Amidst apprehension of rate hike in Noida Extension after the Allahabad High Court ordered more compensation and benefits to the farmers, Confederation of Real Estate Developers’ Association of India (CREDAI) said the builders in Noida Extension have decided not to pass on the extra cost to the existing buyers.
CMD of Amrapali Anil Sharma, who is also the president of In Noida Extension, most of the land has been acquired at a rate of Rs.850 per sq metre as in Patwari village which is the model to be followed. Amrapali is the largest developer in the area with around 500 acres of land.
According to the Court order, the Authority might have to pay an additional amount of Rs.550 elsewhere. In the case of Patwari, to pay the additional Rs.550, the Authority sought an additional Rs.2,250 per sq metre from builders. With around three times of the ground area allowed to be constructed, the land cost of the constructed area will be around Rs.75 per sq. ft. Along with the carrying cost, including interest and other miscellaneous charges, this will be around Rs.100 per sq feet.
The big builders will not increase the burden on the existing buyers but recover the additional cost by increasing the rate for the new buyers by more than Rs.100 per sq ft. If only 80% of the project is sold, the rate will have to be increased by Rs.125 per sq ft for the new buyers. But, if 60% of the apartments are sold, the builders will have to increase the rate by Rs.250 per sq feet, which will be difficult for the market to be absorbed.
Therefore, the small developers, who have sold over 50% of their project, will find it difficult to increase the rate for new buyers to recover the entire additional cost. Some of the small developers, who refused to be quoted, said they may have to absorb the additional cost. They remained non-committal on the issue of not raising the rate for the existing buyers.
