The demolition of Supertech’s twin towers on August 28 on the orders of the Supreme Court sent out a stringent message to real estate developers that they would have to pay heavily if they do not follow norms. This, and a string of measures, such as the new land allotment policy, wherein it will be mandatory for consortium members to maintain 100% shareholding till they take occupancy of the land, as well as the requirement of depositing the entire amount after allotment of a plot within 90 days, reaffirms Noida’s place as a serious and a ‘clean’ investment destination, Noida Authority CEO Ritu Maheshwari tells Vandana Ramnani in an interview.
What steps has the Noida Authority taken so far to clean up the real estate space?
This cleaning up exercise did not begin six-seven months back but has been on for some time now. A lot of processes have now been streamlined. All approvals are now completely online — maps, completion, mutation, transfers. All allotments are now through auction. Earlier they were through a draw. Now, by putting in certain objective criteria, we have reduced the interview criteria for allotment. Except for a few institutional, social infrastructure plots, all allotments are through e-auction which is a more transparent process. Payment terms have also been made stringent with the focus on the ‘real’ person who needs the land.
Earlier, realtors were required to pay only a minimum 10 percent at the time of purchasing land and the rest over a period of five to seven years. Now, they will have to make the total payment within 90 days of allotment.
We are also not allowing sub division of plots before the project is completed. Builders/main consortium members cannot exit a project unless it is complete. Even for other allotments for industrial, institutional and residential lands, payment terms have been skewed down to one or two more years; earlier they were for five to six years. The basic purpose now is that only those who are in need of land should apply. We are also allowing easier mortgages if a developer wants to apply for a loan.
We have also introduced a new guideline wherein if no development has been undertaken on the land parcel allotted for the last five years, the land parcel will have to be returned. The Authority would grant numerous extensions for institutional, industrial plots, IT and ITeS plots earlier but now, if the plot has been lying vacant and has not been made functional, it will stand cancelled. This was introduced two years ago and has been extended until December.
We want to make it clear that land that has been allotted for a purpose should not be kept vacant, especially industry and IT/ITeS land. We want to ensure optimum use of public assets. Industry land should not be held and then sold when prices increase. For this, we are no longer permitting transfer of non-functional plots. The buyer has to first build on the land and only then can it be sold. Speculation is being dealt with severely. We want to send out a strong message that only the real investor, who actually wants to develop a project, should enter; only those people who have the capacity and the appetite to complete a project on their own, should come forward. The investor will now have to pay the full amount for the land and will not be allowed to either sell or sub-divide it without completing it.
How many cancellations have there been so far?
If we put together all the categories of land -– residential, industrial, institutional, commercial — the figure should be more than 100. There would also be a few cases where land may have been restored after dues were paid.
The real estate industry has been saying that there are no new land parcels left in Noida to develop. Is this correct?
After cancelling these 100 odd allotments, we have created almost 300 to 400 acres of land parcels. The total land bank with us today across segments is around 900 acres. These include land parcels that we have got back after cancellations, the land we purchased, the land we got back from encroachment removal and got free from litigation as also from surveys.
Do you have plans to gradually auction these parcels?
Around 250 acres are currently on offer through commercial, residential and industrial schemes that we have recently floated.
Will the upfront payment regulation make residential plots more expensive?
I don’t think so. The basic difference in the case of the residential plots that are on offer is that we are no longer offering big plots but smaller plots. Earlier, the Authority would offer big plots and there were defaulters who purchased multiple plots at a time. All these factors have been taken into account. The buyers of these plots, going forward, should not be defaulters. We have floated a scheme of three to four land parcels but the average size is around 15,000-20,000 square metres. There are six to seven plots that are under litigation and we hope to get clearance by the end of this year.
How much are you expecting to earn from the sale of these lands?
It is tough to say because the commercial land parcels are huge in number and also very costly. We will have to see what the market appetite is. Of late the commercial land parcels have started to receive a good response. Let’s see how these schemes go. They are open until the end of the month.
The value of commercial land banks alone — from what we have offered and other banks — would be around Rs 10,000 crore. But these will be sold in lots and not at one go. Since the last five years, we have sold properties worth around Rs 5,000 crore, which have an investment value of around Rs 24,000 crore for the allottees. We are hoping that we will be able to touch a similar figure in two to three years also.
Also Read: MC Explains | Will upfront payment for land alter the dynamics of Noida’s real estate market?
Is demand for data centres picking up?
Three data centres have so far been sanctioned — two to Adani Group and one to WebWerks. Let’s see how the new scheme goes but, yes, data centres are something for which people are looking for land.
Does this ‘cleaning exercise’ make the real estate market in Noida ‘cleaner’? Are you hoping that more international companies will want to invest in Noida?
Almost all the big players have shown interest here. Ikea has already entered here. Lulu is keen but has not purchased land so far. The Adani Group has two land parcels and is purchasing more. Microsoft has also purchased. Even the Aditya Birla Group is keen to enter. Godrej and Tatas are already here.
Does demolition of the twin towers on August 28 send out a stringent message to other real estate developers? Does it suggest that Noida is serious about projecting a ‘clean image’ to investors?
The demolition was a big decision taken by the state government. We were very clear on that. Otherwise we would have appealed or reviewed or gone in for some legal measures. The government acted stringently and promptly on the violations, FIRs were lodged against erring officials; a high-level committee was constituted, officers were identified, departmental inquiries are on. It was decided that we will get the buildings demolished. The demolition sends out a signal that if you are in the wrong, you will have to pay for it. Noida should be a clean place to build and attractive for investment.
The infrastructure is in any case better than in other cities. The demolition has boosted the image of the place.
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