Land or­di­nance likely to spur de­vel­op­ment

Amend­ments to re­move land ac­qui­si­tion bot­tle­necks in five key sec­tors such as power, high­ways, hous­ing, de­fence and in­fra­struc­ture projects; to fa­cil­i­tate land pool­ing in Delhi

HT Estates - - FRONT PAGE - Van­dana Ram­nani

The year of end-users The year 2015 will ex­pe­ri­ence a very pos­i­tive shift from the ear­lier years and will bring in the much re­quired sta­bil­ity in the prop­erty mar­ket. Spec­u­la­tors and in­vestors who have been rid­ing the prop­erty mar­ket since a long time will make way for end-users this year. Ac­cord­ing to a survey by Makaan.com, as many as 39% want to pur­chase a prop­erty for self-use as they are cur­rently lv­ing in rented ac­com­mo­da­tion. Another one-third want to buy prop­erty to meet grow­ing fam­ily re­quire­ments. Only 14% buy­ers want to buy a prop­erty for long-term in­vest­ment whereas 5% are look­ing to buy a prop­erty as a short-term in­vest­ment. Prop­erty prices to re­main sta­ble in 2015 Proper t y prices have re­mained sta­ble over the past few months and the mood of the mar­ket sug­gests a con­tin­u­a­tion of this trend. Around 33% home­buy­ers feel that the res­i­den­tial prop­erty prices would re­main sta­ble over the course of 2015, whereas 27% of buy­ers ex­pect prices to go up from the cur­rent level with majority ex­pect­ing an ap­pre­ci­a­tion of not more than 10%. For buy­ers, lo­ca­tion is more im­por­tant than price Lo­ca­tion will be the most im­por­tant pur­chase con­sid­er­a­tion for home­buy­ers in 2015. The pref­er­ence for lo­ca­tion will be even higher than price. This will be an im­por­tant shift in the pur­chas­ing pat­tern of home­buy­ers this year. Other fac­tors that will in­flu­ence pur­chase decision will be price, con­nec­tiv­ity and prox­im­ity of the prop­erty to hos­pi­tals, schools and of­fices. It is in­ter­est­ing to note that only 8% of home­buy­ers rate size as the top pur­chase con­sid­er­a­tion. Af­ford­able and mid­seg­ment hous­ing to be hot favourites Af­ford­able hous­ing i.e., hous­ing in the range of ₹ 40 lakh will con­tinue to be pre­ferred by a majority of home­buy­ers with aas many as 46% buy­ers opt­ing for it. Mid-seg­ment hous­ing (₹40 lakh to a crore) will be the pre­ferred bud­get cat­e­gory for 31% of home­buy­ers. High­end hous­ing (₹1 crore and ₹ 2 crore) will be a pre­ferred choice for 15% of buy­ers whereas only 8% of buy­ers will be look­ing for lux­ury hous­ing (over ₹ 2 crore). Among types of prop­er­ties, apart­ments will con­tinue to be pre­ferred over plot­ted homes or vil­las. Ser­vice/stu­dio apart­ments have gained pop­u­lar­ity but will ac­count for a small por­tion of the over­all de­mand. Fac­tors that will keep b u y e r s awa y f r o m buy­ing prop­erty High prop­erty prices will be the sin­gle big­gest hin­drance in buy­ing prop­erty in 2015. As many as 43% home­buy­ers con­sider the high prop­erty prices as a ma­jor chal­lenge and 21% home buy­ers are un­able to find a prop­erty close to their pre­ferred lo­ca­tion and ap­pro­pri­ate con­nec­tiv­ity. They are ei­ther forced to com­pro­mise with the area or post­pone the pur­chase.

Around the same time last year, the Right to Fair Com­pen­sa­tion and Trans­parency in Re­ha­bil­i­ta­tion and Re­set­tle­ment Act, 2013, re­placed an ear­lier law dat­ing back to 1894. The new law pro­posed that farm­ers and landown­ers be paid up to four times the mar­ket value for land ac­quired in ru­ral ar­eas and two times the mar­ket value in ur­ban ar­eas. Another key fea­ture of the act was that the con­sent of 80% of land own­ers was needed for ac­quir­ing land for pri­vate projects and of 70% landown­ers for pub­lic-pri­vate projects.

A few days ago, the new gov­ern­ment pro­mul­gated an or­di­nance amending key por­tions of the “con­sent clause” seen as a road­block to ac­quire land for five key sec­tors such as power, high­ways, hous­ing, de­fence and in­fra­struc­ture projects. While this re­stric­tion has been waived, the gov­ern­ment has de­cided that the com­pen­sa­tion, re­ha­bil­i­ta­tion and the re­set­tle­ment pack­ages would re­main the same. The amend­ment also re­moves the re­quire­ment for manda­tory so­cial im­pact as­sess­ment (SIA) study for th­ese key sec­tors in­volv­ing pub­lic hear­ings - pro­ce­dures that in­dus­try ex­ec­u­tives say would have dragged on the ac­qui­si­tion process for years.

Ex­perts say that this move was ne­ces­si­tated by the fact that the strin­gent land act was hold­ing up projects worth US$300 bil­lion. While this un­der­lines the im­por­tance the new gov­ern­ment at­taches to in­fra­struc­ture de­vel­op­ment, it’s still not clear which projects in Delhi NCR will be im­pacted by this move. The most likely will be the de­vel­op­ments along the Delhi Mumbai In­dus­trial Cor­ri­dor (DMIC).

The amend­ments will def­i­nitely have a di­rect im­pact on de­vel­op­ment, es­pe­cially land parcels that are still in the process of be­ing ac­quired. It will help a lot in land pool­ing, es­pe­cially land pock­ets that are dif­fi­cult to ac­quire, says Balvin­der Kumar, vice chair­man, Delhi De­vel­op­ment Au­thor­ity.

Most stake­hold­ers in the real es­tate sec­tor have re­acted pos­i­tively to the amend­ments, say­ing th­ese will have a pos­i­tive im­pact on the in­fra­struc­ture and the sec­tor as a whole and that the new norms will ease the in­or­di­nate de­lays in the land ac­qui­si­tion process for large scale in­fra­struc­ture and af­ford­able hous­ing projects. Oth­ers, how­ever, are not too happy about the com­pen­sa­tion amount re­main­ing the same.

Po s i t i v e im­pact on in­fra­struc­ture

Anshuman Mag­a­zine, chair­man and MD, CBRE South Asia Pvt Ltd, says that the amend­ments will have a pos­i­tive im­pact on the in­fra­struc­ture and real es­tate sec­tor. ‘’I’m hope­ful of the new norms eas­ing the in­or­di­nate de­lays seen so far in the land ac­qui­si­tion process for large-scale in­fra­struc­ture and af­ford­able hous­ing projects. The in­fra in­dus­try, in par­tic­u­lar, is ex­pected to gain much from th­ese new changes, as will hous­ing for the poor. How­ever, I hope this is just the first step in amending the Land Ac­qui­si­tion Act, as many more amend­ments are re­quired to ease land ac­qui­si­tion pro­ce­dures in In­dia. It could per­haps bring in more seg­ments of or­gan­ised real es­tate within the am­bit of such faster pro­cess­ing norms, which would be ben­e­fi­cial for con­struc­tion ac­tiv­ity across the coun­try.”

“The step will re­move road­blocks and will help de­vel­op­ers get faster ap­provals for projects and ac­qui­si­tions. With the amend­ments farm­ers will get bet­ter deals for their land as the new rules will ap­ply even to land ac­quired un­der 13 other acts like the Rail­way Act, Na­tional High­way Act, Hous­ing or Com­mer­cial Act, etc, the pro­vi­sions will now be uni­form on the com­pen­sa­tion as­pect,” says Prashant Solomon, MD, Chin­tels In­dia and mem­ber­gov­ern­ing coun­cil, Credai NCR.

Re­move road­blocks to de­vel­op­ment

Ac­cord­ing to San­jay Dutt, ex­ec­u­tive man­ag­ing di­rec­tor, South Asia, Cush­man & Wake­field, the decision of the gov­ern­ment to ad­dress the nega­tives of the Act is a wel­come and much-needed con­fi­dence-in­spir­ing step for the coun­try. Th­ese mea­sures will en­sure that the nec­es­sary in­vest­ments in boost­ing the econ­omy through in­dus­tri­al­i­sa­tion, ur­ban­i­sa­tion and de­vel­op­ment of phys­i­cal and so­cial in­fra­struc­ture will be­come vi­able and help achieve the tar­gets set out in the Make in In­dia and Hous­ing for All by 2022 cam­paigns. Be­sides t h e f a r mers who are ob­vi­ously up­set about the con­sent clause be­ing lifted, some le­gal ex­perts are of the view that de­spite the com­pen­sa­tion clause re­main­ing the same, the cru­cial is­sue of the land be­ing un­der­val­ued will con­tinue to per­sist. The value of much of the land sold as agri­cul­tural land is gen­er­ally low.

But when the an­nounce­ment is made to use it for in­fra­struc­ture or in­dus­trial pur­pose, its value goes up. Ex­perts sug­gest that th­ese land parcels should be sold only after it is de­ter­mined that to what use would the land be put to - in­dus­trial or res­i­den­tial. This will en­sure that all stake­hold­ers get a good price of their land.

THINKSTOCK

THINKSTOCK

Crys­tal ball gazers said lo­ca­tion and af­ford­abil­ity will help peo­ple make that crit­i­cal home­buy­ing choice this year.

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