Noida and Greater Noida have 142,500 stalled units that were launched by 2013
On a mild November afternoon Ravindar Singh sits idle outside the boundary walls of RG Luxury Homes’ construction
site in Sector 16B of Greater Noida, chatting with two friends near the site office, his rifle resting against a tree.
Singh, 51, an armed security guard, is talking to them about his future. None of the three men had been paid their salaries for three months. Once a bustling construction
site, work at RG Luxury Homes practically stopped six months ago. The project is awaiting further instructions from the National Company Law Board after its 1,600 flat buyers complained about having waited in vain for over nine years for their homes to be completed.
The site office where 30 officials were once based has been sealed off by the Real Estate
Regulation and Development authorities.
Singh has not been able to send home any money for his family. His only hope is the promise given by RG Group officials that he will be paid in full by December. His friends (also guards) who used to make Rs 15,000 a month each, are less hopeful. They are sick of calling the security agency that hired them. No one answers, making them suspect the agency is in hand-in-glove with the developer.
A project that began taking bookings in 2010 has yet to deliver a single flat to its buyers. Priced between Rs 40-60 lakh, the high-rise apartments were marketed as luxurious homes for mid-income families.
It’s difficult to spot a single finished apartment, let alone any traces of luxury. Some five years ago, 700-odd workers used to work here. The site was constantly replenished by convoys of trucks unloading raw material. Now it is deserted.
is one of the biggest employers for informal workers and, in the past two decades, has helped take the uneducated and unskilled out of poverty. The index of industrial production
(IIP) for construction goods —machinery used for erecting structures — contracted by 6.4 per cent in September, following a 5.4 per cent contraction in August, the steepest fall in about a decade. This reflects a drastic fall in construction activity across the country.
RG luxury Homes is just one of the hundreds of stalled projects in the region that have plunged the local economy into crisis. Around a kilometre away lies another ghost town — Amrapali Dream Valley — an unfinished township. With its promoters thrown into jail by the court, the township has turned into a pasture for grazing cattle, against a backdrop of concrete carcasses. A blue notice states that the project is under the Supreme Court’s jurisdiction.
Such stalled projects, mostly launched during the so-called boom period between 2010 and 2014, dot the landscape of Noida Extension and Greater Noida. From a peak of nearly 30,000 unit launches in 2015, the number of launches has sunk to nil in the July-September 2019 quarter.
As per real estate
analyst firm Anarock’s estimates, Noida and Greater Noida have 142,500 stalled units that were launched by 2013. Their combined valuation: close to Rs 800 billion.
The region has the highest number of stalled units in the national capital region, second only to Mumbai which has 154,000 units valued at Rs 2 trillion. Moreover, the data shows that since 2015, Noida and Greater Noida, along with Ghaziabad, accounted for half - or 100,000 units - of all the units launched in the national capital region.
The prolonged economic slowdown
has shattered the dreams of thousands of home buyers who booked unfinished units. Over 30,000 customers of large building groups such as Amrapali and the Jaypee Group and of smaller developers like the RG Group, have lost their life savings.
Others have been devastated too: local businessmen, vendors, property dealers, transporters and suppliers. Manoj Kumar, a pan shop owner, has lost at least 60 per cent of his business since 2014 when the area used to hum with economic activity.
These days he survives on customers who go to the Gaur City shopping mall that has come up in the locality. Kumar has had to rope in his wife and family to expand his offerings to paranthas and sabzi to lure the staff from the mall.
Radheshyam Tiwari, who runs a local small trucks association, used to manage over 100 commercial vehicles a day. That’s plummeted to barely two dozen.
While the extent of job losses in the region is difficult to estimate, Anurag Kumar of the Centre of Indian Trade Unions estimates the number to be over a lakh. A rough estimate puts the number of lost man-days of work at over one million since 2015.
The roots of the downturn date back to early 2010 but it’s the lack of measures to address the slide that has aggravated the misery. Sector experts speak gloomily of a ‘lost decade’.
According to Amit Modi, president-elect, CREDAI Western UP and director, ABA Corporation, despite a spike in real estate
activity in early 2010, the authorities failed to monitor the market and did not offer the required impetus.
“The farmers’ compensation issue in early days and the resultant halt in activities damaged things. Further, dozens of regulatory clearances required to be obtained by developers, despite their purchasing land from the government for the purpose, only added to the cost burden. This made the offer prices unviable”, said Modi.
As the demand for real estate suddenly spiked in 2010, hordes of developers, many with little experience, entered the field to capture the attention of buyers. In a highly competitive market, many offered prices well below the actual cost of the project. This further aggravated the situation.
“Many property dealers, people with cash but from unrelated sectors, entered the market and offered unsustainable rates just to capture buyers. These projects were bound to fail as they hardly met their cost of construction,” said Modi.
Experts such as Niranjan Hiranandani, president of NAREDCO, welcomed the government’s idea of creating a special fund for completion of stalled projects. ‘It’s a good initiative but what the region requires is more fundamental: a one-time restructuring of due loans is needed to set the ball rolling,’’ said Hiranandani.
The lowering of prices is helping. According to NAREDCO and Anarock’s estimates, in the September 2019 quarter, the Greater Noida region witnessed a 46 per cent decline in unsold inventory since January -March, 2015 - thanks to a significant reduction in launches compared to sales.
Yet, Greater Noida continues to hold an inventory overhang of 37 months. As of September 2019, it has nearly 50,000 unsold units, most of them concentrated in Greater Noida West.
One industry expert sounded a positive note. ‘’The economic and demographic profile are major growth drivers for the region. These, along with the policy changes, are likely to revive market sentiment and increase real estate activities in the future,’’ he said.