Owners of large land holdings in Mumbai and other urban pockets in the state, the developers community and house seekers in general have a reason to celebrate. The Maharashtra government on Thursday repealed the Urban Land Ceiling & Regulation Act (ULCRA), putting an end to restrictions on the development on large land holdings.
While an estimated 1,00,000 acres will be freed from government restriction and claims across the state, Mumbai will get an additional 25,000 acres of land including more than 10,000 acres developable land that was earlier lying unused. The remaining 15,000 acres either violate the Coastal Regulation Zone (CRZ) Act or are forestlands where real estate development is currently prohibited.
According to real estate analysts, the major beneficiaries from Mumbai include the Godrej Trust, the Wadia Trust, Indian Railways and the Hiranandani Developers.
“All of a sudden we have huge amount of land available for development in land constrained Mumbai. Scarcity of land was the prime reason why land prices were so high here and this reflected in property rates. Now with the fresh supply, land prices will cool down and everybody will benefit,” said Ram Yadav, Head Finance & Strategy, Orbit Corporation. According to Yadav the middle-income groups, which found it unaffordable to buy a flat in Mumbai over the past three years, can now fulfill their dreams. “Affordable housing can be developed in the suburbs where a large amount of land has been unlocked. Similarly, the IT/ITeS sector once feeling the pinch of high office rentals in Mumbai, can find commercial space as per their budget,” he said.
The areas where large-scale development is expected include Kanjur Marg to Mulund in the eastern suburbs and from Kandivali to Dahisar in the Western suburbs of Mumbai. But some real estate analysts do not anticipate a sudden crash in real estate prices due to the extra land availability in Mumbai.
“Now that ULCRA is repealed, considerable portions of land will be released in central areas of cities. However, these are out of the reach of middle-income buyers so they will not benefit. The land locked under the ULCRA and now being reverted to its owners has appreciated in tandem with market dynamics,” observed Anuj Puri, Chairman & Country Head, Jones Lang Lasalle Meghaj.
That means land owners will value or sell their land at market rates rather than at throw way prices. At best the rising land prices can be arrested and real estate market should stabilise. In a city like Mumbai a flat aimed at the middle-income groups costs something between Rs 70 lakh to Rs 1 crore and how many middle-income people can afford it?
According to Puri now that the Act has been scrapped, projects will come out at a faster pace, thus preventing losses due to delayed project execution. In this case developers may pass on the benefits of speedier approval and project completion to consumers. This may not be significant. We have to wait for two more years to reap the benefits, if any.