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Those who have invested in property in Noida Extension and parts of Greater Noida in the National Capital Region (NCR) have reason to rejoice. With the Supreme Court on Thursday upholding the land acquisition by local authorities between 2006 and 2009, uncertainty on about 100 residential projects in the area has ended.
However, new buyers or investors planning to buy an apartment in this region will have to spend 10-20 per cent more, as prices are expected to increase following Thursday's court order. Experts say currently, an apartment in this region costs Rs 2,800-4,000 per sq ft, depending on the location. They add once demand picks up in the a few months, prices might stand at Rs 5,000-5,500 per sq ft.
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"After this order, the confidence of buyers and investors will return. And, the sector will look to set up base in Noida Extension. With an increase in demand, prices are bound to go up in the short term," the chief executive of an NCR-based firm told Business Standard.
Data from research firm PropEquity show in the past two and a half years, there has been an increase of 10.67 per cent in the prices of apartments in Noida Extension, while launches of units have declined 96.67 per cent and absorption has fallen 87.1 per cent.
Experts attribute the decline in launches and absorption to the litigation pertaining to land acquisition since 2010.
The Supreme Court has also asked authorities to raise the compensation for the land by 64 per cent and give 10 per cent of the developed land to farmers, upholding an Allahabad High Court order in this regard. It dismissed all petitions filed against land acquisition in the area by farmers and said no land acquired would be returned. During 2006-09, about 3,000 hectares were acquired by government authorities, invoking an urgency clause.
Farmers from 65 villages protested against the land acquisition by local authorities in the Allahabad High Court, saying their land was acquired forcibly and the compensation given to them was meagre. The land, they said, was acquired at a pittance but later sold to real estate companies at much higher prices.
In October 2011, the Allahabad HC ordered the cancellation of land acquisition in three villages. For the rest of the villages in the region, it asked authorities to give 64 per cent more compensation, as well as 10 per cent of the developed land to farmers. However, the order was challenged by Noida authorities.
In February this year, the apex court upheld the HC order for additional compensation to farmers.
The issue had hit as many as 100 real estate residential projects in Noida Extension and parts of Greater Noida. These projects account for 200,000-300,000 apartments, of which many are under construction. Most of the projects were launched in 2010-11. Manoj Gaur, president (NCR), Confederation of Real Estate Developers' Associations of India, said, "Hundreds of crores have already been invested on development in the area. This order will enable the unlocking value for all stakeholders and help customers, developers and financial institutions redeem their capital, which has been in a deadlock after objections were raised."
It would also boost the confidence of investors and buyers and enable the region to rebound to a growth path, he said, adding in the recent past, development of the region had taken a back seat due to various regulatory challenges.
R K Arora, chairman of Supertech, which has about 10 projects in the area, said, "A cloud of uncertainty was looming over the realty sector for the past couple of years, owing to multiple cases of litigation over land acquisition in Greater Noida. This (the court order) will restore the confidence of buyers and investors."
An agency report quoted advocate Surat Singh as saying, "The Supreme Court on Thursday decided the judgment given by the Allahabad High Court was correct, and it has been upheld. The Allahabad High Court had said the land acquisition wouldn't be quashed, adding there should be 64 per cent of enhancement of compensation - from Rs 850 to Rs 1,400 per sq yard - and 10 per cent of the developed land be given to farmers. That Allahabad HC judgment was challenged by Noida and Greater Noida authorities, with 850 petitions filed. Farmers groups filed 350 petitions."
Sanjay Dutt, executive managing director (South Asia), Cushman & Wakefield, said, "The Noida and Greater Noida residential real estate markets are known to primarily attract end-users; speculative buyers or investors are few. The SC judgment is definitely a relief to buyers who had invested in their dream homes and had been living under a huge cloud of uncertainty since the past few years. It was ironical that though developers had bought land from a government body, which would be considered a bona fide seller, were facing hardships and an uncertain future for their projects, if the land was to be returned to farmers. Now, we expect these affordable residential markets to see increased transaction activity, as demand in the segments up to mid-income remains the strongest, even in current market conditions."
