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Noida troubles
The recent move by the courts to cancel land acquired by the UP state
government in Noida Extension has put a question mark over the status
of land sold to developers by the state over Noida region. Current holders
of undisputed land in Noida (JP and Unitech) could gain as Noida
Extension was a major over-supply zone. However, with elections in UP
less than a year away, probability of such undisputed land becoming
‘disputed’ cannot be ruled out, though we believe JPIN’s land possession
carries lesser risk thanks to a Supreme Court judgement in Sep’10. We
expect newsflow to remain intense around JPA and JP Infra during FY12
impacting the stock price despite the apparent value.
Courts cancelling land acquisition in Noida Extension
q On 6th July Supreme Court cancelled the acquisition of 157ha of land by Greater
Noida Authority at the Shahberi village – located at Noida Extension (see map).
q Yesterday, the High Court cancelled acquisition of a further 589ha of land at
Patwari village – again a part of Noida Extension.
q Further, more cases are up for hearing for land acquisition cancellation by the UP
High Court over the next few days in the Noida Extension area.
q The decision follows acquisition of the same land from villagers by the UP
government during late 2008-2010 at compensation rates which were lower than
the ones at which land was sold to developers.
q Subsequently, the area saw sales of an estimated 100msf/75,000 houses during
CY10, at Rs2,000-2,500/sf price points, largely by local developers like Amrapali,
Supertech, Mahagun etc.
Scenario 1: Containment and agreement
q Assuming that no further land acquisition is cancelled; it will be a positive for
developers with land in Noida viz. JP and Unitech. None of their projects are in the
impacted Noida Extension area.
q Oversupply in Noida Extension has been a key reason for Noida pricing staying
c.30-40% below its 2007 levels, even as Gurgaon posted gains during 2009-11.
q A permanent cancellation or resettlement at a higher land acquisition price at Noida
Extension will lend both pricing and volume support to other Noida based projects.
Scenario 2: The fire spreads
q While currently similar cases have not been filed against acquisition of land done at
locations other than Noida Extension villages; possibility of the same cannot be
ruled out as land acquisition in Noida continues to be a major political issue.
q The other major development areas in Noida are – Noida-Greater Noida (NGN)
Expressway; Yamuna Expressway (YE) and Greater Noida (GN).
q We believe that chances of more court cases being filed by villagers are higher
where land acquisition has been recent-most (say 2008 onwards).
q Land acquired around the developed Greater Noida and NGN E-way (Unitech’s
UGCC project, JP Greens Noida project) is older and less likely to be challenged.
Newsflow to remain intense on JPA/JPIN
q The JP Infratech management has assured that the land associated with the
Yamuna Expressway is being used in line with the initial usage and possibility of
‘Noida extension’ like event doesn’t exist. The Supreme Court judgement in Sep’10
on the same issue supports the management view. However, we believe that JPA’s
Sports City (3% of value) project runs a greater risk.
q In any case, bulk of land acquisition for JPIN’s key Noida land parcel (51% of JPIN’s
GAV) had been completed by 2005 and appears to be more secure.
q With UP state elections scheduled in April’12, political activity and newsflow
surrounding the land acquisition issues in Noida will remain intense till then.
q JP Infra may have to postpone opening up of sales at its Greater Noida land parcels
as planned earlier in FY12. We currently build in 15-20% of JP Infra’s FY12 sales to
come from Greater Noida. Postponement of the same will be a negative.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Noida troubles
The recent move by the courts to cancel land acquired by the UP state
government in Noida Extension has put a question mark over the status
of land sold to developers by the state over Noida region. Current holders
of undisputed land in Noida (JP and Unitech) could gain as Noida
Extension was a major over-supply zone. However, with elections in UP
less than a year away, probability of such undisputed land becoming
‘disputed’ cannot be ruled out, though we believe JPIN’s land possession
carries lesser risk thanks to a Supreme Court judgement in Sep’10. We
expect newsflow to remain intense around JPA and JP Infra during FY12
impacting the stock price despite the apparent value.
Courts cancelling land acquisition in Noida Extension
q On 6th July Supreme Court cancelled the acquisition of 157ha of land by Greater
Noida Authority at the Shahberi village – located at Noida Extension (see map).
q Yesterday, the High Court cancelled acquisition of a further 589ha of land at
Patwari village – again a part of Noida Extension.
q Further, more cases are up for hearing for land acquisition cancellation by the UP
High Court over the next few days in the Noida Extension area.
q The decision follows acquisition of the same land from villagers by the UP
government during late 2008-2010 at compensation rates which were lower than
the ones at which land was sold to developers.
q Subsequently, the area saw sales of an estimated 100msf/75,000 houses during
CY10, at Rs2,000-2,500/sf price points, largely by local developers like Amrapali,
Supertech, Mahagun etc.
Scenario 1: Containment and agreement
q Assuming that no further land acquisition is cancelled; it will be a positive for
developers with land in Noida viz. JP and Unitech. None of their projects are in the
impacted Noida Extension area.
q Oversupply in Noida Extension has been a key reason for Noida pricing staying
c.30-40% below its 2007 levels, even as Gurgaon posted gains during 2009-11.
q A permanent cancellation or resettlement at a higher land acquisition price at Noida
Extension will lend both pricing and volume support to other Noida based projects.
Scenario 2: The fire spreads
q While currently similar cases have not been filed against acquisition of land done at
locations other than Noida Extension villages; possibility of the same cannot be
ruled out as land acquisition in Noida continues to be a major political issue.
q The other major development areas in Noida are – Noida-Greater Noida (NGN)
Expressway; Yamuna Expressway (YE) and Greater Noida (GN).
q We believe that chances of more court cases being filed by villagers are higher
where land acquisition has been recent-most (say 2008 onwards).
q Land acquired around the developed Greater Noida and NGN E-way (Unitech’s
UGCC project, JP Greens Noida project) is older and less likely to be challenged.
Newsflow to remain intense on JPA/JPIN
q The JP Infratech management has assured that the land associated with the
Yamuna Expressway is being used in line with the initial usage and possibility of
‘Noida extension’ like event doesn’t exist. The Supreme Court judgement in Sep’10
on the same issue supports the management view. However, we believe that JPA’s
Sports City (3% of value) project runs a greater risk.
q In any case, bulk of land acquisition for JPIN’s key Noida land parcel (51% of JPIN’s
GAV) had been completed by 2005 and appears to be more secure.
q With UP state elections scheduled in April’12, political activity and newsflow
surrounding the land acquisition issues in Noida will remain intense till then.
q JP Infra may have to postpone opening up of sales at its Greater Noida land parcels
as planned earlier in FY12. We currently build in 15-20% of JP Infra’s FY12 sales to
come from Greater Noida. Postponement of the same will be a negative.
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