation to farmers, they will not charge from buyers. Moreover, buyers understood that farmers are not opposed to development per say but only want higher compensation and rehabilitation benefits. Says R P Tyagi, President, Noida Extension Flat Buyers Welfare Association, “We have full sympathy with farmers who have faced injustice. Yet we believe that dismantling the already completed works in order to make the land cultivable again will amount to a loss of huge amount of public money, besides creating acute housing shortage.”
There is a positive development on the farmers’ front too. The disunity among them had resulted in scuttling agreements reached between the authorities and the farmers’ representatives. And now with the decision of the farmers to come under one umbrella body to present collective demands, one hopes that it would not be a long haul for an amicable out-of-court solution to provide relief to all the aggrieved parties, thereby reviving the fortunes of Noida and Greater Noida. --with inputs from Sujeet Kumar Jha