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After ULCRA : Reality & Speculations

Following the repeal of the Urban Land Ceiling (Regulation) Act (Ulcra), around 22,000

acres of land is set to be released in the real estate market in Pune. As a result, buyers are

hoping for a dip in property prices. However, unless the Act repeal is supplemented by a series

of other corrective measures, the much-hoped decline in prices will not come to fruitionimmediately, although it may stabilise the property prices in the fringe and suburban areas.

 Abhijit Atre reports

The long wait is over. The Urban Land Ceiling (Regulation) Act (Ulcra), 1976, is finally gone.

While the political leaders may pat their back for abolishing the Act, it is a common knowledge

that the state had no other option as the Union government had warned that the urban areas in the

state will not get the promised grants under the Jawaharlal Nehru National Urban RenewalMission (JNNURM) unless the Act is abolished by March 31, 2008.

The move comes as a good news to the builders who are eyeing the availability of the vacant

lands while the prospective property buyers are hoping for a correction in the property rates.

The Ulcra had imposed a ceiling on the maximum land holding by an individual in Pune at 1,000square metres, that is, around 10,000 square feet. (It is 500 sq.m in Mumbai and varies from city

to city). According to the Act, the amount of land in excess to 10,000 sq. feet was declared as

“surplus” and the government was authorised to either acquire it or allow to develop it providedhe/she grants 10 per cent of the constructed area to the government.

Based on the logic that more the availability of land, less the property prices, it has been

 predicated that property prices will fall inevitably. However, since the 22,000 acres of land ismostly located in the fringe villages, the sale of it will affect the property rates in the suburbs that

are close to these villages, and not the main city.

For example, the availability of land places like Lohegaon and Wadgaon Sheri will help stabilise

the property prices in nearby Vimannagar and Kalyaninagar, as a buyer may not mind to move

few kilometres ahead if the rates in the nearby villages drop following the release of the Ulcraland.

Such is not the case in the main city. The lands that were under Ulcra in the main city have been

already developed under the provisions of section 20 of the Act. The said provision empowersthe land owner to develop the property and hand over 10 per cent of the constructed tenements to

the government, free of cost.

Even in the villages, there is no guarantee that the land owners will release the land for 

development at one go or immediately. It is, therefore, the state urban development department

has formulated a proposal to impose a 10 per cent annual surcharge on vacant residential lands.However, this proposal, aimed at curbing the practise of land holding, is yet to be tabled before

the house.

There are few other issues as well, Promoters’ and Builders’ Association (PBAP) president

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Lalitkumar Jain said, adding, “The move needs to be supplemented with the sanctioning of the

Development Plan for the 23 villages and speeding up the infrastructure projects.”

Elaborating on the issue, Jain said that several residential lands in these villages have been

reserved in the water sacristy zones (WSZ) while many border on the proposed Bio-Diversity

Parks (BDP). In the WSZs, the Floor Space Index is limited while no construction is allowed inthe BDP.

“It’s still to be assertion as to how much surplus land falls in these zones as this land will not beavailable for construction. The availability of infrastructure around the lands is also an issue

which needs to be considered. Till then, it will be hasty to predict that the Ulcra abolition alone

will lead to immediate fall in property prices,” Jain said.

More so because, though the lower rates of land will be seen in the immediate term, this land

after being purchased (a process that takes 3-4 months) needs to go through the planning and

approval process (further 8-12 months). The impact of the lower land prices as a result of this

action will, therefore, only be seen on homes that will be offered into the market to the customers12-18 months from now, he said.

State chairman of the Government Liaisoning Committee of the Confederation of the Real

Estate Developers Association of India (CREDAI) Hemant Naiknavare said that the demand for 

housing in Pune is constantly escalating and there is a shortage of houses even after the prices

have increased.

According to a PBAP study, currently there is a shortage of four lakh houses in Pune. “But I still

feel that the Ulcra abolition will help stabilise property prices. At least the speed at which the property rates in Pune had escalated will be brought under check,” Naiknavare said 

While the possibility of a correction in the property prices is being debated, the developers are,however, unanimous that the scrapping of Ulcra will usher in greater transparency in land deals

and will help planned development of mini townships.

“The move signals the end of speculative land deals. The speculators and the fly-by-nigh

operators will cease to exit. The market will open up for genuine developers,” PBAP chairman

Lalitkumar Jain said.

Elaborating, CREDAI’s Hemant Naiknavare said that hitherto procuring a large land was nearly

impossible in fast-developing cities like Pune.

“We used to feel proud even if we got an one-acre plot. Now, there is a possibility that we may

 be able to purchase large lands to develop mini-townships. This will ensure funding for 

 prominent financial institutions. It will, thus, usher in corporate discipline and planneddevelopment,” Naiknavare said.

Also, as these land deals will be effected through a proper registered agreement, the government

will earn a handsome revenue by way of stamp duty and registration charges. The land deals will

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thus become more transparent, Naiknavare felt.

President of the Marathi Bandhkam Vyavasayik Sanghatana S.R. Kulkarni pointed out that not

 just the builders but even the individuals (who plan to construct bungalows) will be saved fromthe red tape and corruption while seeking Ulcra clearance certificates. Chairman of CREDAI

Kumar Gera also asserted that the abolition will ensure that significant amount of land will come

into the market and that there will be opportunities to develop large-sized schemes.

“There was an artificial shortage of land owing to the Act. I would definitely expect softening of 

land prices in Mumbai, Thane, Pune, Nashik, Nagpur & Kolhapur. But, how much will this be, itreally cannot be foretold,” he said. Also, the softening will vary from place to place and will

depend on a number of factors. “Each product price impact needs to be evaluated based on

looking at the increase in the last 2 or 3 years. Perhaps, the future increase will be at a lower 

 percentage because of this relief.” he said.

The real land for real estate

The prime areas, which share the 22,000 acres of land mainly includes the villages that weremerged in the Pune Municipal Corporation (PMC) and Pimpri-Chinchwad Municipal

Corporation (PCMC) in 1997, and even those, which were later de-linked from the twomunicipal bodies. Some of the prime villages, which will witness land stock getting released for 

real estate development include Baner, Balewadi, Warje, Wadgaon, Hingne, Sasanenagar,

Mohamadwadi, Wadgaon Sheri, Danori, Tingrenagar, Kharadi, Kondhwa, Katraj,

Khadakwasala, Lohegaon, Dhairi, Shivne and Ambegaon. Also, villages around Pimpri-Chinchwad, Dehu Cantonment Board, Talegaon also have the Ulcra surplus lands. Thus, the

land is not concentrated in one particular belt but is spread along the outer limits of Pune and

Pimpri-Chinchwad township.

REALITY AFTER ULCRA

Ulcra land likely to be released in Pune22,000 acres

Shortfall of houses in Pune

4 lakh

Proposal to impose surcharge of land is yet to be tabled

Development Plan for the 23 fringe villages is on hold

Infrastructure in the villages needs to be developed

Rates in the suburbs near the villages may drop

Hoping for clarity in land deals