By the looks of it, it does seem that farmers, landowners and builders in the Noida Extension area will come to some sort of an arrangement, eventually. But this will cost money, which will be passed on to the customer
About three and a half years ago, my wife and I started looking for an apartment in the NCR area (National Capital Region) around Delhi, from the perspective of actually living in it at some time in the foreseeable future. The initial search was limited to Central/South Delhi, Gurgaon and Noida, and the budget was around Rs1.5 crore.
The parameters we fixed, while researching, were:
At the outset, barring one DLF project in Delhi which also was closer to West Delhi, pretty much all the other prospects in Delhi "proper" did not meet our parameters. The cash-to-cheque ratios were amazingly high, most of the prospective properties were what is known as "builder floors" which were made using techniques not improved on in the last 50-75 years, and moreover, there was no cogent clarification on the legality of many of the properties.
However, we must be different from most other potential customers, because apparently this is the one segment where the "market" has seen good growth and appreciation. The price increase here in the last 3-4 years, all other things being equal, would be around 15% to 40%, for most properties, though here too, these are simply anecdotal figures which cannot be re-confirmed. Add to that the number of properties popping up inside "lal-dora" (urban villages) matching the prices of the properties in the "colonies" next door, and you get an idea of how it moves in Delhi "proper".
All the same, boom or bust, permitted or banned, the rampant re-construction going on all over Delhi bears out one simple fact-there is apparently no dearth of buyers willing to pay a couple of crore or even more for the privilege of living in whatever, as long as it has a Delhi address. What used to be single family two-storey bungalows on 300-400 square metre are now being torn down rapidly to typically build a basement and two tiny three-bedroom apartments on each of four floors, with ground floor on stilts all set to become "commercial" in due course.
Next, we were, like thousands of others, certainly taken in by the bright lights and hype of what is known as "new" Gurgaon. However, we had lived in Gurgaon in the not too distant past, and despite connectivity improving in the period ad interim thanks to the Metro, we knew a few things about Gurgaon which made us hesitate.
One was the fact that due to a lack of real city planning, much of the development was haphazard, with bits and pieces left out in between that stood out like ugly sores, with potential to cause chaos. Next, there was hardly anything by way of proper mixed land use planning, and no public transport to speak of. And finally, here in Gurgaon too, the cash-cheque monster reared its familiar head.
Gurgaon also has a problem which is never discussed - due to the way it has been developed, the water table has gone way deep down, and there is something happening to the land over there which has the larger builders worried. Trying to build something with, for example, more than a third basement, simply does not seem to work. And existing second/third basements are showing some signs which are, to put it bluntly, not very happy.
Also, on a per-square-foot basis, Gurgaon was and is cheaper than Delhi, but costlier than our final choice-Noida. And Gurgaon has a cost of living that is higher than Delhi's, and way above Noida's.
So we zeroed in on Noida, and right away, all other things being more or less equal, the options opening out were:
Main Noida, around Rs4,500-Rs5,500 per square foot. (Full cheque possible)
Greater Noida and the Expressway, around Rs3,500 to Rs4,500 per square foot. (Full cheque possible)
Noida Extension, around Rs2,500 to Rs,3000 per square foot. (Part cheque, part cash)
Please appreciate, with all the time taken for research, we were by now into 2009. And all the quotes mentioned above were for "projects" which envisaged two-four years to delivery. The big difference also was that many of the Noida Extension projects were from relatively little-known builders, though there were a few known ones too. But why was the price so low? This struck a red flag immediately.
Now if you look at a map of the area, it becomes apparent why Noida derives a premium over the Greater Noida and Expressway properties on grounds of proximity to Delhi/Noida, and also because Noida is already fully developed. However, by the same logic, Noida Extension should have been the same price as Greater Noida/Expressway, if not slightly higher.
The reason Noida Extension was selling at a discount, compared to the neighbouring areas-and let me assure you that it was hard-sell from the full-page ads to the extremely persistent sales push with even salesmen literally jumping into our cars-was because even then the whisper was out, the whole Noida Extension (a name given by the builders, by the way) was still not totally, how does one put it, kosher.
So, to place the facts as they existed then, people who chose to go in for what looked like an amazing bargain in Noida Extension, compared to other projects in the vicinity, either knew the risk they were taking, or had simply not done their homework. Cut it any way you like, that's the simple truth, and the fact remains, that we invested in Noida at a higher cost and are likely to take delivery soon; hopefully, without any problems. And with a sudden 20% spike in prices in the last few weeks, too.
So where does that leave those who have booked apartments and properties/land in Noida Extension, and are now at the mercies of not just their builders, but also the farmers who own the land and the judgement due in a few days? By the looks of it, it does not seem like this is going to be the last word on anything, but a catalyst for a national re-look at land acquisition that could impact other projects nationally too.
By the looks of it, and after having gone over the ground in the last couple of days, it does seem that the farmers/landowners and builders will come to some sort of an arrangement, eventually. Especially where there has already been some amount of construction, and where the landowners have already been through the money they got the first time around, which has given them a taste for more.
This arrangement will, obviously, cost money. And no builder is going to deliver a project with these additional costs as charity; the costs will be passed on to the eventual customer. Who, when he sits down and does his maths, and compares it with the price of other projects in the Noida and Greater Noida areas, will realise that he is back to what the number was in the first case. And that the amazing discounted price for Noida Extension was, simply, yet another example of the old truism, that there is no such thing as a "good deal".
What that does in terms of timelines, other litigations, sales and re-sales, changes of builders, and similar variables, is of course, not known. But on the ground, the word is out-if you want to protect your investment, then please keep your head down, and wait for an additional call for an additional amount.
Noida Extension at those prices, despite all the endorsement by cricketers and others, was too good to be true. And buyers surely knew this when they walked in with their eyes open in the first place. Sold only on lowest price, without any solid back-up on the fundamentals, it was bound to stumble at some stage or the other. In a way, it is good that it happened at this juncture, before things became worse.
There is a case for a fundamental change in the way properties and projects are sold in India. Today, you can take out some full-page ads, plant a hoarding in a piece of land somewhere, and start collecting money from potential customers, as well as take credit from banks. What happens to the "project" eventually is a risk that seems to be growing wider.
By right, builders should have the financial strength to organise their own funds for land acquisition and construction, and then offer apartments or land for sale ONLY after all the work as well as paperwork is done. Likewise, banks may or may not choose to extend credit to builders on commercial terms, but should simply not give loans to individual customers till the property is completed and ready to occupy.
Is this feasible? Well, this is how it is done in some parts of the world. In addition, closer home, builders like DLF are already doing it, with selective projects being offered only after they have been completed and are ready for possession.
Maybe we need to add that to our list of parameters-buy only when ready? Or be prepared to take the risk, of anything, including the reversal of land acquisition.
Dr Reddy's Laboratories is looking for partners to develop its New Chemical Entity, an anti-cholesterol molecule
Drug maker Dr Reddy's Laboratories is looking for partners to develop its New Chemical Entity (NCE), an anti-cholesterol molecule, a top executive of DRL said.
"We will have a partner to take it forward. Right now, the cholesterol ester transfer protein (CETP) inhibitor is into Phase-II...," G V Prasad, vice chairman and CEO, Dr Reddy's, said on the sidelines of the company's annual general meeting held on 21st July.
Roche and Merck are developing an analogous molecule and are in Phase-III trials, and through this, Dr Reddy's will become the third company in the world in the CETP inhibitor segment.
The company had earlier admitted that another NEC Balaglitazone, an anti-diabetic molecule on which the company had spent considerable time and money hit dead end, as no company came forward to take the molecule forward after Phase-II trials.
"Most of the DRL problems are they took up molecules from old school of products and they will have to take from new areas like cancer where they can have a good market," Surajt Pal of Elara Securities, said.
DRL should concentrate more on developing bio-similars, where there will be immediate returns, Pal added.
The company has earmarked nearly 7.5% of sales for R&D in this fiscal.
CETP, which has completed its first phase, is said to have produced favourable results.
Earlier in the day, addressing the shareholders in the 27th AGM, K Anji Reddy, founder-Chairman of the company, said work is in progress on over 20 products, including NCE.
"Our own R&D efforts are scaling up and moving in the right direction. We are working on over 20 products including NCE. The foremost in the NCE programme is CETP inhibitor which has recently moved to Phase-II trials," the company said.
Shares of the company were trading at Rs1,558.05 apiece on the BSE, up 0.98% from the previous close.