Land Acquisition Bill: Here's how it will impact valuations
Mayank Saksena of Jones Lang LaSalle (JLL) India sums up the impact that the Land Acquisition Bill will have on land valuations in the country.
August 30, 2013 / 14:11 IST
Mayank Saksena
JLL India
The newly revised Land Acquisition Bill is beneficial to land owners. The scope of minimum required approval has been increased to 80 percent of the affected families. This consent is mandatory only for private enterprises.Secondly, the Government's role in land acquisition has been curtailed as far as private enterprises are concerned. These enterprises can now enter into their own negotiations and arrive at the price to be set for acquisition.Also read: Land Bill: India Inc wary of rising costs; but welcomes aimThirdly, different techniques for arriving at the compensation to be paid have been provided. With the intention of providing land owners with compensation which is closer to the existing market rates, the Bill now stipulates that local circle rates will now need to be doubled and further multiplied by a factor of two when it comes to land parcels in rural areas. This means that that the acquisition price for land in rural areas will effectively be four times that of the local circle rates. In urban areas, the circle rates will need to be doubled in order to arrive at the acquisition price.The new Bill also requires a Social Impact Assessment (SIA) study to be carried out. This study will have to outline how the acquiring parties intend to use the land, and how the original inhabitants or owners will be rehabilitated. The Act now also puts very definite timelines on project completion and entire land utilization.For developers, the cost of land is going to increase significantly, impacting their project costs and therefore margins. Land valuations are already high and by further increasing them, land acquisition becomes even more difficult. Anyone without an existing land bank will now be looking at vastly increased entry costs.The author is the managing director of Land Services at Jones Lang LaSalle India. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
