Redrawing boundaries
What happens when a new district is added to a metro region? Realestate activity can see an upswing, as long as infrastructure keeps pace
The number of districts in the National Capital Region has grown from 10 in 1985 to 23 today. The latest addition was Uttar Pradesh’s Shamli district in December; in January, the UP government said it is considering adding Aligarh, Bijnor, Hathras and Mathura too.
So, what happens next? Once a district is included in a metropolitan region, it is entitled to funds for development from the metropolitan planning and development authorities.
This means planned development according to a metropolitan blueprint rather than the jurisdiction of the local or rural authorities.
“The original district after being pushed into a new territory is also within the ambit of the latter’s municipal bye-laws and gets access to authorities and development plans as an extension of a city,” says Ashutosh Limaye, head of research at realty consultancy, JLL India.
There’s access to better transportation, as rail, road, Metro, flyover and other such links are extended.
Building sanctions and rules regarding FSI and land use come under the ambit of the city’s municipality.
For the cities, the integration catalyses economic, social and civic development of the national capital besides generating substantial investments and creating ample job opportunities, adds Anuj Puri, chairman of Anarock Property Consultants.
Paucity of land is a major factor behind new inclusions in areas such as the Mumbai Metropolitan Region (MMR) and NCR.
“By making an area part of the greater metropolitan region, more land is unlocked. This effectively helps to keep property prices in check, gives builders an opportunity to build more and also helps buyers in getting more options within the confines of a metro.”
WIN-WIN
Globally, the increase in real-estate values is dependent on location, connectivity, proposed infrastructure development, proximity to commercial, educational, health, and recreational centers, the growth potential of the region and the quality of life that it offers residents.
The development of neighbourhoods in and around metropolitan centers in India is also dependent on the same.
Apart from including districts such as Thane, Navi Mumbai, Kalyan, Dombivli, Panvel, Mirabhayander, Vasai, Virar, Raigad and Palghar, MMR has witnessed a significant shift in the epicenter of the city northwards over the past two decades, says director of the Real Estate Management Institute, Shubhika Bilkha. “Infrastructure developments such as the trans-harbour Link, Navi Mumbai Airport Influence Notified Area, Viraralibaug multi-modal corridor, which were proposed after these districts became part of MMR, will further enhance the development of these regions and their realty markets.”
Therefore, for buyers, it not only means access to better transport facilities and infrastructure, but also access to affordable homes since land parcels in small towns open up opportunities for developers to cash in on the affordable house segment. “Hence, property prices start to see firm trends and a structured approach,” says Limaye.
Developers agree that the move works for the better for them. “We have access to readymade by-laws, town planning drafts and most importantly, infrastructure,” says developer Dhaval Ajmera.
“Inclusion within a greater metropolitan area also attracts customers and we can charge according to city rates rather than the prices of smaller towns,” he adds.
However, it becomes imperative that the government make extensive provisions for the proper development of infrastructure in the newer areas, because connectivity and infrastructure are the major challenges to the growth of these areas, says Puri of Anarock.
Security is another factor. “Areas that are well policed and guarded and have easy access to efficient emergency services are bound to garner more interest from buyers,” Puri adds.
BOOST FOR AFFORDABLE HOUSING
The RBI raised the loan limits under priority sector lending (PSL).
The central bank revised the housing loan limits for PSL eligibility from ₹28 lakh to ₹35 lakh in metropolitan centres and from ₹20 lakh to ₹25 lakh in other centres.
The government has decided to use surplus land of sick public sector units for construction of such dwelling units, and from now on, home-buyers will be recognised as financial creditors, thus giving them a greater say in insolvency of defaulting builders.
Making an area part of the greater metro region helps to keep property prices in check, gives builders an opportunity to build more and also helps buyers to get more options. ANUJ PURI, chairman of Anarock Property Consultants
A CAUSE OF CONCERN
RBI observed, “After a careful analysis of the housing loans data, it has been observed that the level of non-performing assets (NPAS) for the ticket size of up to ₹2 lakh has been high and is rising briskly. Banks need to strengthen their screening and follow up in respect of lending to low-ticket affordable loan segment.”
It is closely monitoring this sector. “We will consider appropriate policy response such as a tightening of the loan to value (LTV) ratios and or an increase in the risk weights, should the need arise,” said RBI.
EXPERT TAKE
Rakesh Makkar, chief executive officer, Grihashakti- Fullerton India Home Finance Company, said,“the rate hike is in alignment with market expectations and we expect this to arrest inflation and keep the economy on projected growth trajectory. This will also address asset resolution and thereby attract genuine home buyers.”
Shishir Baijal, chairman and managing director, Knight Frank India, said, “The RBI’S stance of increasing the rate by 25bps is in line with our expectation considering that the crude oil flared inflation level and the interest rates in the broader economy have been marching higher for some time now. However, this increase will delay the revival of the country’s housing market, which after suffering a prolonged period of slump has just begun to show early signs of improvement on account of uptick in affordable housing.”
Ramesh Nair, chief executive officer and country head, JLL India, said, “The hike may dampen sentiments in the market, but in terms of real estate may have little or no impact. As almost all home loans these days are on floating rates, the rise and fall in home loan rates does not impact the performance of residential real estate sector much and tends to balance each other out over long term. As buying decisions are generally not taken based on fluctuations in home loan rates, there will be little effect on the real estate market. Though for some home buyers looking towards making a very low ticket size purchase decision, there may be some tentativeness in the decision making, overall we will see minimal impact on the end-user in the housing sector.”