Developers are bearing the brunt of the crisis in Noida Extension after the Supreme Court asked builders to relocate home buyers or refund their money with interest and directed the authorities to return the land acquired from farmers in Sahberi village.
Manoj Gaur, chairman, Gaursons says only 10 per cent of the home buyers are seeking a refund while 90 per cent want an apartment as they cannot afford to buy anywhere else (the price was between Rs 1,800-2,000 per sq ft).
Over 6,500 home buyers had booked flats in 6-7 projects in Sahberi. “The problem is limited to one village. Many builders are big and can absorb this,” he said. But this is an understatement of the problem staring at them. New bookings have stopped since the Sahberi order and now banks have stopped lending for projects in Noida Extension
“It’s a double whammy for developers as sales have taken a knock while banks are wary to lend. Their cash flows will be affected,” said Geetamber Anand, chairman, ATS Developers. “Builders will suffer huge losses as they have spent on advertising, paid brokerages and paid advance to suppliers and contractors. It’s difficult to quantify the losses. Plus, there’s a loss of opportunity,” said Logix Group CMD Shakti Nath.
It’s difficult to fathom the exact losses as some home buyers have paid 10 per cent of the total cost, while others have paid 30-40 per cent and some would have paid the entire amount. While most builders had not started construction in Sahberi except for excavation work and few floors by Amrapali, there’s a lot of construction activity in the vicinity.
What’s worrying them more is that farmers from many other villages have approached the court, post-Sahberi, and the fear is that there could be similar orders. A petition by villagers of Bisarkh, which along with 11 other villages constitutes Noida Extension, comes up for hearing before the Allahabad High Court on Thursday. “The courts always go by precedence. The HC will be guided by its earlier judgment on Sahberi and the Supreme Court ruling in this case,” said another builder in Noida.
Since 1991, land in Greater Noida has been acquired using the emergency clause, which did not give farmers an opportunity to file objections. The only difference is that unlike Sahberi, where a majority of farmers did not take compensation, a majority of the farmers in other villages have taken compensation, claimed authorities. Farmers who have taken compensation cannot challenge the acquisition but can seek a higher price.
Secondly, only 10-15 per cent of the land acquired across Greater Noida has gone for housing, while the rest was for industry or for creating infrastructure (for public good): Roads, sewage lines, water tanks and sub-stations. Nearly 250,000 apartments are being built in Noida Extension; at an average cost of Rs 15 lakh per unit, it will cost Rs 37,500 crore. Around 100,000 of these flats, worth Rs 15,000 crore, have been sold.
“Lot of land parcels are clear. Each area has its own classification. Villagers don’t want land, but higher compensation. Builders and the government should seek a review as people need houses. What happened here will have a ripple effect across the country, and not just Greater Noida. There should be a national debate,” said Nath.
Developers said farmers may expect a higher price for their land, but the land cost can only be proportionate to the selling price. “The selling price has been fixed (at Rs 1,800-2,000 per sq ft). The construction cost is around Rs 1,200 per sq ft; so land costs cannot be 1,200 per sq ft. The authority and farmers have to go for a settlement,” said a builder.
