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Maharashtra scraps land law
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Potentially the move will free large tracts of prime land in Mumbai
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New phase: Construction sector is optimistic about the future.
India’s richest State has scrapped a law that controls urban land holdings, potentially freeing large tracts of prime real estate in the financial hub of Mumbai, a move which sent shares of property firms up sharply.
Analysts and property developers said the Urban Land (Ceiling & Regulation) Act, which has been in place for three decades, has hampered construction of homes and offices and contributed to soaring property prices, and scrapping it may bring thousands of acres of prime land to the market.
“Physically, it will make available a lot of land for development. Our estimate is that it could offer 15,000-17,000 acres (6,100-6,900 hectares),” said Pranay Vakil, chairman of real estate consultancy Knight Frank.
“Admittedly, a lot of this land is embroiled in legal issues, so it’s not like tomorrow hundreds of acres of land will be available. It will take time.”
Developers said the move could free up to 25,000 hectares of land in Mumbai, where property prices match, or in many cases overtake, prices in New York and Tokyo.
HDIL gains 8 p.c.
Shares of real estate firms soared on the news, with Housing Development & Infrastructure Ltd gaining more than eight per cent, while the main share index – BSESN - was up 1.5 per cent.
Some analysts said the move would primarily help companies which have land to sell but could not previously because of the restrictions.
The analysts also say that the potential buyers may not gain much as property prices are already high.
Thousands of hectares of land will also be available for development in Maharashtra’s other crowded cities such as Pune and Nagpur, where there is a high demand for houses and office spaces.
Critics of the land ceiling law say freeing land will make way for commercial redevelopment and creation of crucial infrastructure. But supporters of the lawsay the move will help builders, not the common man. – Reuters
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