If you were one of those who found themselves stuck in one of the controversial projects in Noida Extension, the deal seems to be now in your favour. With the Allahabad high court expected to increase compensation for farmers, who are protesting alleged illegal land acquisition, the cost of the land will go up. So the same land will cost more to the developers, who will recover this extra cost from new homebuyers. And in such a scenario, existing apartment allottees will see a price appreciation.

By Shyamal Banerjee/Mint

The Allahabad high court completed the hearing of all 491 remaining petitions in the ongoing land acquisition controversy in Greater Noida on 30 September and has reserved its final judgment. Sources close to the development say that the judgment may come any time soon.

What happened earlier

The controversy began when the Allahabad high court in May this year had quashed the acquisition of 600 acres of agricultual land in Shahberi village. Later in July when the Supreme Court upheld the high court’s decision, the Greater Noida Industrial Developnment Authority (GNIDA) compensated the farmers of this village by increasing the compensation amount.

Inspired by the incident of Shahberi, farmers of neighbouring villages also filed petitions in the court calling the acquisition illegal. Farmers from at least 16 villages in Noida Extension went to Allahabad high court demanding that farmland acquired by using the urgency clause under section 5-A of the Land Acquisition Act for constructing flats be scrapped. They also petitioned for higher compensation.

Later, farmers of neighbouring Noida too joined protests demanding for increased compensation for their land in various sectors of the city. Looking at the number of petitions and their common objective, the court decided to club all the petitions and give a final verdict.

Developers to pay

As per the agreement between the authority and the developers, a portion of the increased compensation package will come from the developers’ kitty. While developers are ready to shell out a portion of the compensation money, they have decided to raise the cost of purchase for new homebuyers. Says a developer, who did not want to be named, “Developers will have to shell out extra for the same land that was acquired at lower rates. As a result, we will pass on a share of this extra cost to new buyers in this area."

Around 200,000 apartments (including under-construction and newly-launched projects) are proposed to come up in Noida and Greater Noida, according to rough estimates provided by Confedereation of Real Estate Developers’ Association of India (Credai), a pan-India body for developers.

Imminent price hike

Developers in the region say that prices will move up by another 500-600 per sq. ft. Mint met some leading developers whose projects are coming up in the Noida Extension area and all of them said new buyers would find the deal costlier. “The extent of hike will be in the range of 25-30%, which will take the pricing in the range of 2,500-2,800 per sq. ft. But this increase will only be applicable to new customers," says Anil Sharma, chairman and managing director, Amrapali Group. The Group’s residential projects Smart City, Leisure Valley and La Residentia have been affected by the land acquisition controversy in the region.

Developers will also charge a higher rate from those old customers who have not paid their instalments on time or have missed their payments. Supertech is one such firm. “We will levy the extra charge on those old customers who have been defaulting on their payments till date," says Mohit Arora, director, Supertech Ltd. The company’s project Eco Village II and a portion of Eco Village III are affected by the controversy.

A comparison with neighbouring regions suggests that Noida Extension offered the lowest rates in the National Capital Region till date. While residential projects in this region were launched in the range of 1,800-2,200 per sq. ft, the average residential rate in Noida City is in the range of 5,00-6,000 per sq. ft, as per the data available with property consultant firm Jones Lange LaSalle India. Even upcoming areas like the Raj Nagar Extension in Ghaziabad are in a slightly higher range of 2,000-2,200 per sq. ft, as per estimates given by developers in the region.

With the increase in rate, the region will no longer be affordable, which was its biggest attraction. Says Geetamber Anand, national vice-president, Credai, “Most developers with projects stuck in the Greater Noida land acquisition row will increase their rates by around 500 per sq. ft for new homebuyers."

Re-formatting of projects

To compensate for the developers’ loss, the Greater Noida Authority has also increased the floor area ratio (FAR) to 3.5 from the earlier 2.75. FAR denotes the (according to the development plans and zoning laws of individual states) part of the plot on which a developer can construct apartments. However, developers will have to pay a fee to make use of the extra FAR.

Says Sanjay Rastogi, director, Saviour Builders Pvt. Ltd, “Most builders will increase the height to consume the FAR. But this will only happen when there is an indication on increased compensation from the authority." Saviour Builders and Gaursons India Ltd are jointly coming up with two residential projects Gaur City I and Gaur City II in Noida Extension.

Agrees Arora, “We too are keen on buying the extra FAR. We will increase the number of floors where construction has not begun yet. But in my view, height will increase instead of any horizontal development, as there is restriction on the covered area."

However, it’s too early still. “An increase in FAR means developers can now build 20-25% more apartments in the same project. An extra tower or extra floors may come up in the same project where you have invested. But it is too early to comment whether developers will actually reformat their project," says Pankaj Bajaj, president, Credai’s NCR chapter.

What should you do?

Buyers who already have their flats in the area stand to gain due to the price escalation. But be prepared for delayed possession. Typically, projects will get delayed by 6-15 months from the scheduled date of completion. Says Sharma, “The delay will extend to a maximum of six months in most projects."

Also, the green and open spaces promised to you may shrink due to re-formating of projects. Stay invested to gain on the price appreciation.