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Commentary

Video: Q&A On Noida Property With JagoInvestor

I’m interviewed by Manish Chauhan at JagoInvestor on the Noida Extension issue. The Supreme Court’s verdict to return Shahberi land to villagers has created a larger issue, with farmers from other areas demanding their land back too. Builders are playing truant, buyers are in a panic and the Greater Noida Authority is clueless.  As I had mentioned earlier, SBI had stopped lending in Noida, and banks in general got the jitters .

The Problem
  • People bought under construction land in Greater Noida.
  • From builders, who’d bought it from the Greater Noida authority.
  • Which had in turn taken it forcibly from farmers.
  • Saying that it will give it to industry, the villagers would get jobs, there will be development, etc.
  • But it gave the land to private builders instead, for homes.
  • The farmers complained to the courts.
  • The Supreme Court said give it back.
  • Builders had started construction, and had taken advances from buyers.
  • Buyers have taken loans from banks.
  • Now everyone’s screwed.
  • Even the farmer, whose land can’t be tilled for the concrete that’s in it.
What happens

The farmer has his land back. But since it will probably have to be rezoned as agricultural land, the farmers can’t even finish the construction and sell the flats themselves even if they wanted to.  He can’t till it. He has to hope for the builders to pay him directly, which I think will happen eventually.

The Greater Noida Authority is a shameless, faceless, corrupt entity that stole land and earned some money. But because they sold land cheap to the builders, they probably didn’t make too much out of the game. They should be forced to compensate the farmers, but the cases will take years.

The Builders have promised that they might give either money back or allot flats in different areas. This is not going to happen; builders are in deep deep trouble anyhow, financially. Their only hope is to pay the farmers more and then take the land, but because they have got away with so much earlier, the thought doesn’t cross their mind. They will demand a bailout, threaten to default, or otherwise shut down operations before eventually acquiescing to pay up.

It’s not that they can’t pay – it opens a can of worms. One builder pays, and now every farmer will demand money from builders even if the land sale was done through the Greater Noida authority.

The buyers are screwed. Banks are less screwed. Many buyers have paid just the advance – about 10-15% of the value – and taken the rest as a loan. Banks have probably financed the subsequent operation (that is, further payments will be made by the bank) which obviously are not forthcoming any more. 

Whose Problem?

Like I say in the video, it’s always the buyer’s risk. My father bought an under-construction flat in 1980. He got possession in 1991. There was no internet to complain. My dad went pillar to post, the builder DOUBLED the price and he had no choice but to pay or lose all the money he’d already paid. He had a housing loan at 18%. When he passed away in 97, we paid the loan back with his provident fund amount – inspite of nearly 17 years of paying, the loan was nearly 1.5 times the initial amount. I have had life easy; my dad suffered through the worst of property deals ever.

He never got a bailout and he never asked for one. My father knew his risk, and the property he bought is an incredible one, but he knew that he was lucky to have got it; every first allottee in that apartment complex knows that too. After that, I do not advise pre-construction properties to ANYONE.

The fault lies perhaps with builders and the GNIDA authority. Yes, some should go to jail. Yes, they should be forced to pay the buyers back. The court process might take care of that over the next few years. I just hope our government doesn’t do a bailout; that would make people dumb enough to invest in more such property. Punishment is deterrence.

What Now?

Builders are doing weird stunts like posing as buyers to not pay up. (Many buyers were brokers anyhow, putting their commission largesse to work in the same business). There’s a draft Land Acquisition Bill going around, but builders say that will increase prices a lot. (My foot)

Noida (as opposed to Greater Noida) has brokered some peace by offering farmers 5% of their land in developed areas; this applies to cases running from 1976. The Allahabad High Court has asked the GNIDA and farmers to attempt an out-of-court settlement by Aug 12.

Lessons

Don’t buy under-construction properties. Even if they come with the seal of a public authority like GNIDA, you are at risk. It is your risk, so treat it like a risky proposition.

Do the due diligence anyway. Buying property is a painful business, and get as much documentation as possible from the builders, gathering as much history as possible. In boom times, they won’t give it to you because there are other stupid buyers around. So don’t bother during boom times, or go in understanding there is a big risk.

What else? Comment away. Here or at Manish’s blog.

  • Ankur says:

    well……..if no one buys under construction properties, what will happen to business model usually followed by builders…that is use installments paid by buyers / banks as advance to carry on with further work, from slab to slab. I understand the issue but surely there must be a way out……it will be better if end result of this mess in noida is proper transparent system which buyer can rely on… what are your views on what needs to happen to ensure fairness for all parties involved for any future land acqusition from farmers for constructing residential units?

  • Raja says:

    That’s really going to be a horror story for the individual buyers. Am sure they will be the worst affected of the lot. I have been close to the situation when the builder from whom i bought my under construction flat was on the verge of walking away from the project during 2008 crash.
    Normally in a home loan, the initial down payment (10-15% of property value) is from the buyer’s pocket. The banks contribution starts after that. So, for example if just the foundation and 2-3 floors are done in a property having total of 8 floors, the builder would have got close to 40% of the property value by then. which means close to 30% of the loan would have got disbursed too. So, the pain point for the buyer will be to give the interest (pre-EMI) on this 30% of loan amount, even if has no outlook for when he will get the property or if he will get it at all. The monthly payment of interest is what is going to act like salt on his wound. Remember, banks won’t like him to default on the interest even for just 2-3 months as then strict NPA norms would kick in.
    Good Luck to all people affected from the bottom of my heart!

  • Arghya says:

    Hi Deepak, Hot topic!!
    As you know I have been following your all writings even before you moved to gurgaon and now I know why you are so dead against buying an under-construction house.
    I have been following Manish’s articles (from Jagoinvestors) for a long time too. He is even against buying any property, he strongly recommend in staying in rented house.
    But truly speaking after so many analyses I myself could not draw a conclusion in this matter. Just some food for thoughts – you said ..
    “My father knew his risk, and the property he bought is an incredible one, but he knew that he was lucky to have got it; every first allottee in that apartment complex knows that too.”
    Do you think it was ever possible for your father or even you to buy that property as a ready-to-move condition? The answer to such questions for all the genuine buyers who are buying a under construction house is same and that is – it is not possible for them to buy a ready-to-move home.
    It’s jungle out there. A few weeks back I talked to few builders on golf-road in gurgaon. They bluntly said one need to pay 40% as black for the villa/flat which costs more than 2 crores.
    Genuine buyers don’t have option. They have to take the risks. It’s like it’s now or never. It is like, if you don’t book a flat at Noida-extension right now, you might have to book a flat next to Agra after 10 years. Everybody knows property prices are away overvalued, but nobody knows when it would crash. If it crashes after 25 years, does it worth waiting that long? The agony of staying in a rented house could only be realized by a person who has lived in a rented house for long time. It’s a trap, you know it, but yet you can’t avoid it. And I would repeat one of Manish’s remark – “If you don’t take risk, you are taking huge risk”.

    • Yes, we found that indeed, we could have purchased the flat in 1991 when we got possession. Imagine 18% interest for 11 years. What we had paid in the end was nearly 2.5x of the eventual cost (which was already doubled because the builder demanded it – everything was “white” though). The house prices in 1991 were depressed, and we could have bought for lesser than what it really cost us.
      I remember that someone bought an apartment in that building about 8 years later for effectively double what we had paid in total over 18 years.
      Ready-to-move houses are NOT that expensive; you have to wait it out, there is always a crisis (i have seen prices go down by half in the same apartment bldg in the 90s) Rents are insignificant compared to EMIs – in fact when you don’t buy a ready to move house you pay both Rent and EMI for years! How can that be better? Plus, after that you still have the EMI – for which the interest portion is greater than equivalent rent for many many years.
      No, I think we’re just enamoured by houses.

    • Manish says:

      Arghya
      Hey .. Not sure why you got that feeling that I am against “Buying” . I am not .. I am only against irresposible buying and buying just for the sake of “buying” without logic .
      I stay in rented apartment right now and in future even I will buy , but it will be for the same reasons as mentioned by you like “Pain of moving” . Apart from that I will make sure that the EMI’s are well with in my control .. and I will try to find a ready to move house ..
      So I am not against buying . I am only against unthought , hasty decisions made by people and going beyond one’s means .. If at some point, I said that I was totally against buying , i would like to change it .
      Manish

  • Arghya says:

    Yah Deepak, I got your point, that is why I always tell people (almost all of my friends have booked flats/ villas) who are buying property that – net equity after adjustment for interest-payment, tax saving, rent expense-income and price appreciation could well be negative even if the prices go up as expected. There is an enormous amount of risk and downside. But points which are rally important are –
    It’s not easy to find a seller for a ready-to-move house. You are left with very limited options. You are limited to options where sellers are available and in most of cases asking price is too ridicules unless it is distressed sale. (And even if it is distressed sale, prices don’t go down much, a lot of people have plenty amount of money which is lying idle. I got questions from my friends’ acquaintances – there is lot of money lying within india and outside india, could you grow it like white and if possible make white as much as you can? They just don’t know how to use that money!!!!)
    I used to live in sector-56, gurgaon. 5 years back cost of the 4-bhk in which I was living was ~45lac. I enquired and came to know for the same flat someone is asking 45, someone 60 and someone even 85lac. But everybody wants as much as possible in black. Now I heard that on same apartment a 3-bhk flat got sold for 80lac, buyers is an NRI, paid 60% in black.
    How a genuine buyer with white money can win the competitive bidding for a ready-to-move house? On pen and paper it is good, but in reality there is lot of tweak. Your money in bank account is no good, double digit inflation doesn’t left much buying power. I talked with “emmar mgf”. They launched the property on golf-course road 3yrs back at 6000/psq, now the resale price is at 12000psq with 40% black. Let say there would be devaluation after 10 years; in-between prices would reach to 31124.91 psq (assuming 10% inflation and no further increase in valuation). Can a service man with white earning would ever be able to afford it even after devaluation?? So only solution is to book new launch flats of same quality at golf-course-extension road (at a distance ~10km further away from city) at 6000psq now.
    See I don’t see much hope of devaluation of property price in India because of the following reasons –
    1) There is plenty amount of black money lying idle, which are I fact many-fold of our gross GDP. Those would jump into property aggressively as soon as prices get depressed.
    2) A huge NRI community. They have very significant contribution to our bulging foreign reserve. As long as there is such a huge difference in foreign exchange there is very little hope of property price devaluation.
    3) Population and growth – which my friends are emphasizing is a big factor. Demand would grow automatically because of such huge population.
    Disclaimer – Even though I want to book a flat right away (because I don’t think I could time the market), I could not find a good deal which I can afford for last 3 years.

    • Arghya, thanks for that. These factors existed in the late nineties also (black money, NRI Community, population) and still prices crashed a lot. (IN fact, then, NRIs were even bigger as a % of property buyers in India, I think) Cash on the sidelines remains on the sidelines in a crisis.
      I think we’ll live to see the reverse of those words; that prices will fall, that “distress” sales will truly be in distress, and that “too much money lying within India” will prove to be a myth in a crisis. But time has to tell, that’s all!
      In the end, I would say don’t buy because you think prices will go up. Buy because you can afford it. When you can’t afford it, wait; going for under-construction properties is needless risk unless you can do a LOT of background work.

  • amol says:

    its a lesson for real estate agency…especially for buyers.
    Today, people pay less attention to big decision and high attention to small day to day decision.
    petrol prices increased by 1 Rs…then they will do “halla bol” on government
    they do negotiation with street side shopkeepers…for 5-10 Rs.
    but when it comes to big time decision like buying property of 30-40 lacs they become volunteer to participate in the robbery to themselves.

  • Saurabh says:

    Commented on http://www.jagoinvestor.com” also
    Manish i find you to be very critical of Mayawati and the Noida & GNoida authority.I stay in Noida from last 6 years and i can bet you cannot name any other city apart from Chandigarh which is planned in such a great manner.Almost 50% of the area is open and green.It is a completely planned city with wide roads and an excellent water and drainage system.
    To develop anything in such a manner you need to acquire vast tracts of contigous land.We all agree that next few decades will see rapid urbanization and area like NCR will need lakhs of dwelling units to support this demand.What Noida authority does is that it notifies an area under section 4 A, which shows the intent to acquire, as soon as this is done the farmers and landowners start illegal construction and cut illegal plots and colonies to escape from acquisition.Later they claim this as abadi land and ancestral dwelling.
    To avoid this illegal construction the noida officials cut corners and immediately acquire land using emergency clause.Now coming to specific area of Noida extension.Four years back there was no such place on earth.Noida & GNOIDA officials connected the so called Noida extension area to Mainland Noida via a 6 lane bridge over river Hindon which seperates Noida and North Greater noida .After this a web of roads was built around the area.This spiked the value of the land which had no more value than a agricultural land has.
    Now coming to point of profitability of Noida and Gnida authorities and Peanuts that farmers claim to have recieved.GNOIDA authority paid 850/- per sqmt to farmers as compensation, along with that farmers were to get back 6% developed land.That means that any farmer whose 2 acres (8000 sqmt) were acquired will get a 500 SQmt developed plot. Well now you are wise enough to calculate the asset value of a 500 sqmt plot in NCR and not a agricultural plot.
    The same land which was acquired for 850/- was sold to builders for 11000/- per sqmt. BIG LOOT?? I think not at all? Suppose the land acquired was 100 acres, of this almost 50% land area goes in building Roads , green areas, common facility centers, stadium, government hospitals, schools etc. 6% land goes back to the farmers.So the authorities are left with just 44% of saleable land.Also farmers get reservation in future housing schemes launched by authority in which chance of allotment is very very high and getting lucky in draw is almost a certainity.
    Out of this 44% saleable land there are two categories one is residential and the other is institutional & industrial.The allotment rate of both varies alot, institutional rates are almost half to residential.Now this was about the land rates, now the roads have to be laid afresh, main roads, sector roads, service roads etc. Drainage system has to be setup. Electricity infrastructure is to be installed. You add all this and starting with 850/- you will definetly reach very close to 11000/-.
    Yes but i agree on the point that builders and developers had to pay undertable to get their group housing plots, that corruption has surely happened and it happens in not only Myawati’s UP but across the nation from last 60+ years.
    OK now coming back to compensation amount of 850/-sqmt on a standalone basis. We know that agriculture happens on vast lands and not on a 200 sqmt plot but on acres of land. Every farmer has acres of land and the rate of agriculture land is very less compared to residential or commercial.For every acre of land the compensation on older rate (850/-) was 32 lakhs+ 6% plot= 240 sqmt, market value 50 lakhs +reservation in housing schemes which is almost a certainity.
    So roughly farmer gets 80lakhs for an acre.If on same one acre he does three crops a year he can earn maximum to maximum 40000/- per annum after all costs paid( seeds+labour) etc.
    The problem is that state govt should provide some mechanism to safeguard this money.
    Farmers are mostly uneducated and do not have the financial wisdom to handle large sums of money and use it wisely, we know even graduates , and PGDBM MBA are not always able to handle and grow money.Thats why we need your site “jagoinvestor”.
    The present problem is more of political slugfest between RG and Mayawati. Farmers know they have a chance to earn big Moolah here, there is not a single farmer in Noida extension area who wants to do farming. They want land to be acquired.Consider this there are many farmers in Patwari village of noida extension who have more than 30 bigha of land.On current comensation rate that turns out to be 3 crore of tax free white money + 6% land returned as developed plot.That means 6 plots of 200 sq mt. That means 3 crore more. And we say it peanut.

    • Thanks Saurabh. Agri-land is priced much higher than 80L per acre, especially where there is conversion potential. In Gurgaon, farm land has been sold at 2-5 crores per acre recently, and in Bangalore, I remember deals, in 2007 or so, for over 2 cr. In fact we have families living in big apartments, of farmers whose lands were taken.
      Second, about roads and drainage sysetms. They are about 40%-50% of land and usually are made up by FAR and usage. The city makes money off the registration costs, which are usually enough to ensure infrastructure. The sale was at 10,000 per sq. mt. which is approximately 1,000 per sq. ft. But farmers got just Rs. 85 per sq. ft. Just the stamp duty on the sale would have been 5% – that’s Rs. 50 per sq. ft. That is, the GNIDA will earn 50 rs. per sq. ft JUST ON THE STAMP DUTY where farmers got Rs. 85 cr. Apart from this, there are development charges, water connection charges etc. that are charged with every flat sold which gives GNIDA even more revenue. Apart from that, they made the spread of Rs. 915 per sq. ft. It doesn’t makea lot of sense – the farmers are absolutely right to demand their share of compensation; in fact, it should be a straight-through deal will full revenue going to the farmers, with the builders paying GNIDA for the infrastructure separately.
      Farmers should absolutely have every right to higher compensation if their land was forcibly taken. I say do not take over such land at all. In the name of progress, we are stifling freedom, and that, as we are learning through our courts, is no longer acceptable.

  • Saurabh says:

    Deepak with all respect that i have for you after following your blog for last many years i beg to differ with you on this matter of land acquisition that
    has taken place in Noida from 1976 onwards.Whole of Noida & GNOIDA are built on land acquired using urgency clause of land acquisition act.In my personal
    capacity i have filed some RTI’S to know how the land was acquired for New delhi areas like Punjabi bagh,Rohini, Dwarka and most of New Delhi.The RTI have
    been filed to DDA ,CPWD and MCD.
    In fact most of the land on which Delhi stands has been acquired using the urgency clause, so why there should be seperate yardsticks for UP and seperate for
    say Delhi. Supreme courts have in past dismissed the petitions related to urgency clause.It is only now that Supreme court has termed “The land acquisition
    act” as archaic, what was it doing from last so many years.What about those who have lost their land.Where should the line be drawn.
    Is it possible to revisit and undo all acquisition done using urgency clause across India since 1947.There was a recent news in NDTV that some farmers of
    Sonepat have claimed the land on which Rashtrapati Bhawan stands today.See this link “http://khabar.ndtv.com/LiveVideo.aspx?id=207074&cp”.
    In my personal opinion, the High court and supreme court recent verdict in Noida extension case has failed to deliver complete justice. Yes, there was some
    justice, but only for ONE party… namely, farmers… where was justice for buyers? They were innocent during all this time. WHY weren’t they heard? WHY
    didn’t they get justice? Some buyers had put in all their life’s savings. Some borrowed money at heavy interest rate. Some sold gold… liquidated FDs…
    liquidated pension policy… and some even sold another property. Even if their money is returned now, with so called reasonable interest… what are hundred
    thousand plus buyers supposed to do? Will the bank take the money and restore old FD? Will the pension policy be reinstated? Who will pay for the interest?
    Can the old property be returned? Please remember… incomplete justice is worse than injustice. In this case, it turns out to be worst form of justice.
    First coming to comparison of land rates that you do between Greater Noida & Gurgaon, now it is a well known fact that land rates in Gurgaon are almost 50000
    per sqmt whereas in open market land in Greater noida area was far far less and not comparable to gurgaon when it was acquired.So it is not expected that if
    land being sold in Gurgaon earns 2-5 crore per acre,the same amount be given to farmers in Greater noida.Every area has its intrinsic advantages.
    Originally govt. acquired the land at 850 per sq. mt. Even at that point of time,the market value of acquired land (agricultural without land use change )was
    not more than 200-250 per sq mt. As was the trend then rich farmers buying the land from poor farmers at a rate less than 250 and then few months later
    selling it to govt. for 850/-. Now the same rich farmers who fooled the poor farmers have gone greedy again and demanding more from the govt.
    Anyways Ideally, farmers should be allowed to sell in the open market. Unfortunately, when that is done, many farmers are unwilling to sell. As a result, the
    developers cant get clean parcels of land and the entire exercise is wasted. It is then, the government comes to picture and lands up fixing the rate. Govt.
    then acquires the land and passes it to private developers. At this point, corrupt officials and private builders form a mafia and farmers again land up
    loosing.Those farmers who are in immediate need of money start doing plotting and you get illegal colonies with 2 metre wide internal roads which is later
    years down the line termed as slums.
    Direct selling has some more disadvantage, in such cases the authorities start playing with the Master plan of the cities, where to build roads, where to
    build public amenities and all.Selectively the land is notified and denotified.Large tracts of lands are bought cheaply by powers that be or big developers
    having inside information at damn cheap rates.
    The farmer who sells directly to builder gains but then his neighbour whose land is acquired by State governemnt for roads, drains , metro projects etc ends
    as a big big loser when compared to his immediate neighbour.
    You took the example of Gurgaon, well i have stayed in Gurgaon for a brief period of 6 months, and i swear its public amenities like roads, drainage are in a
    pathetic state.To travel in peak traffic sometimes i needed 1 hour for a stretch of 2 Km.Moreover the roads are worst among whole of NCR.That is where Noida
    and GNOIDA are far far better i will say incomparable to any other city in India.
    Properly planned cities in a country like India need contigous land, or else the developement authorities get stuck with score of litigations and Stays
    granted by courts for their on ground developement projects.
    If noida extension which is esentially quad sectors of Greater noida a scam which needs CBI enquiry.Well than same is true for entire Noida and GNOIDA +Delhi
    and many parts of Urban India not just Noida extension.
    One more thing i will like to point that you are firm believer in sane pricing of houses.The land when bought or acquired at insane prices cannot deliver
    built up houses with a saner price tag. Today Gurgaon developers command a sale price of 6000/- all inclusive.The same house with very same specifications or
    even better was available at 2500/- per sq ft.The concept in which you believe i.e affordable and in budget houses.
    Talking about developers which are often termed as cheats,corrupts,frauds and so on and so forth.Well the same developers who operated in Noida extension
    have 10’s of delivered projects in Noida, Greater noida and Ghaziabad.People live in those flats and go to work.We all live in flats build by these very
    developers.If i trust a friend for my life and he cheats and back stabs me , well ideally i should not abhor and discard the concept of friendship” et all.
    But i will have to learn to live with that and move ahead.
    Now coming back to bought at 850/- sold at 11000/- .Well you say that registry revenue goes to GNIDA, i am not an expert but when i read local newspapers i
    get the impression that in UP revenue department and Greater noida industrial developement authority are two seperate legal entities.GNIDA is all on its own and as far as my knowledge does not get anything from Revenue treasury.As far as FAR is concerned it is 3 In greater Noida. The builder has to leave 50% open area, so if he buys 10000 sqmt the actual construction can be on 5000 sqmt.Total builtup area is 10000*FAR=30000 SQMT.so number of floors to be built is 30000/5000=6.sO 6 floor can be made.I do not know how much authority is paid for a FAR of 3.
    I will quote the CEO of authority Rama raman on prfoit loss equations for authority in sale and purchase, well he may be lying about it , but then to what extent he can lie?
    “GREATER NOIDA: In the wake of controversy over land acquisition for the Yamuna Expressway, the Greater Noida Industrial Development Authority today clarified that the land acquired from farmers for development is sold at no-profit-no-loss basis.”Cost of land per square meter calculates to Rs 11,000 (per square meter) for the Authority,” Chief Executive Officer Rama Raman told reporters here, adding that the land is purchased as well as sold at the same rate.
    Giving the break-up to explain how the amount settles at Rs 11,000 per square meter, he said, “Rs 850 per square meter is land compensation cost. For
    internal development, expenditure is Rs 1,500 per square meter. It includes internal sector roads, electric poles and transformers and other infrastructure.
    External cost is Rs 850 per square meter which includes construction of wide roads, Expressways, for better connectivity.”
    Raman said the third expense is special development such construction of hospitals, schools, fire stations and other infrastructure needed. “Its expenditure
    calculates to Rs 1,600 per square meter,” he said.”Beside these there are other expenses. Total cost per square meter calculates to Rs 5,500. Only 50 percent land is available for sale as rest goes in development of roads and parks. The actual expenditure per square meter land to authority calculates to Rs 10,500 to Rs 11,000 per square meter,” he said.Raman said the price is fixed at Rs 10,000 to 11,000 per square meter for residential plots while industrial and institutional land is sold at subsidised rates of Rs 3,500 to Rs 5,000 per square meter.The loss from these allotments is recovered from sale of commercial allotments, he added.”
    Deepak it will be nice if you visit Greater Noida once in case if you havent that will give you an idea of what GNOIDA authority does and if you have visited well you must be in a position to compare it with many other cities you would have visited.
    Well thats my POV.

    • Thanks for the detailed reply. some points:
      1) “Why shouldn’t buyers be heard”? Because you haven’t filed cases. If you file cases against the builders, you will be heard.
      2) Yes, Delhi cases might be heard – the court will determine if the case is too old to hear or not. Typically, the court takes the view that if you don’t protest before the construction, you’re out of luck. But they’ve been known to do some damage control later also.
      3) I have lived in Gurgaon and BLR – where similar land – far away from the city – was sold at about 1.5 crores per acre in 2005. So no, I don’t agree that things are different.
      4) I don’t believe that we should be allowed to acquire property forcibly in the name of progress. If they can’t pay everyone on their terms, don’t build the city. It’s fine, we’ll figure ourselves out eventually. There are private cities that are built without govt intervention. Eminent domain is a horribly troublesome thing!
      5) Costs: I honestly don’t believe the GNIDA commissioner – It doesn’t cost that much, going from any city built in the past (in fact what he’s saying is about 5x the cost!) But then you’ll have to take my word for it versus his; the cost metrics should be evaluated when they do it – and there is the big corruption setup, they siphon off the money with inflated costs. Also Note: there is additional revenue to the state for exactly this infrastructure – even gurgaon charges it – which more than covers the cost; it’s the order of a few lakhs per apartment. GNIDA is going to be compensated from ths revenue.
      6) I will visit GNIDA; when I came to gurgaon even this place had no traffic. Now its tough, but less than Delhi. GNIDA will also become the same type if it develops like these cities.
      7) housign prices should not be cheap or expensive – they just should not be subsidized. They will form bubbles unnecessarily otherwise (compared to forming bubbles as part of hte market – that is ok)
      Overall, I think we’re on different sides of the fence. You’re probably someone with an interest in the area, which I respect – for you the loss can be terrible. But what do you do if you buy a secondhand car and it turns out to be stolen? Your car is returned, but what about your money? will you ever get it back? Answer: You have to go to court. That’s exactly what you’ll have to do here also. It’s unfortunate, but just like I can’t force the stolen car to be given to you just because you paid for it, I can’t demand that the stolen land be given back to the builders.

  • Saurabh says:

    Yes Deepak very rightly said i have interest in the area, there was a housing scheme launched by Greater Noida authority way back in July of 2008 for plots and built up houses of sizes varying from 90sqmt to 200sqmt.I was lucky at that time to get a plot alloted of size 200sqmt, for that piece of land i had to pay 21 lakhs @ 10500/- sqmt with a promise that land will be delivered in 3.5 years.Subsequently the developement work was commenced, plots were demarcated, internal sector roads were built etc, the built up houses are already complete ahead of schedule and were awaiting handover.
    At that time there was no place called Noida extension it was Sector 3 of Greater noida for me and couple of thousand more allotees.The scheme was just like any other housing scheme that Noida and GNOIDA authorities were coming up with from last 35 years!!!!So that was’nt a scam that was happening,because if that was scam i repeat the entire Noida is a scam.
    I have bought and paid to GNOIDA authority. I know my money is safe and in worst case if the Land matters does not settle in that area Authority will relocate allotees like me to a alternate sector or area, and in worst of worst case if all the land that authority has with it is denotified, i will get back my money with 12% interest (that is the interest rate authority charges from allotees).
    But then i wonder that such kind of housing schemes are very common in each district of UP. My native house in Lucknow was built on 120sqmt authority plot 25 years back, my father bought that plot for 25k.But then these are bad times and its time to distrust everyone,even the governement of the land .Well RIP to my dream of owning my own house.
    Still Deepak i request you to once devote some time to visit Noida and Greater Noida and provide a critics POV.
    With all due respect and admiration for you.
    Thanks & Regards
    Saurabh.

  • Arghya says:

    Great great going …
    A great way to learn various things ……
    Regarding forcible land acquisition I am completely agree with Deepak. Property right is the one of the basic building block of development and progress — http://www.ejsd.org/public/journal_article/5
    We just can’t allow any government to takeover any property by force for the sake of development. Yes the logic is true that it would be a big barrier for development as you can’t buy large-continuous block of land from farmers directly. But solution to this problem is not forcible acquisition. If we do that, our age would be no different than feudal age. I could write up pages for implementation (not going to do that here) which could maximize the over social benefit with minimum sacrifice – In essence, we need to have transparent bidding system where developers and planners would buy land directly from owners where unwilling owners/farmers should be given lands elsewhere. I strongly believe that these DDA-HUDA-GNOIDA and all other so called development authority are just the vehicles (like special purpose vehicles of corporate) of government to rob common/poor people and transfer the wealth to the rich (now-a-days we can use rich and politicians vice versa. Who are rich, are either politicians or possess great political influences and who are politicians are anyway rich. obviously with few exceptions). This must be stopped.
    But I also have contrary opinion in case of farmer-protest in NOIDA or Gurgaon. This is simply black-mailing. These farmers are noway poor, they are crore-pati. They don’t represent the agony of real farmers. These are politically motivated goon-das trying to squeeze out free-money as much as they can. I am against any further compensation to these goons. What about the others who’s land had been forcefully acquired since independence!!!!!! This is again an opportunity of making corruptions/misappropriation – Powerfuls would be distributed free land in the name compensation where as the poor farmer would find nothing in the receiving end.

    • Agree with you on the property right piece. But not on the farmers in Noida – even if they ARE crore-patis, their land should not be taken forcibly. If land prices fall tomorrow, they should suffer the lower price also in a similar way. I’m not for poor or rich, i’m just saying that property rights are sacrosanct. The correct thing then is to not pay these farmers anything – in fact take back the money paid, and give back the land. If they don’t want to pay the money back, it’s considered sold – give them about 6 months to find the money. Banks can easily finance the interim, if they make direct deals with builders.

  • Saurabh says:

    A nice article in Business standard making comparison between Gurgaon and Noida infrastructure policies…….
    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.
    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.
    Land row dwarfs good work by Greater Noida
    authority
    Ranju Sarkar / New Delhi August 07, 2011, 0:14 IST
    Page 1 of 1
    http://www.business-standard.com/india/printpage.php?autono=445056&tp= 8/24/2011