Fresh supply to rationalise land prices

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According to the Delhi Development Authority’s (DDA) 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 40-60 per cent 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 rises to the tune of 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 litigation-free 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 the present land acquisition system, in case of private entity enterprises, freehold (state-owned and privately-owned) as well as leasehold (state-owned) land requires the consent of 80 per cent of the affected land-owning family; and the consent of 70 per cent 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.

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 & Maharashtra models

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. 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 100 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 centers, hospitality and entertainment areas.

Following such successful models in Maharashtra and Gujarat, other state governments, like Tamil Nadu and Andhra Pradesh have also started considering 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 kilometer-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 urbanization 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 low-income groups. There are as yet vast growth opportunities in the country’s realty sector. Especially where urbanisation and related large-scale infrastructure is concerned —India is yet to experience the full extent of population migrations to its established urban cores, which will put pressure on the existing urban infrastructure and mass housing.

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