Delhi to unlock nearly 57,000 hectares for housing: Here's what it means
The land pooling policy, which is set to expand the urban limits of Delhi, was notified by the Ministry of Urban Development (MoUD) in September 2013 while the regulations for operationalisation of the policy were approved in May 2015 by the Ministry
In a move that could unlock 57,000 hectares of land for development in Delhi and boost housing supply that would keep prices under check, Lt Governor of Delhi Anil Baijal has notified 89 rural villages as urban areas. The move would pave the way for operationalisation of the long-pending land pooling policy.
“Land pooling is a viable alternative to land acquisition primarily due to the difficulty faced in acquiring clear, marketable and litigation-free appropriately sized contiguous land parcels for development. The decision to declare 89 villages as urban areas under land pooling in Delhi is a step in the right direction. This will lead to the availability of large land parcels to meet the shortage of housing in Delhi as well as give the much needed boost to creation of public infrastructure,” says Rajeev Talwar, chairman, NAREDCO.
What is the land pooling policy
Under the land pooling scheme, 10 lakh dwelling units are expected to come up in Delhi’s new zones - J, K (I and II), L, N and P (I and II), that include places such as Narela, Bawana, Dwarka, parts of Rohini and even some villages near Chattarpur. Out of these 2.5 lakh units will be in the affordable housing segment.
Impact on realty prices
“The policy will go a long way in bringing about price efficiency and speculative prices will correct by almost 20 to 25 percent. But all will depend on how and at what pace the supply of land is released by DDA,” says Pankaj Kapoor of Liases Foras, adding if the land is released at a slow pace, prices will continue to remain speculative. The unsold inventory in Delhi-NCR currently stands at 2.6 lakh units.
“The government should work towards imposing a vacant land tax that will ensure more land is released for development and people don’t choke land supply leaving room for prices to escalate,” he says.
But the impact of the scheme on Delhi-NCR markets will not be immediate. Investors and homebuyers in NCR will start to feel the change once housing stock takes shape in Delhi which may take another three to five years from now, say real estate experts, adding everything will depend on the speed at which the scheme is executed, land released and prices at which these projects are launched.
But will the land pooling policy play spoilsport for potential investors in NCR? “It is expected that residential supply will mute investor sentiments as he may not be able to make huge profits by putting in money in these markets as the choices available in the residential segment will be huge,” Kapoor says.
While those working in Gurgaon or Noida may not suddenly decide to relocate to Delhi and purchase property there, others who have a job a Delhi may now think about deferring their purchase in NCR. But again all depends on for how long they are willing to wait.
“There will not be any impact on residential prices in NCR towns immediately as the market is in any case dominated by end-users and less by investors. In the long run, when there is more clarity, real estate funds and even private developers will evaluate the opportunity in Delhi more seriously and they have already started doing so,” says Anckur Srivasttava of GenReal Advisers, adding all depends on how soon the policy will get executed.
As for prices, there may not be a significant run-up in the next few years. They are likely to remain soft and just about keep pace with inflation due to the increase in housing options across Delhi-NCR, he says.
Agrees Pravin Jain, president National Real Estate Development Council (NAREDCO). “There will be no immediate impact of the policy on Delhi NCR markets till the time projects actually get launched on the ground. At best, prices of these agricultural lands will increase. Also, demand for these properties will depend on the price at which these projects are finally launched in Delhi. If these are around Rs 5,000 per sq ft, buyers may still consider investing in the Capital but if they are far too expensive, they may continue to explore options in Haryana and Uttar Pradesh.”
“Once there is more clarity, we will explore projects under the joint venture model,” says Jain, who is also CMD at Tulip Infratech.
Success of the policy will depend on implementation
The success of the land pooling policy will depend on the intent, time bound execution and coordination between the multiple agencies involved in the policy’s implementation, say experts.
“State governments of Haryana and Uttar Pradesh will have to revisit their strategy and develop each of their markets as self-contained micro markets. Until now 40 percent of people who invest in these markets are from Delhi. Going forward, these markets will compete with the Delhi housing market and those that are able to generate jobs and create economic opportunities will score,” says Ramesh Menon of Certes Realty.
The land pooling policy, which is set to expand the urban limits of Delhi, was notified by the Ministry of Urban Development (MoUD) in September 2013 while the regulations for operationalisation of the policy were approved in May 2015 by the ministry.
However, the policy was stuck over a few demands by the Delhi government on getting 10 percent of the pooled land to develop hospitals, schools, email@example.com