Repeal of ULC Act may not up land supply much

When the Urban Land Ceiling and Regulation Act (ULCRA) is repealed in the present session of the state assembly it could have only a salutary impact on the land supply and realty prices in Mumbai and others cities of Maharashtra.

Mumbai may get only 6,000 to 7,000 acres for housing and development projects out of the 25,000 acres to be freed up after the repeal. Over 18,000 acres of land falls in the coastal regulation zone (CRZ), no-development zone (NDZ), in litigation and covered in slums, said Knight Frank chairman Pranay Vakil. But, he believes, even that could add substantially to the land supply.

"When smaller factories are closing down on LBS Marg and other parts of Mumbai, the land owners can use them for other purposes without getting permission. Otherwise, what you can do with 500 square metres. Once the act is scrapped, it could have a salutary impact on the realty prices,'' says Vakil.

Real estate industry hopes that repealing of the ULCRA will make trading of land easier since buyers of vacant land will get a clear title. "It will help foreign investors and real estate funds who are particular about titles to invest in properties. Land buyers also can mortgage the vacant land now and get loans,'' says R S Ajmera, president, Confederation of Real Estate Developers Association of India (CREDAI).

Terming the repeal as psychological and a marginal one for the Mumbai real estate, Mohan Deshmukh, president, Maharashtra Chamber of Housing and Industry (MCHI) said the impact of the repeal on the Mumbai real estate could be seen over a period of a year or so.

''Nonetheless, the repeal can ease the shortage of dwelling units in Mumbai, which is as much as 35,000 units. However, I see tier-II cities in the state seeing a major correction in land prices where the prices have gone up dramatically.''

Deshmukh believes since major land holdings are held by trusts and corporates, more players could come into the market. "Either the land owners would develop the land or would go in for joint development with the existing developers," Deshmukh said.

However, the real impact of the repeal will be felt in other cities including Pune, Nashik and Nagpur which have witnessed a higher property price appreciation than Mumbai. According to industry sources, nearly 22,000 acres of land in 23 villages surrounding Pune will be freed up for development.

"For instance, in Pune land prices in 5 to 7 km from the city have risen 300-400 times. An acre of land was sold at Rs 12 lakh three years ago in Pune. Today, the same land is sold at Rs 45 lakh. I feel that after the repeal, more land will come and prices will stabilise,'' says Deshmukh.

Says Lalit Kumar Jain, chairman of Pune Builders and Promoters Association: "Even if lands get freed up under the ULCRA repeal, until the development plans for the 23 fringe villages presently lying with the state government is accepted and notified, no real benefit will be felt.''

Elaborating on the impact of repeal in Pune's realty prices, an industry source said: "If land in Lohegaon and Wadgaon-Sheri villages are freed up, it will impact the prices in neighbouring Vimannagar or if land in Baodhan and Baner are freed up, prices in Aundh will be impacted. Both Aundh and Vimnnagar are favorite residential destinations for Pune's IT and ITeS employees."