NOIDA/Greater NOIDA, which till now was trailing Gurgaon as a corporate and IT destination, has come up in the rankings. Good infrastructure, quality roads, good Metro connectivity, and most importantly a single decision making govt. agency/Authority, have helped the twin cities in attracting many Multi-National Corporations (MNCs), IT companies and BPOs - which hitherto had preferred Gurgaon. Even the start of the Rapid Metro and the development of the peripheral roads and expressways (NPR, SPR, KMP) and new sectors has failed to motivate the existing companies to bet long term on this City. Experts say that the primary reason for this scenario is that Gurgaon has become an expensive city, and more a real estate destination - the rent, maintenance and cost of living have become irrational. One more positive development that has taken place in NOIDA is the adoption of the UP Apartment Ownership Act 2010, which has become applicable from June 2014. In contrast, in Gurgaon, the State has brought in the Societies Act 2012, to allegedly counter the Haryana Apartment Act – as even group housing projects are being asked to register under the Societies Act. As compared to NOIDA, the violations by builders are more brazen in the Millennium City; and the excuses, delays and inaction (conveniently) caused by the multiplicity of govt. agencies here, just seem to rub salt into the wounds of hapless buyers. Is it any wonder then that apartment buyers, IT workers, their companies and even corporates are now actively looking for a shift to NOIDA/Greater NOIDA. The relatively lower rate of both commercial and residential real estate is also a motivating factor. The decision of the NOIDA authority to adopt the UP Apartment Act has sent a message that the authorities will now ensure a better monitoring and regulation of builders – making the regularisation of any irregularity more difficult.
Another interesting observation is that while MNCs, investors and NRIs have till now followed the conventional wisdom of going where the action is, there seems to have been a perceptible change in their outlook, as ‘hot, but not overheated’ markets like NOIDA (twin cities) are becoming the new attractions. An area that was mainly considered a hub for affordable housing is now turning into an IT, BPO and corporate hub. Sanjiv Kumar, a real estate consultant who has handled many big ticket clients, says that the demand for space in the IT sector is indeed rising in NOIDA, as corporates are now looking for the ‘right’ prices and the availability of affordable housing. The (ambitious) hope that the real estate industry would (as if ordained) quickly turn around in Gurgaon after the coming to power of Prime Minister Modi has been dashed, and prices have remained static. The builders are still taxiing for takeoff, and may have to return to base – and maybe even have to offload customers. Kumar is of the opinion that the slowdown in IT is also forcing these companies to look for options that are reasonable. Realty experts suggest that in the present circumstances, where a large number of investors are literally stuck – not wanting to sell or buy, the downside risk is clearly more than any upside opportunity.
While the IT industry does not see Gurgaon from the prism of returns, it wants the City to be more organised, to be run professionally, and to have more affordable office and residence options. Nidhi Gupta, Head North, NASSCOM, says that NOIDA has emerged as a strong option for IT companies because the administration there is very active, and it considers the IT industry to be a growth engine and a driver of the economy. NOIDA is run in a cohesive manner, and offers better infrastructure, transport and power supply. "Last mile connectivity, commuting and housing are major issues in the Millennium City, and if the right measures are not taken, more companies could move to NOIDA," asserts Gupta. While Gurgaon's share in IT exports may not have gone down, it has not risen either (as expected, and as it had in the last decade). Also, very few IT and BPO companies are expanding operations in Gurgaon; they are instead searching for options in NOIDA, Pune or other Tier 2 locations like Lucknow and Chandigarh. Vivek Agarwal, CEO of Shared Reach, a Gurgaon-based IT company, points out that there are more entrepreneur driven and home grown Indian companies in NOIDA. In comparison, Gurgaon has more MNCs and companies with large operations. He believes that this division would remain. "The cost of doing business in Gurgaon has leapfrogged, and housing is becoming quite unaffordable. The cost of power is also more. Therefore, new businesses, and particularly smaller and mid-sized companies, are preferring NOIDA," asserts Agarwal. In contrast, for top management (especially of MNCs) and big business owners, Gurgaon will remain the preferred destination, because of a better quality of housing, and more lifestyle options, golf courses and recreation facilities.
In the changed business scenario, there is some churning taking place even within the IT industry, as companies increasingly prefer younger (under 35) and less expensive employees to an experienced and expensive workforce. Sanjay Sharma, MD of Qubrex, makes an interesting observation when he says that for this changing complexion of workforce, cheaper accommodation and work space are needed, which are in abundance in NOIDA; Gurgaon is becoming more an aspirational, but less practical, destination. This change in the complexion of the workforce and the fact that not many IT workers are now able to go for onsite work abroad, is changing the way the new lot earns and lives. A top IT executive says that if Gurgaon does not change the way it functions, then NOIDA and many other cities would soon steal a march over it. He says that the traffic on Gurgaon roads is impossible to manage, the cost of real estate for setting up an office is skyrocketing, and women’s safety is a live threat.
The lack of local talent (in Gurgaon and Haryana), which is crucial for the survival of a people-driven industry like IT, is also a reason for the Millennium City losing its charm. Vivek Agarwal says that NOIDA acts as a magnet for the entire youth of a diverse State like UP. There are also a number of higher education institutions in NOIDA, where the companies can go for recruitment. With a high rate of attrition, having good bench strength and the ability to quickly fill-in is important. The NASSCOM Haryana chapter has been trying to rectify this anomaly, and Nitin Seth, who heads the Chapter, had told FG in an earlier interview that this situation needs to be changed fast if Gurgaon has to remain the IT hub of the country. Seth believes that unless urgent steps are taken by the government to promote innovation, to harness and boost local talent, and to improve infrastructure in Gurgaon, this city is unlikely to remain an IT leader for long. Gupta of NASSCOM says that the government needs to take this industry seriously, and take steps that will make it easy to work and do business in Gurgaon. Meanwhile, market watchers in NOIDA say that it is catching up fast, by ensuring that the Metro route is extended, and good housing and office space is always available. Even luxury projects are being launched. NOIDA (twin cities) boasts of a Formula 1 track and the Yamuna Expressway, better connectivity with Delhi, and is also an integral part of the DMIC freight corridor. The only downside has been the perceived poor law and order situation, though locals say that policing
has improved. Rakesh Asthana, who works in NOIDA and lives in Delhi, says that the intra-city (and twin cities) bus service is good; there is easy availability of water as well; smaller properties and offices are available at affordable rates; the cost of land is less, and even industrial plots are not expensive. A real estate consultant says that industrial plots can be rented for Rs 8 to 12 psf in NOIDA, whereas comparable rates are Rs 20 to 25 PSF in Gurgaon. Since it is easier to set up operations in rented spaces, the lower rates are attracting many BPOs to NOIDA - as the industry is primarily about cost competitiveness. Most of the BPO players don’t want to invest heavily in infrastructure and fixed assets. Living in Delhi (with many options available) and working in NOIDA is quite a comfortable proposition (versus the Delhi-Gurgaon option).
An important reason for NOIDA’s recent rise has been the strong co-operation between the Uttar Pradesh government, the Greater NOIDA Authority and private builders; they have worked together to plan and build the twin cities, says Sanjay Sharma. In comparison, Gurgaon does not have a plan any longer (if it ever had one), as both bureaucrats and builders give the excuse that it is a city that grew very fast. Now only a retrofit of the inadequate facilities can take place, which will not be able to fix the shortcomings in the City. IT honchos say that unless the State government takes a pro-Gurgaon approach, and is willing to spend the huge amount of EDCs/IDCs collected from the residents and establishments, the City’s sheen will slowly fade away. Nisha Singh, a Councillor, suggests that, most importantly, there is need for more effective local governance, through the empowerment of the MCG. Civil society activists like Bhawani Shankar Tripathy have come out with comprehensive plans that could help the City make a turnaround but they need support from the government and the local administration. An important recommendation is a social and water audit of the City. They believe that there is an urgent need to check the carrying capacity of Gurgaon on many parameters, and to then take adequate measures at the earliest. For the IT and services sector, if not for industry in general, NOIDA is knocking at Gurgaon’s door.
Interpretation of the UP Apartment Act by the Allahabad High Court.
The Allahabad High Court has upheld the provisions of the UP Apartment Act 2010, which state that once a group housing project is complete, the developer would obtain a completion certificate, give possession of the apartments to the homebuyers, help form the RWA and then hand over common areas and facilities to the Association. It is being hoped that the NOIDA Authority will implement the rules in letter and spirit. As far as FAR is concerned, Section 4 (4) of the UP Apartment Act states that once the developer discloses plans and specifications to homebuyers and signs a written agreement with them, it can’t make any changes in the building plans without the consent of the homebuyers. This provision was also upheld by the High Court. The Court also confirmed another provision of the Act, which says that once the project is complete, while a developer can purchase additional FAR with the consent of a majority of the residents in a group housing project, the apartment owners will share the benefits from this additional FAR. FAR utilisation will also be subject to the consent of the apartment owners, the judgement said.
The judgement is likely to help lakhs of homebuyers and put a check on the unending confrontation and litigation between realtors and buyers over delays in delivery, size of apartments, control over common areas and the quality of construction. The provisions of this Act will ensure greater transparency in the sale and purchase of apartments, make it difficult for builders to make ad hoc changes, and commit to delivery dates. It will also help the sellers to penalise buyers if they miss out or delay on payments.
Specific points clarified:
(1) ompletion Certificate must be obtained and Deed of Apartment must be executed and registered by builder/promoter before giving possession of an apartment. If the developer fails to do so, he will not be able to claim ‘limited common areas and facilities’ or ‘independent areas’.
(2) he FAR or any additional FAR is a property, appended to the rights in the property on which the building is constructed, and is thus a property in which the apartment owners have interest, by virtue of the provisions of the UP Apartment Act, 2010.
(3) he promoter shall not make any alterations in the plans, specifications and other particulars without the previous consent of the allottees.
(4) ommon Areas and Facilities are deemed handed over to the association after adoption of the model bylaws.
(5) he builder has to propose the plan and common benefit to the owners first, and get the majority to approve the building plan and its usage.
True Disclosure of the Project:
(a) romoters will have to disclose all details of the project and common assets to the buyers before allotment.
(b) eclaration has to be filed by all promoters, within 12 months from the date of approval of building plan, and within 90 days for constructed or under-construction buildings.
(3) romoter cannot change the scheme without the written consent of all the allottees.
Formation of RWAs:
(i) fter the enforcement of the UP Apartment Act, 2010, no builder or promoter can resist or delay the formation of an association of apartment owners under Section 14 of the Act.
This has also, significantly, been upheld by the Supreme Court, which refused to stay an Allahabad High Court judgement in a case involving e-Homes, a Ghaziabad-based project by Designarch, and its RWA. The High Court interpreted the Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act 2010 in a manner that boosted the rights of the apartment owners, and also laid down that apartment owners would even share the benefits of any Floor Area Ratio (FAR) bought by the developer after the completion of the project. This is contrary to what happened in Gurgaon, where a Supreme Court judgement in the matter of Silver Oaks Society, effectively gave the builder the rights over the common areas and facilities. The Silver Oaks judgement has been challenged by the RWA.
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