Citizens' Issues
The Noida Extension—there are a number of issues involved: multiple sale of apartments, the broker-builder nexus and legal complications

The Noida Extension issue will eventually get resolved, but a large number of people will get burnt in the bargain, as always this will be the upwardly aspiring middle class. Be extremely careful while putting your life's earnings on the line for real estate

was amongst the earliest to publish an early warning report on the Noida Extension issue, related more to the Formula One (F1) race and its realities, and other issues, symptomatic of all that is happening in that part of the country, all the same in the name of "property development". Over the past few days, the same media, which at one time could not carry enough advertisements and supplements on the "property market"—has been going ballistic over the issue. Where is the truth?
The matter is in Court right now, and so it might not be proper to opine on the subject, but here are some more observations-some of which do not seem to be making it in the mainstream media. As yet. But then, for those of us from Delhi who may recall, for example, the activities of the then-famous Skipper Group and its property tangles, this is nothing new.
This legal judgement may interest some: (Delhi Development Authority vs Skipper Construction (P) Ltd and others). Briefly—the "project" started in 1980, went through all sorts of issues, this judgement is dated 1999—but the rotting building in the midst of town is still a dumb witness to reality. Reality is that on the crossing of Barakhamba Road and Tolstoy Marg is still very much present the incomplete shell of a multi-storeyed building with the dreams of hundreds of buyers sunk into its gaunt shell.
So, while Noida Extension is on the frontline of everybody's radar right now, behind the scenes there are matters which do not often get reported, and we try to bring some of them out.
1)    While official word is not out on this, buzz on the grapevine has it that there might have been some cases of multiple selling of some apartments and plots and that this will cause further problems. None of the builders nor the Noida Authority appear to have a 'master database list' of those who have invested in this area. Incidentally, this is not as strange as it sounds, it does appear to happen quite often in the property business.

How it works is like this—an apartment or property is "held" by a co-financier. It is also sold to an actual buyer. The co-financier is "released" as the genuine buyer makes payments. Now what happens when the genuine customer stops making payments in a situation like this?
2)    The issue of cash component paid, first by the builders to presumably the political formations, and next by the apartment buyers to the builders, is causing the maximum amount of grief. Obviously, barring kachee parchees, there is no proof of any financial transaction in such cases. Furthermore, this is not something the average middle class person will speak up about openly, but fact remains it exists. In addition, a broker will usually have been paid some commission, part of it in cash-this goes into a loop too. The buyer is, without realising it, now party into more than one three-way transactions. Unlike in neighbouring Haryana, property brokers are not registered—so in most cases where it involves the smaller ones, they can simply fold their tents and melt away.{break}
3)    Over the past few years, there was a massive surge of new generation industry of the info-tech and media sort into Noida. Film City, for example, employs thousands, as do the many tech parks in the region. A large number of young people from these industries first booked some properties themselves and next induced their friends and colleagues to do so too. There was a very complex ladder of commissions which in some cases extended to the HR (Human Resources)/F&A (Finance & Administration) departments of some companies. In one case that has come up, the EPF (Employee Provident Fund) amounts were "reduced", and the money "saved" was diverted by these youngsters towards booking apartments. Fair enough, but not that simple-the matter has become very complex, especially as the builders were given "permission" to hold seminars and marketing events on premises. And the EPFO (Employee Provident Fund Organisation) is not happy about the drop in contributions, so it is likely that soon, they will want their pound of flesh too.
4)    There is also a move to involve and hold liable the people who endorsed and lent their name to some of these projects. Names doing the round include Virender Sehwag and Mahendra Singh Dhoni. It will be interesting to see how the government or the legal options respond to this, Section (68) of the Companies Act is there, but it has never been used before for such episodes. If it does, then it opens up a whole new stream of issues, going back to Home Trade and Sachin Tendulkar, for example. And many others, some of whom have received National Awards too, which might need to be reviewed. Is it correct for the Government of India to give National Awards to people who are being investigated for inducing people to invest money in schemes that turn out to be fraudulent?
5)    An unfortunate side-effect has been the trickle-down to the rest of the local economy. Contractors in the hundreds and their labour in the thousands have no work—other ongoing legit projects have the option of taking advantage of the drop in prices. A whole sub-group of people who were counting their profits on notional increases in booking prices, and in some cases spending them too, are suddenly unable to figure out what is going on. This is in addition to what we all already read about increased interest rates and EMIs and banks withdrawing from 'certifying' these projects. There has been a direct impact on, for example, lounge bars and nightclubs—the profits of the property "boom" were one of its biggest contributors.
The opening salvo has not been heard in this business, that's for sure, as various players take their positions. Waiting in the wings are also the larger developers, especially the well-connected ones whose names most people fear to take, such is their reach. Some of them stayed out initially, some entered but backed out, but all of them are watching carefully.
Fact remains, Noida has a better future as far as developed satellite townships go, than does Gurgaon. In the long run, as cogent empirical data can prove beyond doubt, the Noida/Ghaziabad area is more sustainable for people to live in. For multiple reasons—mixed habitat, planned townships and lesser heavy polluting industries. And this habitat has a vastly better road & rail network as well as connectivity. All this gets subsumed while this present scam takes front page. Reality is, however, that there was something attractive about Noida which attracted people, right?
Noida Extension will eventually get resolved, many issues solved, but a large number of people will get burnt in the bargain, as always this will be the upwardly aspiring middle class. That's one more reason to be extremely careful while putting your life's earnings on the line for real estate that sounds too good to be true.



Manish Ray

2 years ago

I have booked a flat in Amrapali Golf Homes on Rs. 3430 per sqft in NOIDA Extentsion. Should I go with this booking or cancel it?


5 years ago

Excellernt write-up! Presents the real and true picture in the nCR today.



In Reply to HostGator 5 years ago

Many thanks your comment. All is not doom and gloom though some people will take a bath. Some larger good may come from this.

Aegon Religare Life to offer more online products

After success of iTerm and iMaximise, the company plans to come out with several on-line products offerings over the next few months

Aegon Religare Life Insurance (ARLI) said it plans to launch several Internet offerings over the next few months.

"After the success of iTerm, we launched our second unit-linked on-line product iMaximise for high networth individuals through invitation strategy at February end. Till date, we have received Rs8.71 crore as premium," Aegon Religare Life Insurance Company chief marketing officer Yateesh Srivastava said.

After success of both iTerm and iMaximise, the company plans to come out with several on-line products offerings over the next few months, he said.

"We have already filed one on-line health product with the regulator awaiting their approval. We are also planning on one protection product and a few hybrid offerings," Srivastava added.

About 10% of the company's business comes from the on-line offerings, while the rest 90% from the off-line products. Aegon Religare Life Insurance has 16 off-line products and is also aiming at around 10% growth from its online product offerings, the chief marketing officer said.


Stockbroking: Tough times

Broking companies are paying for grave systemic flaws

The two SAT orders discussed above...

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