The Greater Noida Authority may have erred with its land acquisition policies, which is responsible for the current stalemate in Noida Extension, but it has done good work in promoting affordable housing in the National Capital region. A developed infrastructure has enabled the builders to sell at prices of Rs 1,800-2,000 per sq ft in Noida Extension, the cheapest close to Delhi.
This was possible by increasing the floor area ratio (FAR) from 1.75 to 2.75, increasing the population density norm to 1,600 people per acre from 654 people per acre, and partly funding builders by allowing them to pay for the land cost over 10 years.
This brought down the land cost to Rs 510 per sq ft. With a construction cost of Rs 1,200 per sq ft, and other expenses such as brokerages and marketing of Rs 200 per sq ft, builders could sell at Rs 1,800 per sq ft. The floor area ratio and the population density norm have been changed for the entire state, and these have been adopted by Noida and Greater Noida authorities.
“You can buy a 2 BHK in Greater Noida for Rs 25-30 lakh, a 3 BHK for Rs 35-40 lakh. Where else can you buy at these prices close to Delhi?’’ asks a developer. Noida and Greater Noida are industrial authorities and are not governed by the housing laws in the state. So, there’s no property tax and a buyer does not pay IDC or EDC (internal and external development charges), which can cost Rs 4.5 lakh for a 1,500 sq ft flat in Gurgaon.
“Increasing the population density norm and the FAR allows the developers to construct more and help builders to bring down the pro-rata land costs,” says Navin Raheja, CMD, Raheja Developers.
Gurgaon allows a density of 300 people per acre, which is why the average flat size is bigger at 1,600 per sq ft. Assuming 4.5 people stay per flat, and a density norm of 300 people per acre, one can have 66-67 flats per acre.
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If the density norm is doubled, the number of flats too will double, but will be smaller. Noida and Greater Noida Authority not only increased the density norm by 144.65 per cent, but also increased floor area ratio by 57.14 per cent from 1.75 to 2.75 two years back. While a higher density enabled smaller flats, the increase in the floor area ratio enabled builders to construct more, and bring down the pro-rata cost.
Pankaj Bajaj, MD, Eldeco Housing says at these rates, builders do not make a profit. Or, rather they hoped to sell at a higher price in the next phases of the project, and make money. “There’s no margin in the entire chain. (What the authority buys for Rs 850 per sq m, costs it Rs 10,500 per sq m if one factors in the cost of developing infrastructure and 50 per cent of the land which goes into it) Noida Extension has emerged as the hub of affordable housing. It is under threat today,” said Bajaj.
According to realtors, Noida and Greater Noida authorities have done good work in developing infrastructure. “They have done phenomenal work, which is closest to good urban infrastructure. Gurgaon has no sewage, no electricity. But look at the quality of roads in Noida and Greater Noida. Every road has a sector lane. In Gurgaon, even the sector roads are missing,” quips Bajaj, who is also president, CREDAI (Confederation of Real Estate Developers' Associations of India) (Western UP).
IDC and EDC are levied by builders and deposited to the town authorities like Haryana Urban Development Authority for developing basic infrastructure within a sector and bigger projects like highways, flyovers, and metros that connect sectors or cities.