Dated: 18th February 2014
The bottled up real estate opportunity is national capital is all set to be unleashed with Delhi Development Authority, the government behemoth which has long controlled real estate development pushing for pooling agricultural land as well as coming up with a new farm house policy. Real estate analysts opine that opening up of land in Delhi would make it possible for houses to become available at affordable prices which has not been possible till now. The government’s stranglehold on urban development in Delhi has ensured that houses remained in short supply while satellite towns like Gurgaon, and Noida emerged as hot housing destinations riding on shortage in the national capital.
This however is likely to change as Delhi government’s revised policy on land pooling which was notified on September 5, 2013 has been finally incorporated into Delhi Masterplan-2021. Real estate firms like Certes believe that this change in policy will boost construction activity in the national capital as people having agricultural land can monetize it by pooling the land. The land pooling is expected to make at least 24000 hectares of land available for redevelopment, and new development and this could help people secure a home in Delhi. This is also huge opportunity for investors, and developers who want to buy land, and housing projects as social and physical infrastructure around the Residential Zones is already present, says Ramesh Menon of Certes. “I believe investing in Delhi land, and particularly farm houses is going to pick up as ticket size is going to come down”, adds Menon.
The pitch being made by Delhi government that it’s Master plan 2021 aims to transform the city into a Global Metropolis has also gone well with investor and real estate sector. The Delhi Master plan 2021 as per a DTZ report goes beyond the scope of 1962, and 1981 Master plans which are still operational but have not been able to match the pace of urban development, and population growth witnessed by the city. The inability of the government agencies like DDA to acquire land in a timely, transparent manner while paying market rates to farmers has also alienated a huge section of rural populace. The new Master plan as such has put more focus on private sector participation in not only building real estate but also building big infrastructure in the city. The developers can now get involved in land assembly, construction, building infrastructure and capacity, and provide essential services. The MPD 2021 also envisages setting up five new sub-cities in rural Delhi in Zones marked as J, K, L, N, and P meant for urban extension. It also caters to different sections of society, and real estate needs with houses meant for weaker sections, mid-level housing, high-end apartments as well as plots. The key areas where investments could be made say experts are those where urban extension projects shall be taken up, and zones where sub-cities are likely to be built. The positive for these areas is that they are already having substantial social, economic and infrastructure eco-system which shall be augmented by Master plan projects.
The new land policy which will guide the real estate sector in Delhi is based on ‘Land Pooling’ where individual owners or group of owners can consolidate the transfer of ownership rights to the designated land pooling agency which will later transfer the ownership of a part of land back to owners for developments. The landowners, including farmers can form associations as well as enter into collaboration with builders to develop real estate. As per DDA officials around 24,000 hectares of land will be available for development out of which 21,000 hectares will be for residential purpose whereas 2073 hectares is meant for commercial activity. For every 1000 hectares, 50,000 units are provided for EWS section which means 12 lakh houses would be available to the economically weaker section in the city.
There are two categories in land pooling, and under the Category 1, total land area to be pooled needs to be between 20 and 60 hectares. Under this scheme 60 per cent land will be returned to developers, and rest 40 per cent will be kept by DDA for infrastructure building and cost for change in land use. Under category II, the land pool could be between 2 to 20 hectares in which 52 per cent land will be kept by DDA, and rest given back to developer. Another interesting facet is that the pooled land need not be at one place, and only total area should meet the criteria. However, the catch is that DDA will return land only at one place, and that too within 5 km radius of the major chunk of land which shall be surrendered to DDA.
To ensure that the real estate plan under MPD 2021 is successful, the DDA has also increased the Floor Area Ratio (FAR) at 400 times the land area on which the project would be built for group housing on net residential land. This is exclusive of the 15 per cent FAR meant for EWS housing. The density for EWS population is over and above the gross residential density of 800 to 1000 persons per hectare. As per norms, upto 50 percent EWS housing stock shall be retained by developers, and sold to apartment owners at market rate which shall be meant for community service personnel working for group housing projects. Rest 50 percent EWS housing shall be sold to DDA at a base cost of Rs 2000 PSF which can be enhanced as per CPWD index.