Why I Will Not Buy An Apartment in Noida-Greater Noida

Not very long ago a leading real estate consulting firm raised a red flag to investments in Greater Noida residential markets. Few years before that Noida’s flagship developers were also facing the heat of National Green Tribunals orders restricting development activities in the city. Today if one were to make a table of projects where buyers and builders are in dispute with each other, Noida-Greater Noida will likely stand out above others. Disputes range from projects not taking off to being shelved mid way to severe delays and price revision by builders. In the midst of all this it is very difficult for anyone to consider property purchase in the region of Noida-Greater Noida. This is why I said “I will not buy an apartment in Noida-Greater Noida”.

DND Flyway - Connects Delhi NCT To Noida-Greater Noida
DND Flyway – Connects Delhi NCT To Noida-Greater Noida

Noida region (Noida and Greater Noida from here on) serves a great residential and commercial alternative to Delhi NCT. It being a vital part of Delhi NCR, Noida region has fast developed to be an economic hotspot in the global map. Be it IT/ ITeS or manufacturing, Noida has it all. From HCL, Samsung, FiServ, Barclays to Honda, Moser Baer, Philips and others, global players have presence here. Further if one were to compare Noida region to Gurgaon (another important market of the Delhi NCR), Noida is rated much higher in terms of infrastructure. Roads, metros and expressway provide Noida with seamless connectivity with all cities in the Delhi NCR. The Noida-Greater Noida expressway is not just a great road but also a hotbed of real estate and IT investments. From here one can easily reach Mathura/ Agra via the Taj Expressway. Schools, universities, hospitals and entertainment zones all are available to residents of Noida for ample social living and upbringing of their kids. Noida is very high on sports and golf living. The authorities here have sanctioned development plans incorporating needs of sports for future residents of the city.

What Noida probably lacks is the sense of security for residents. There are ample thefts, burglaries and murders reported in this city. Many people rate is lower on this parameter in comparison to neighboring  Gurgaon.

Coming back to the real estate landscape of Noida city – If one was to look closely at matters here the Noida land lease policy has worked against the property buyers in the recent past. How does the Noida land lease policy work (synopsis) –

  • Noida and Greater Noida Authority accept bids on lands marked for real estate development
  • Basis several fitment tests a builder is selected to take up development
  • The builder deposits a certain proportion of total value of land to the Noida and Greater Noida authority (it is to note here, most of these land parcels have been allotted at payments which are small percentage of the total land value)
  • The builder is required to pay up the Noida and Greater Noida Authority, an amount equivalent to the bid value (100% land value) over a pre defined period of time (few years)
  • The builder is typically given an yearly payment schedule with a certain interest over and above the principal value he owes to the authority. Authorities interest rate is typically lower than that of the bank
  • Builder thereby enjoys a large amount of credit (unpaid part of land costs) at easy finance terms. Builders equity (value at risk) is lower vis-à-vis a model where the company has to buy the entire land out at the start (as is the case in Gurgaon)
  • If a builder does the project construction on time and is able to sell his inventory, he can use customer advances to make payments to authorities

These when read together narrate the story of Noida regions vast expansion as a real estate market. Speak to locals here – brokers, builders, consultants – and they say just about everyone who had some muscle and ins with the authority became a developer in the past many years. Today Noida region witnesses a heavy supply in under construction residential units and reasons include the policy, high FSI and easy approvals.

Entry roads under development at Sector 150 Noida
Entry roads under development at Sector 150 Noida

However going back to land lease policy. A simple  math is enough to understand the benefits of it to the industry. Lets say –

  1. Land area – 10 acre
  2. Cost per acre – Rs. 10 crore per acre
  3. Total land cost – Rs. 100 crore
  4. Amount required at the time of application – 10% of land cost or Rs. 10 crore

Now as a builder I save Rs. 90 crore outflow at the project bid stages, thereby a smaller party can easily wear the shoes of a builder (all things being the same). We are sure that authority does much stricter diligence of financial matters, but then if that was the case why would so many projects be in limbo today. The builder being a builder, would also use project cash flows to acquire more development licenses. Now look at another factor here, I can continue to own newer projects with much lesser equity investments than cost of lands. Thus many builders today face the heat in Noida region with several projects at different stages of construction, project cash flows used to acquire newer properties and sales falling off the cliff. The Noida regions’ typical builder not only owes contractual obligation to the consumer (like in all other markets in India) but also to the Noida authority which needs to be PAID!

This is why we keep reading about instances such as – Noida Authority to cancel licenses, return money to builders to complete their projects or seeking heavy interest from defaulting parties. There are cases where projects may be nearing completion stages but the builder hasn’t paid the authority its land dues resulting in delays in getting Occupancy Certificates.


I can go on and on about risks of owning property at Noida, but that doesn’t make everyone bad here. Firms such as TATA Value Homes, TATA Housing and Godrej Properties are entering the Noida market and they may just get advantage of being process oriented, strong consumer brand and governance. Several Noida region developers too are noteworthy and have consistently surpassed consumer expectations.

At no point do we infer here that Noida is a bad real estate market. In fact Noida region provides ample premium and affordable options much unlike Gurgaon. Also at a distance of 25-40 km from Connaught Place in Delhi, Noida’s various regions make it much closer to Delhi than Gurgaon. Noida regions’ infrastructure as discussed above beats that of several cities in terms of connectivity to important landmarks and economic centers. And there is more in the offing including fast metro connectivity till Greater Noida and probably an airport in that city too. Just one needs to be careful on what product are they buying and from whom….

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5 Replies to “Why I Will Not Buy An Apartment in Noida-Greater Noida”

  1. @Joshi_K: Is that a bad or good thing? Professionals coming to Noida means its development, right? I think it is a good thing. Traffic is anyways a problem in all major cities, Noida is no exception

  2. Population density is also increasing in Noida. Every month new people come here with jobs in companies. Traffic increases as a result.

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