By: Santhosh Kumar, CEO – Operations, Jones Lang LaSalle India
The Noida Extension land acquisition fracas was all about the authorities allowing developers to acquire land at considerably low prices from farmers and also changing the planned use pattern from industrial to residential. Farmers revolted and were able to gain wide support from different quarters.
After massive agitations and high court orders, the authorities gave the verdict that the affected farmers were eligible for compensation from the land allottees that had acquired their land at meagre prices. Going by prevailing trends, it was to be expected that builders of projects on the plots will pass on the added costs to consumers. They have gone ahead and done so, raising the cost per unit in order to be able pay the stipulated compensations as demanded by authorities.
Also, the construction work on a majority of the projects in this area has been stalled since the acquisition row. This has resulted in limited availability of options, which in turn has enabled developers to have their own way with regards to the pricing for unsold inventory. Higher prices resulted and were accepted, as they were still perceived to be on a comparatively lower side.
Additionally, inflationary pressures and the rising cost of raw materials have compounded price appreciation in the region. Before the controversy stirred its head, the average residential rates on Noida Extension were in the range of Rs. 1800-2000/sq.ft. Currently, they average at 2800-3200/sq.ft.
Overall, it can be said that the realty market at Noida Extension has actually emerged unscathed out of the whole controversy. This is because the area continues to have unique selling point of location for affordable housing when compared with Noida and Greater Noida. That said, the price appreciations are real enough to buyers, and it is expected that prices will now either remain stable at the current levels for a couple of quarters, or climb only marginally.
The NCR Planning Board (NCRPB) is set to give its final nod to the developments at Noida Extension. Once this comes through, the area will seal its position as a prime location for affordable-range houses in the Delhi NCR region. The major players, in terms of land banks, are Amrapali, Supertech and Gaursons. In addition, many other developers are queuing up their projects.
Noida Extension will prove to be a tough contender to other localities in NCR, primarily in terms of pricing and location. This fact has also spurred commercial and corporate activity in the area, as commercial property rates are also far more competitive when compared to those in the developed sectors of Greater Noida and Noida.
On cautious note to investors, buyers will not be aggressively hunting for properties at Noida Extension for a while to come. Based on our learnings from the whole controversy, we are convinced that buyers will only put up their money when construction on the stalled projects has actually begun on the ground. As of now, developer still need to obtain all the necessary approvals. Only at this stage do the projects become bankable, enabling the approval of home loans.
