Since 2008, residents of the National Capital Region (NCR) have had to contend with a very annoying problem: Endless text messages about yet another upcoming real estate project in the Noida and Greater Noida region.

Those messages reflect the bustle of a new urban centre at the south-eastern edge of New Delhi. The Noida -Greater Noida region has steadily risen to become the leader in residential real estate sales in the country in 2010, overtaking its more celebrated cousin Gurgaon and zooming ahead of many suburban appendages of metros such as Chennai and Bangalore.

“The Noida-Greater Noida region is the second largest destination in the country in terms of rupee value of residential real estate assets. It comes a close second after Mumbai ,” says Samir Jasuja, CEO, PropEquity, one of India’s leading provider of real estate intelligence. Within the NCR market, Noida’s share of housing rose from a paltry 13 percent before 2008 to over 50 percent by the end of 2010.

This real estate boom has been almost single-handedly driven by the so-called ‘affordable housing’ market. This has been possible because of the coming together of some innovative policy changes in 2008 and some very aggressive entrepreneurs who have taken advantage of these changes to build houses and companies.

To be sure, this growth isn’t totally free from controversy. People have raised questions about whether the Noida policy changes ­— especially the government’s acquisition of land on behalf of private developers — is the right thing to do. Such questions may acquire a sharper tone in the light of villagers clashing with police at Bhatta-Parsaul, 60 km from Noida city centre.

Enter the Entrepreneurs

But these questions do not bother 51-year-old Anil Kumar Sharma, chairman of Noida-based Amrapali Developers, who could well be the poster boy of the Noida-Greater Noida real estate story since 2008.

Sharma, a civil engineer from IIT Kharagpur and a former Bihar civil service officer, joined his father’s company, Amrapali Developers, in 2003. Until 2008, it was a small company. Today, its turnover is Rs. 2,500 crore. It sells flats mostly in the Rs. 15 lakh to Rs. 35 lakh range and has announced almost one residential project every month for the last year-and-a-half.

What explains the rapid growth of Amrapali and other such real estate developers such as Supertech in Noida? Something changed in 2008.

Earlier land prices in Noida were very high and government regulations ensured that the density of construction in any piece of land, measured by Floor Area Ratio (FAR) was low. This meant that to recover his costs, a developer had to build large, costly houses.

Post the global downturn, land prices in Noida crashed from as high as Rs. 6,000 per square feet to below Rs. 3,000 per square feet. Many of the big developers, who had many projects across the country, suffered an acute cash crunch and put a halt to almost all construction activities. But the demand for housing, especially affordable housing, did not halt and the Noida Development Authority, prompted by some builders, decided to get into the act with some innovative policy changes.

A Policy Boost

The central idea behind the policy changes was to make it easy for property development to happen,” says R.P. Kaushik, senior town planner, Noida Development Authority. The first big change was that developers were now required to pay just 10 percent of the land price at the time of registration, instead of the earlier 30 percent or 100 percent in places such as Gurgaon. Moreover, the remaining 90 percent was allowed to be paid over a period of 10 years.

This move allowed small developers like Amrapali and Supertech, which were still unencumbered by the worries of the downturn, to expand fast. It also freed bulk of their funds for developing the property. So, instead of paying Rs. 1,000 crore just for the land upfront, they could start their projects after paying merely Rs. 100 crore. As the project took off, money from the customers started funding the projects.

The other change was to increase the FAR in Noida and Greater Noida, ranging from 1.5 and 2 to 2.75, without charging the developer anything extra. This essentially meant that builders could construct more flats on the same piece of land without paying any extra money to the Authority. A clear 35 percent drop in per unit cost allowed them to focus on more affordable houses.

What sweetened the deal further was the Noida Development Authority not increasing land prices between March 2009 and March 2010.

The entry of new entrepreneurs changed the landscape in Noida-Greater Noida. From the developers’ perspective, construction was made cheaper and most of them started functioning on ‘cost plus’ pricing. This was quite different from the pre-2008 phase, where margins were kept much higher in order to cover for the high land prices. Typically, land prices, as a component of the total cost, fell from 50 to 60 percent (before 2008) to 30 to 35 percent after the new regulations.

According to PropEquity, the Noida-Greater Noida market, which used to be less than one-third the size of Gurgaon (in terms of new supply) in 2008, rapidly grew to 1.5 times in 2009 and then almost six times in 2010.



Forbes India - Noida’s New Landlords
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    According to PropEquity, the Noida-Greater Noida market, which used to be less than one-third the size of Gurgaon (in terms of new supply) in 2008, rapidly grew to 1.5 times in 2009 and then almost six times in 2010.



    Forbes India - Noida’s New Landlords

    Sir, this is situation only when noida extension area include but can we include at this stage

    Sir, this is situation only when noida extension area include but can we include at this stage
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  • The first big change was that developers were now required to pay just 10 percent of the land price at the time of registration, instead of the earlier 30 percent or 100 percent in places such as Gurgaon. Moreover, the remaining 90 percent was allowed to be paid over a period of 10 years.

    But who will ensure that how flat purchasers can become Owners of the flats after getting their flats registered. If the builders does not pay the remaining amount after completion of flats, say after 3 years, and decides to extend payment upto 10th year, then flats canot be registered in owners name.

    This is one of the reasons why SBI, the largest bank, is not lending in Noida region.

    The other change was to increase the FAR in Noida and Greater Noida, ranging from 1.5 and 2 to 2.75, without charging the developer anything extra.

    Hope this does not lead to another Indrapuram.
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  • Originally Posted by amarakbar


    But who will ensure that how flat purchasers can become Owners of the flats after getting their flats registered. If the builders does not pay the remaining amount after completion of flats, say after 3 years, and decides to extend payment upto 10th year, then flats canot be registered in owners name.


    https://www.indianrealestateforum.com/forum/city-forums/ncr-real-estate/noida-real-estate/15874-buyers-will-it-be-possible-to-have-your-flat-registered-after-possession?t=18093
    CommentQuote