Greater Noida: Once touted among the most attractive destinations for housing projects in the National Capital Region, uncertainty looms large at Greater Noida after 156 hectares of farmland for realty projects were ordered to be returned to villagers.
"Builder sentiments have been hit," said Manoj Gaur, managing director of Gaursons India and president of western region of the umbrella body for realty sector, Confederation of Real Estate Developers` Associations of India (Credai).
"Buyers, especially, are uncertain over the fate of their properties in the area," Gaur said, referring to the mood after the Supreme Court decision that upheld an earlier order asking the authorities to give back the land at Shahberi village there.
According to him, it may prompt other farmers, who have sold their land, to knock on the doors of courts to seek similar recourse in a bid to get higher compensation than what they had earlier received, since such a framework has now been set in courts.
Gaur`s views were corroborated by Neeraj Bansal, director of consultancy firm KPMG who said the judgment has hit sentiments across the board-investor, builders, banks and most importantly first-time house buyer.
"Many buyers-first-time buyers-may have taken home loans for the property and now find that the initial collateral, which the house or a flat represents, is not there at all now," Bansal said.
He further added that socio-political upheavals in Noida and Greater Noida, constituting a major portion of the larger National Capital Region, will also have an adverse impact on the price in the similar category housing projects in other areas surrounding New Delhi.
"Builders, investors, buyers and banks, through those buyers, have invested in a lot of their money. Therefore, all these factors also have the ability to adversely impact on prices in housing projects in a similar price range and areas," Bansal said.
Short-term impact on investment in realty development in Greater Noida, in particular, may also occur, unless the government or any other regulatory authority takes stock of the situation," he said. "Financing projects in the area would be a bit difficult now. as the collateral itself-which is the property-is in jeopardy. Commercial banks have slowed down the processing of loans for that region."
Industry officials and officials agree customers may be the biggest loser. Vinod Behl, editor of niche magazine Realty Plus, who said that the compensation package was also headed towards a raw deal as developers were struggling under huge-debts.
"Customers are going to be hit hard since some builders do not have an alternate project to shift them to. Due to the high debt they are under it would also be difficult for them to pay higher compensation," Behl added.
Experts also blamed the state-run Greater Noida Industrial Development Authority (GNIDA) for ch0osing an inappropriate model to acquire land. Farmland was bought at as low a price as Rs 800 per square feet and then sold for Rs 11,000 per square feet.
Meanwhile, the Amrapali Group, the largest of the six developers hit by the court order, said it was monitoring the situation and will even ask for a compensation form the state authorities from whom they purchased the land.
"We are closely studying the Supreme Court order. We will decide in a few days’ time on the future course of action," Mohit Gupta, director-marketing with the Amrapali Group, said.
"There can be various modes of compensation. Like cash-back or allotment of some another land," Gupta said, adding the fate of its Smart City project affected by the apex court order, will also be decided soon.
"As far as our valued customers are concerned, we have given them the option to shift to our luxury flat and villas project -- Dream Valley -- at no extra cost.