The land ac­qui­si­tion bill is likely to dou­ble land prices - so get ready to pay more for a house

HT Estates - - Front Page - Van­dana Ram­nani

The pas­sage of the much de­bated Land Ac­qui­si­tion, Re­ha­bil­i­ta­tion and Re­set­tle­ment (LARR) Bill, 2012, through both the houses of par­lia­ment, has come as good news for land own­ers in the long run. Those hit in the process will be de­vel­op­ers who will be pay­ing higher prices for land ac­qui­si­tion and pass­ing on the costs to home­buy­ers.

The bill seeks to pro­vide sig­nif­i­cantly high com­pen­sa­tion to landown­ers at four times the mar­ket value of land in ru­ral ar­eas and twice the mar­ket value of land in ur­ban ar­eas. This will lead to in­creased cost of land, push­ing up pro­ject costs and, there­fore, mar­gins of de­vel­op­ers, say ex­perts.

Mayank Sak­sena, man­ag­ing di­rec­tor, land ser­vices, Jones Lang LaSalle In­dia, says that any­one with­out an ex­ist­ing land bank will now be look­ing at vastly in­creased en­try costs.

Ac­cord­ing to CRISIL Re­search, land prices will in­crease as landown­ers will ex­pect higher prices. The ac­qui­si­tion process will get longer and pro­ject ges­ta­tion pe­riod will in­crease. In case of in­dus­trial and in­fra­struc­ture projects, the over­all pro­ject costs will in­crease by around 3 to 5 per­cent. This will im­pact the vi­a­bil­ity of such projects.

An im­me­di­ate reaction, say real es­tate ex­perts, is that the realty mar­ket is frozen. Farm­ers have al­ready started quot­ing ab­nor­mally high prices for their land, and in the next 18 months, find­ing any prod­uct in the range of R4000 per sq ft could be dif­fi­cult, even in far-flung NCR ar­eas.

Ac­cord­ing to An­shu­man Mag­a­zine, CMD, CBRE South Asia Pvt Ltd, this bill will make it more dif­fi­cult to ac­quire land and will act as a de­ter­rent for in­vest­ment into large town­ship projects.

The pro­vi­sions of the bill will be ap­pli­ca­ble in cases of land ac­qui­si­tion of 50 acres in ur­ban ar­eas or 100 acres in ru­ral ar­eas. Thus, the cost of land ac­qui­si­tion will surely go up for all projects ir­re­spec­tive of them be­ing govern­ment or pri­vate or pub­lic-pri­vatepart­ner­ship (PPP) projects as they will have to ad­here to the new norms, says San­jay Dutt, ex­ec­u­tive man­ag­ing di­rec­tor of South Asia, Cush­man & Wake­field.

Delays in land ac­qui­si­tion and, sub­se­quently, projects, are also likely to re­sult from the clause of manda­tory con­sent of 80% of own­ers for pri­vate projects and con­sent of 70% landown­ers for PPP projects. Those al­ready in­vested in large parcels of 75 acres and above are in a Catch-22 sit­u­a­tion. They will ei­ther be forced to fin­ish projects quickly or launch at higher prices.

Anckur Sri­vast­tava of Gen­Real Ad­vis­ers says that as far as joint de­vel­op­ment is con­cerned, not many would be ready to en­ter into such a part­ner­ship when there is no clar­ity on land val­u­a­tions. “How does one ar­rive at the mar­ket value of the prop­erty in some ar­eas?,” he asks

Even in ar­eas that have re­cently been brought un­der the am­bit of var­i­ous mas­ter plans, the bill will lead to con­fu­sion be­cause of the am­bi­gu­ity on ac­count of land be­ing cat­e­gorised as ei­ther ru­ral or ur­ban and the com­pen­sa­tion mul­ti­plier that will be ap­pli­ca­ble to it. This could end up negat­ing the mas­ter plan­ning ef­forts due to the un­fore­see­able land ac­qui­si­tion time­lines, Sri­vast­tava adds.

De­fence Colony East of Kailash Greater Kailash

Kalkaji La­j­pat Na­gar Malviya Na­gar

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