Experts see Supertech's brand image being hit after Noida blow

Company denies any dent in brand as observers expect it might have to cut prices across projects

Real estate developer Supertech might find it hard to sell apartments in its projects after two of its towers in a Noida project were sealed over violation of rules.

Experts tracking the sector say the company’s brand has taken a beating and it might have to cut prices, since sales are expected to decline. The company’s website says there are about 40 ongoing projects worth Rs 14,000 crore, at Gurgaon, Noida, Greater Noida, Uttarakhand and Bangalore. Supertech has a little over 75 million sq ft under construction across residential, commercial and hospitality segments. It also recently launched a university in Uttarakhand.

The company says it does not believe the brand has been dented. “Only for one or two days the matter had impacted sales but it has normalised. There will not be any major impact on sales or the company’s brand,” Supertech chairman R K Arora told Business Standard. “We have assured our customers that their money is safe with us and they will have the option of moving to our other projects as well.”

Ashutosh Limaye, head, research and real estate intelligence, Jones LangLaSalle India, says: “With such incidents, brands take a beating and sales drop. The company could observe sales velocity for a couple of weeks and then decide whether prices have to be reduced. There won’t be any immediate impact on prices but only on sales.”

Another person tracking the realty segment in Noida and Greater Noida says sales in Supertech’s other projects will certainly be impacted but by how much is difficult to ascertain. Also, it would be difficult for people — buyers or investors — in the projects to exit at a good appreciation value.

A few months earlier, the company was in the news with a number of international tie-ups for high-end projects in Gurgaon and Noida, including with Disney, Armani and Yoo Worldwide. Now, experts say they doubt if it will be able to attract enough customers for highly priced branded residences.

In an order on April 11, the high court at Allahabad ordered demolition of two towers in Supertech’s Emerald Court project off the Noida Expressway. The company was told to refund money to the buyers with 14 per cent interest compounded annually. The judgement was passed on a petition from the Emerald Court Owners Residents Welfare Association, which alleged approval and construction of the towers was “in complete violation of the UP Apartment Acts”.

Devina Ghildial, deputy managing director, RICS South Asia, says: “Worst hit would be those who invested at lower rates at early stages of the project. Properties in the region have appreciated three to four times in five to six years, which means they will have to spend much more to acquire a new property in the region or neighbouring sectors of Noida.”

Arora maintains it had all the approvals for construction of the two towers and it might file a review petition in the Supreme Court next week.The towers were sealed by the Noida Authority on Tuesday.

The towers have 857 apartments, of which 600 had been sold. A set of buyers in these towers are planning to move the SC, too, to make them a party in the case. Those who bought only for investment seem happy with a refund.