Saturday, December 01, 2007

Land prices set to crash ??

Is this the pin which deflates the bubble ???

A total of 22,000 hectares (approximately 54,363 acres) will be released in the city with the State Legislative Assembly on Thursday passing a resolution to repeal the Urban Land Ceiling and Regulation Act of 1976. Of the 22,000 hectares, 9,500 hectares (23,475 acres) will be used for construction activity.

However, many city builders are still nurturing hopes that the cooling of heated up land rates will take up to two years to become a reality. President of the Promoters and Builders Association of Pune (PBAP) Lalitkumar Jain, while welcoming the decision said, "Mere repeal of the Act will not bring down the prices. The government has to address the demand and supply issue and a master plan will have to readied for the same. Infrastructure should be made available to support the desire to provide affordable housing," he said.

Municipal commissioner Praveensinh Pardeshi too welcomed the decision, but said that land prices will definitely come down in the "near future." This will help low cost housing for the poor and will also put a full stop to burgeoning slums, he said.

Another builder, Rohite Gera, vicepresident of PBAP, said the repeal of the Act and the ensuing price slump that could happen over 15 months would affect the "fly-by-night operators and not the regular real estate developers." Also, the government decision to levy a tax on vacant land will have to assessed to see how much it would benefit the end user, he said.

With the Act being repealed by the state, it will also throw open the blocked funds under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a pre-condition put by the Centre.

Schemes for poor under the Development Control rules and the JNNURM will get more land for development, Pardeshi said.

Advantage New Developers As Mumbai Land Prices Seen Falling

"They will also benefit from the local govt picking up the tab for developing roads, water supply, electricity lines"

The repeal of the Urban Land Ceiling Act (Ulca) by the Maharashtra assembly on Thursday will benefit new township developers in a big way. But the profits of developers who had invested in townships on the basis of the old law might take a hit.

Existing developers will have to compete with new realtors who will not only benefit from buying land at softer prices following more land being available in the market but also have the benefit of the local government taking on the cost of infrastructure such as roads, water supply, sewage lines and electricity distribution lines within townships, said Kumar Gera, chairman of Confederation of Real Estate Developers Associations of India, a lobby representing real estate developers. The cost of new infrastructure could make a difference of up to 20% of the project cost, he said.

According to a recent report on integrated townships by real estate consultant firm DTZ, 12 townships are being planned in Mumbai and Pune on a total of 8,053 acres. Typically in Mumbai, land costs are between 50-80% of total project cost depending on the area, with the interest costs an additional 12-13%.

Across the state, about 17,000 acres of land is expected to be released into the market on account of the repeal of the Act. While upmarket locales in Mumbai such as south Mumbai, tony suburbs such as Bandra, Khar and Santa Cruz have little vacant land, the repeal is expected to trigger development in surburbs, such as Kandivali and Malad in the west where land lies vacant, and Thane and beyond among the central suburbs. It would also release land in tier II cities such as Pune, Nagpur and Nashik.

Medha Patkar condemns ULCA

With the repeal of ULCA 3000 + acres will be freed in Mumbai and more in Pune. There shouldn't be any doubt in anyone's mind that this was done to fill the coffers of the builders. The builder politician nexus is well known anyway and the builders will compensate the politicians. Why should be poor benefit anyway ?? What are they doing for the politicians ? Its never been any government's priority to create housing for the poor. Why should the case be different this time.

Condemning the state government's decision to repeal the Urban Land Ceiling (Regulation) Act (ULCRA), Narmada Bachao Andolan leader Medha Patkar said the move was meant only to authorise large land holdings of individuals, which, till now, were held by them illegally.

Addressing a news conference here on Friday, Patkar expressed the view that the repeal will lead to unequal distribution of land, increase in the number of homeless, and most importantly, it will increase the gap between the rich and the poor. She charged that in Mumbai alone, about 30,000 hectares of land will go in the hands of big companies and builders. According to her, Pune too will not remain unaffected.

"Moreover, we are of a strong belief that the state government's assurance of providing free housing to the homeless will also not come through," Patkar said.

The ULCRA was repealed on Thursday by the state government, which restricted individual land holding to 500 square metre.

"The government had the power to acquire and develop vacant plots for common good under ULCRA, but it failed to do so. It is utterly farcical to assure that the poor will benefit. The Act has been repealed only for the benefit of the builder lobby, who will have a free hand now," Patkar said.

Patkar added that the National Alliance of People's Movement was left with no option but to stage agitation and protests against `land grabbing'.

Monday, November 26, 2007

Costliest Indian land deal: 3,000 cr for 3 plots

A record property deal has been made at Mumbai's Bandra-Kurla complex. It's the highest in the country.

The price tag for the first plot was Rs 5,04,000 a square metre or Rs 831 crore and the 16,500 square metre plot was bought by Mumbai's Wadhwa Builders.

Wadhwa Builders have paid 229 per cent higher than the reserve price.

Reliance Industries bought the second plot — a car park-cum-commercial complex — for Rs 918 crore, valued at Rs 27,917 per square foot. The bid by Reliance was the highest and winning bid.

Reliance paid Rs 3,00,500 a square metre, for the 30,550 square metre plot. They bid 96 per cent higher than the reserve price set for the particular plot.

Meanwhile, the TCG and Hiranandani joint venture have bagged the third plot, for a commercial complex at Rs 1,041 crore.

Mumbai Metropolitan Development Authority (MMRDA) has raked in Rs 2,790 crore with the sale of these three commercial plots.
Prices were expected to touch such dizzying heights, because of the lack of supply existing at the Bandra-Kurla complex on Monday. The MMRDA has positioned it as an international financial business hub and demand kept increasing so far.

Consultants said there will be no respite for the next one year. Commercial property prices are expected to touch as high as Rs 60,000 a square foot.

But the MMRDA has reacted and said that Rs 2,790 crore is precious little compared to the Rs 260,000 crore that they require in terms of funding to develop and improve the Mumbai Metropolitan region.

It is 230 per cent higher than the reserve price. The reserve price was set at Rs 163,000 a square metre, which was the highest the last time MMRDA sold plots at the BKC. Prices have more than doubled between last year’s auction and this year’s auction.