Property values set to rise in Noida post land allotment rate hike

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Land allotment rates hike in Noida

The Noida Authority’s decision to hike the land allotment rates for residential, group housing and institutional purposes by 14.19 per cent has not gone down well with Delhi NCR developer fraternity. They believe that it will not only lead to a property price hike but also make the area unaffordable, leading to a decline in housing demand.

Noida has always been popular as an affordable residential real estate market in Delhi NCR. However, the recent announcement of land allotment rate hike by Noida Authority across residential, group housing and institutional categories by 14.19 per cent effective April 1, 2016, has created a furore in the housing market. Experts point out that this move will overshadow the positivity in the market. On the other hand, Greater Noida Industrial Development Authority (GNIDA) and Yamuna Expressway Industrial Development Authority (YEIDA) refused to hike the rates. This hike is not applicable for commercial properties.

Suresh Garg, CMD, Nirala World & Secretary, CREDAI-Western UP, says, “Land rates play a vital role in the deduction of the final cost of apartments and being a price sensitive industry, any small hike in land cost will impact the sector hugely. Higher land allotment rates will increase the cost of dwelling units and will affect home buying decision of buyers.”

Revised rates are as follows:

Residential category

Existing rates (per sq m)

New rates (per sq m)

E (newly developed sectors)

Rs 25,000

Rs 29,600

D

Rs 29,170

Rs 34,540

C

Rs 34,900

Rs 41,320

B

Rs 47,920

Rs 56, 740

A

Rs 68,750

Rs 81,400

Group housing

Rs 35,420 – Rs 93,750

Rs 41,940 – Rs 1,11,000

 

For instance, some of the sectors that fall in category A are Sectors 14, 14A, 15A. Similarly, category B comprises of Sectors 15, 19, 20, 21, meanwhile, Sectors 11, 12, 22, 42 are part of category C, Sectors 63A, 86, 112 are in category D and Sectors 102, 115, 158, 162 fall under category E. 

Property prices to increase

The move will add an extra burden on buyers as the cost of housing will increase with an increase in the land cost. The cost of land is the biggest component comprising 40 per cent of an entire real estate project either it’s a residential or commercial project. Hence, if the cost of land is going to be hiked then it will have a huge impact on the cost of the project, shares Amit Modi, Director, ABA Corp and Vice President, CREDAI-Western UP.

Ashok Gupta, CMD, Ajnara India Ltd shares that the moment we say that land will cost more, it clearly means that the final unit cost is set to rise. It is imperative to understand that rising property prices in a market like Noida will lead to negative sentiments that might further dampen the realty prospects in the region.

Aman Agarwal, Director, KV Developers & Governing Council Member NAREDCO reiterated that the increase in land prices of Noida will certainly be a setback for the sector. The real estate sector is already under pressure and changes in the allotment rates will hamper the investment and growth opportunities in the Noida region.

New land parcels to cost more

This decision will have a negligible effect on current Noida's realty sector as it is reaching a saturation point as almost all land parcels are well-utilised. On the other hand, piled up inventory in Noida is quite high and as a result, the developer will first clear the existing inventory and then only will buy more land for development. However, this might have an effect in future if new land parcels will be allotted for development, shares Deepak Kapoor, President CREDAI-Western UP & Director, Gulshan Homz.

Impact on affordable housing

At a time, when the government is focussing on providing housing for all by 2022, this move is inappropriate for the sector, shares Garg.

Rupesh Gupta, Director, JM Housing shares that the current government and developers have started to concentrate on affordable housing and increasing land allotment rates will make this task even more difficult as it will directly increase the cost of the unit. Noida's real estate market plays an integral role in NCR's realty market. Thus, this decision will give inverse effect on affordable housing demand.

Modi further adds that hiking land allotments rates will definitely give a major setback to buyers planning to invest in the region, especially the real and first-time investors with limited and accounted means, who may either delay or put off their investment decision for the want of more funds.

While this move will affect new homebuyers, existing investors and end users who have already invested in Noida are likely to benefit from the hike as it will provide a better return on investment (ROI) in terms of capital appreciation.


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