Anuj Puri, Chairman & Country Head, Jones Lang Lasalle Meghraj, on Maharashtra's scrapping of the Urban Land Ceiling Act
30 Nov
2007
Now that the Urban Land Ceiling Act is repealed in Maharashtra, considerable portions of land will be released in central areas of cities. However, these are out of the reach of middle-income buyers to begin with, 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 since the passing of the Act 22 years ago.
.jpg) Mumbai, (IndiaPRwire) The Central Government had not considered states like Maharashtra and Andhra Pradesh when it repealed the ULCRA in other states like Gujarat, Karnataka and Punjab. It had its reasons, but it became evident that the ULCRA rendered valuable land useless for all practical purposes. In India, land constitutes approximately 50% of the price of real estate.
Now that the Urban Land Ceiling Act is repealed in Maharashtra, considerable portions of land will be released in central areas of cities. However, these are out of the reach of middle-income buyers to begin with, 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 since the passing of the Act 22 years ago. In any case, it will meet no more than 5% of the overall demand in Mumbai over the next one year.
Nevertheless, now that the Act is scrapped, projects will come out at a faster pace, and developers will pass the benefits of speedier approvals on to the consumers.
In any case, repealing the Urban Land Ceiling Act was definitely the need of the hour. While it was certainly envisaged as a means of protection to landowners, it has not served any of the purposes for which it was created. By repealing this archaic Act in all states, the Government has assured that the real estate sector will grow by at least 14% by the year 2011-2012. Real estate's contribution to the national GDP so far has been about 11%. With the scrapping of ULCRA, this figure will increase substantially.
This is an excellent and much-awaited move by the Government, and definitely a step in the right direction.
Altogether, 25,000 acres of land have now been freed. However, only 10,000 of these are in developable zones, while the remaining 15,000 fall in areas with restrictions – such as coastal zones, forest lands etc. The players with the biggest land holdings previously locked by the ULCRA within Mumbai include Godrej, the Wadia Trust and the Indian Railways, with Hiranandani from the developer community.
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