Land prices ex­pected to rise on the back of Delhi’s land pooling pol­icy

Land pooling may be a vi­able so­lu­tion to land ac­qui­si­tion prob­lems in in­dia

HT Estates - - HTESTATES - An­shu­man Mag­a­zine

Ac­cord­ing to the Delhi De­vel­op­ment Au­thor­ity’s (DDA’s) re­cently passed land pooling pol­icy, pri­vate de­vel­op­ers may di­rectly ac­quire land from farm­ers/landown­ers will­ing to par­tic­i­pate in the land pooling scheme (LPS), where they will get back 40% to 60% of the de­vel­oped land, in­stead of any com­pen­sa­tion. DDA, in turn, will de­velop the nec­es­sary sup­port in­fra­struc­ture and mass/EWS hous­ing projects on the land, while de­vel­op­ers will re­ceive a large por­tion of the same for fur­ther real es­tate de­vel­op­ment. The land pooling pol­icy will prove to be pos­i­tive for the Na­tional Cap­i­tal Re­gion (NCR) in the long-term, since land prices in the subur­ban mar­kets of Gur­gaon and Noida would even­tu­ally ra­tio­nalise with fresh sup­ply com­ing into the Delhi mar­ket.

Mean­while, cer­tain pe­riph­eral lo­ca­tions of Delhi with large land parcels—along the NH-1, North Delhi (Ak­barpur, Mazra), North West Delhi ( Ro­hini, Narela), West Delhi (Na­jaf­garh, Dwarka), and ar­eas of South Delhi (Ma­sood­pur, Kis­hangarh, Ch­hatarpur, etc.)—have been wit­ness­ing price es­ca­la­tion that’s two to three times over the course of about six quar­ters. Ex­perts be­lieve this to be a short- term trend, how­ever, which is likely to ra­tio­nalise once more sup­ply of de­vel­opable land comes into the re­alty mar­ket.

Land pooling in In­dia

Land ac­qui­si­tion is a con­tentious sub­ject in In­dia. Quite apart from the chal­lenges of ac­quir­ing clear and lit­i­ga­tion­free ti­tles to suit­ably- sized, con­tigu­ous land parcels for real es­tate de­vel­op­ment—it is a po­lit­i­cally-sen­si­tive is­sue in many parts of the coun­try. In these times of in­creas­ing scarcity of space in ur­ban In­dia, open spa­ces de­mand a pre­mium. As de­vel­op­ers go ver­ti­cal to max­imise their space util­i­sa­tion, re­alty projects re­quir­ing hor­i­zon­tal de­vel­op­ment— such as town­ship projects, in­dus­trial cor­ri­dors, and large-scale re­gional in­fra­struc­ture de­vel­op­ment projects—face chal­lenges pri­mar­ily aris­ing from has­sle-free ac­qui­si­tion of ad­e­quate land.

Un­der t he present l and ac­qui­si­tion sys­tem, in case of pri­vate en­tity en­ter­prises, free­hold (state-owned and pri­va­te­owned) as well as lease­hold (state-owned) land re­quires the con­sent of 80% of the af­fected land- own­ing fam­ily; and the con­sent of 70% in case of pub­lic-pri­vate part­ner­ships (PPP). More­over, com­pen­sa­tion of up to four times the mar­ket value in ru­ral ar­eas and twice the mar­ket value in ur­ban ar­eas is also re­quired; apart from a re­ha­bil­i­ta­tion and re­set­tle­ment pack­age for the orig­i­nal in­hab­i­tants. In many cases the only way in which de­vel­op­ers are able to cir­cum­vent such com­plex­i­ties is via land pooling. Suc­cess­ful cases of land pooling in­clude Amanora and Ma­garpatta in Pune, where mul­ti­ple landown­ers had pooled their land and de­vel­oped in­te­grated town­ships to meet the de­mand for res­i­den­tial and of­fice space in the city.

As a method for as­sem­bling land for plan­ning and de­vel­op­ment, the Town Plan­ning Scheme ( TPS)— also known as the Land Pooling Scheme (LPS)—is in­cluded in the Ur­ban De­vel­op­ment Plan For­mu­la­tion and Im­ple­men­ta­tion (UDPFI) guide­lines of the Min­istry of Ur­ban De­vel­op­ment and Poverty Al­le­vi­a­tion. In fact, the Model Ur­ban and Re­gional Plan­ning and De­vel­op­ment Law con­tains a sep­a­rate sec­tion on LPS, where it pro­poses that plan­ning and de­vel­op­ment au­thor­i­ties should pre­pare land pooling schemes for town plan­ning ar­eas un­der its ju­ris­dic­tion.

Gu­jarat and Ma­ha­rash­tra mod­els

Ar­guably, the very first TPS in In­dia was prob­a­bly put into prac­tice in 1917 for the Ja­malpur area of Ahmed­abad, Gu­jarat, fol­low­ing the Bom­bay Town Plan­ning Act, 1915, which pro­vided for the im­ple­men­ta­tion of Town Plan­ning Schemes. The TPS prac­tice, which is ex­ten­sively used in Gu­jarat, al­lows lo­cal plan­ning au­thor­i­ties to de­velop com­monly pooled land with­out com­pul­so­rily ac­quir­ing it. The process in­volves a joint ven­ture be­tween the lo­cal/metropoli­tan de­vel­op­ment au­thor­ity and land own­ers, who vol­un­tar­ily pool their land, re­dis­tribute it as plots among them­selves af­ter the plan­ning process, and share the de­vel­op­ment cost. In Ahmed­abad alone, more than 10,000 hectares of land has been de­vel­oped un­der TPS over the years. The same has been suc­cess­fully im­ple­mented in other cities of Gu­jarat and Ma­ha­rash­tra too.

The most suc­cess­ful land pooling case study of re­cent times is prob­a­bly that of the Ma­garpatta Town­ship De­vel­op­ment and Con­struc­tion Com­pany Lim­ited (MTDCCL). More than 400 acres of land be­long­ing to over a hun­dred farmer fam­i­lies was pooled to­gether to cre­ate the in­te­grated town­ship of Ma­garpatta City in Pune. This de­vel­op­ment was en­vi­sioned as an in­te­grated planned town­ship with com­mer­cial zones (in­clud­ing IT parks), res­i­den­tial zones, and so­cial in­fra­struc­ture like schools, hos­pi­tals, shop­ping cen­tres, hos­pi­tal­ity and en­ter­tain­ment ar­eas.

Fol­low­ing such suc­cess­ful mod­els in Ma­ha­rash­tra and Gu­jarat, other state gov­ern­ments, like Tamil Nadu and Andhra Pradesh have also be­gun to con­sider such im­ple­men­ta­tion poli­cies for pre­par­ing com­pre­hen­sive re­gional plans—par­tic­u­larly for ad­dress­ing prob­lems aris­ing out of dis­con­nected de­vel­op­ment along subur­ban/ pe­riph­eral zones of ma­jor metropoli­tan cen­ters, in­dus­trial cor­ri­dors and large town­ship de­vel­op­ment.

Up­com­ing plans

The Hy­der­abad Metropoli­tan De­vel­op­ment Au­thor­ity (HMDA) has re­cently pro­posed land pooling for ap­prox­i­mately 250 acres within a kilo­me­tre-wide belt on ei­ther side of the growth cor­ri­dor abut­ting the Outer Ring Road.

In case the landown­ers agree to be­come part­ners in the de­vel­op­ment of the area, it is likely to be taken up as a pi­lot project. If suc­cess­ful, it will serve as a road map for fu­ture land pooling schemes for sim­i­lar ur­ban­i­sa­tion projects in the city.

Sim­i­lar ini­tia­tives in­clude that of the Delhi De­vel­op­ment Au­thor­ity ( DDA), which has re­cently passed a mod­i­fied land pooling pol­icy within the Mas­ter Plan Delhi 2021 (MPD 2021). DDA has iden­ti­fied ap­prox­i­mately 200 vil­lages along the out­skirts of Delhi for this LPS. It in­tends to con­vert around 90 vil­lages into ‘de­vel­op­ment ar­eas’, and about an­other 90 into ‘ur­ban vil­lages’. All such iden­ti­fied vil­lage ar­eas are to­gether likely to free up more than 70,000 acres of de­vel­opable land in the NCR.

The Delhi MPD 2021 is ar­guably the largest real es­tate op­por­tu­nity in terms of state as­sur­ance and de­mo­graphic de­mand for ur­ban growth and de­vel­op­ment in the coun­try. And the re­cently sanc­tioned land pooling pol­icy is per­haps the first of many such state ini­tia­tives.

Such land pooling schemes will help solve is­sues re­lated to the avail­abil­ity of land for nec­es­sary real es­tate de­vel­op­ment and in­fra­struc­ture for­ma­tion for In­dia’s ever-in­creas­ing ur­ban pop­u­la­tion—es­pe­cially for the cre­ation of ur­ban green spa­ces, open pub­lic spa­ces and mass hous­ing for EWS and low­in­come groups.

There are as yet vast growth op­por­tu­ni­ties in the coun­try’s re­alty sec­tor. Es­pe­cially where ur­ban­i­sa­tion and rel at e d large- scale in­fra­struc­ture is con­cer ned— In­dia i s yet to ex­pe­ri­ence the full ex­tent of pop­u­la­tion mi­gra­tions to its es­tab­lished ur­ban cores, which will place pres­sures on ex­ist­ing ur­ban in­fra­struc­ture and mass hous­ing.

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