By Ruchika Bhard­waj (Associate-Certes Realty Ltd)

Dur­ing the first four months of the cur­rent cal­en­dar year, a few ques­tions were oft repeated dur­ing most of the meet­ings & sem­inars that we atten­ded.  Most of them obvi­ously had a ref­er­ence to the revival of the realty sec­tor, and the prom­ises, unful­filled and yet to be made, by the scru­pu­lous as the not so well meaning.

a)    Are we headed to a hung parliament?

b)    If a gov­ern­ment is formed with major­ity, would the agenda be any dif­fer­ent for the incom­ing urban devel­op­ment & hous­ing ministries?

c)    Would it impact the real estate prices in Delhi NCR?

d)    How soon do we expect changes, if any?

The first ques­tion was answered by the resound­ing win by the con­gress. We finally had a stable gov­ern­ment which “prom­ised to deliver differently”.

Mr. Jaipal Reddy being sworn in as the urban devel­op­ment min­is­ter was an indic­a­tion towards the government’s intent of con­tinu­ity and speed. Ms. Selja’s appoint­ment as the min­is­ter for Hous­ing & poverty alle­vi­ation was another ‘leg-up’ for the change in pos­it­ive attitude.

Every­one was keen to know on the con­sti­tu­tion / func­tion­ing of the min­istry, the agenda and the fore­see­able res­ults. We too have been anxious to know the logical dir­ec­tion of the Delhi mas­ter plan 2021, as we believe that would be the sin­gu­lar factor to drive down the already increased and unsus­tain­able pri­cing pre­val­ent in the NCR region.

We huddled together in the first week of July’09 to ana­lyze the pre­val­ent & likely trends, price points, ground level real­it­ies, admin­is­tra­tion – polit­ical & bur­eau­cratic, and most of all, the first 100 days agenda of the min­istry of urban devel­op­ment, as well as the Min­istry of Hous­ing & Poverty alle­vi­ation, which would be a key indic­ator for the stra­tegic dir­ec­tion of the MPD 2021 (Delhi mas­ter plan).

We rum­maged through a lot of ref­er­ence mater­i­als, includ­ing tran­scripts of debates in the Par­lia­ment & Assembly, vari­ous noti­fic­a­tions, draft mas­ter plans, the expert com­mit­tees con­sti­tuted for Lal Dora / others.

Here is the good news. The first 100 day agenda of the Min­istry or Urban devel­op­ment.  Let me re-produce rel­ev­ant por­tions of it, before we get down to the ana­lysis of the same.

Press release — Monday, June 29^th, 2009     18:52 Hrs

100 day agenda for action of Min­istry of Urban devel­op­ment unveiled

Point # 15  Mat­ters relat­ing to the Delhi Mas­ter Plan 2021

“The Delhi Mas­ter Plan 2021 envis­ages involve­ment of private sec­tor in the devel­op­ment of land and pro­vi­sion of infra­struc­ture ser­vices as an improve­ment over the cur­rent scheme of large-scale devel­op­ment and acquis­i­tion of land entrus­ted to the Delhi Devel­op­ment Agency (DDA).  Focused efforts will be made to final­ize the policy. Every effort will be made to final­ize the Zonal Devel­op­ment Plans of Delhi”.

Our Obser­va­tion: The draft mas­ter plan of Delhi 2021 was noti­fied vide S.O no. 141 dated 07.02.2007 and pub­lished in the Gaz­ette of India. Post that, there wasn’t much action on the ground level. Many an investors, developers and home buy­ers are wait­ing in the wings, money ready, to grab land par­cels when the zonal & ward plans would be noti­fied. This clear indic­a­tion would def­in­itely motiv­ate them.

On the other hand, this news would be a major dampener for the real estate invest­ment scen­ario of Gur­gaon, Noida, Faridabad, Sonepat, Bhi­wadi etc. Let us not for­get that these mar­kets (except­ing Gur­gaon to some extent) mush­roomed since Delhi (read DDA) did not ensure that the sup­ply was in any way com­men­sur­ate to the demand. Delhi’s pro­jec­ted hous­ing demand is in excess of 1 mil­lion homes.

Point # 16 Real Estate Reg­u­lator for Delhi

Real Estate Man­age­ment (Reg­u­la­tion & Con­trol) Bill for NCT of Delhi will be taken up for decision.

Our obser­va­tion: A right step in the right dir­ec­tion, how­ever, one needs to be too big an optim­ist to see this imple­men­ted in a hurry. Also, let’s not for­get that real estate being a state sub­ject; we won’t really see uni­form­ity à la other sec­tors like Tele­com (TRAI) etc.

How­ever, we also referred to office order # o-17034/18/2009-H dated 19^th Feb’ 09 with the sub­ject –“set­ting up of a com­mit­tee to give a final shape to the model bill for reg­u­la­tion in real estate”.

Point # 17 Build­ing up 65, 000 houses by the DDA in next four years

In order to meet acute short­age of houses for urban poor, eco­nom­ic­ally weaker sec­tions and lower income groups of city of Delhi, con­struc­tion of about 40,000 houses will be taken up. Tender doc­u­ments for con­struc­tion of such houses have already been made ready with fast mode of con­struc­tion adopt­ing pre-fabricated tech­no­logy. Here, about 10, 000 houses are phased to be com­pleted every year from the year 2010 onwards.

In addi­tion to above, about 10,000 houses for middle-income group will be taken up on the same tech­no­logy of pre-fabricated con­struc­tion in four years’ time in phases.

Apart from the above, about 15, 000 houses will be com­pleted (ongo­ing pro­jects) in vari­ous phases. These houses will be con­struc­ted on con­ven­tional tech­no­logy and these will be avail­able from the year 2009 to 2011.

Our obser­va­tion: There seems to be a pos­it­ive move­ment on the ground, with some pro­jects already under­way, esp. towards Bakkar­wala etc. DDA already is in pos­ses­sion of land par­cels which can reduce the timelines. That is another point of con­sid­er­a­tion when we deduce that the cur­rent pri­cing levels of NCR mar­kets would see another round of cor­rec­tion, when the Delhi sup­plies are unveiled. Our deduc­tion is that the entry level product pri­cing, for mid-end hous­ing would be reduced to < 20 lakhs, com­pared to the 30+ today.

The noti­fic­a­tion of the Delhi mas­ter plan 2021 would be a pre­cursor to many a sys­temic changes that we are likely to see in the India real estate industry. The draft policy of “land assembly.…..” vide order No.F.3 (53) 2003/MP and pub­lished on the DDA web­site vide let­ter no. CEO/EL.G/102 (14) / 2009 date 11.04.09 is a depar­ture from earlier times. Let me refer to a couple of them to high­light the atti­tu­dinal shift.

- MPD 2021 acknow­ledges that with the neces­sity for cre­ation of infra­struc­ture to sup­port growth of the city at this scale, the present policy of large scale devel­op­ment and acquis­i­tion and its rel­ev­ance in the present con­text needs a thor­ough relook. Also to involve the private sec­tor in the assembly and devel­op­ment of land and pro­vi­sions of infra­struc­ture services.

-  It is neces­sary to review and recon­sider the cur­rent scheme of large scale land acquis­i­tion, devel­op­ment and dis­posal by DDA.

- Guid­ing prin­ciples 4.1 page 03 – Govt. / DDA to act as a facil­it­ator with min­imum inter­ven­tion to facil­it­ate integ­rated planned development.

- Page 07 – clause 9.1 – FAR per­miss­ible on the gross res­id­en­tial use in the assembled pock­ets – 200 ( higher than Gur­gaon which is @ 175)

- FAR to be ear­marked for the EWS com­pon­ent over & above the FAR of 200: 30 (15%)

The noti­fic­a­tion of Delhi mas­ter plan 2021, and its integ­ra­tion with the other agen­cies & watch­dogs of cul­ture, her­it­age etc. is extremely crit­ical owing to the many national & inter­na­tional events and sched­ules in Delhi, over the next few years.

The inten­tions expressed by the vari­ous arms of the gov­ern­ment over the past few months are indeed encour­aging, and, we feel vin­dic­ated over our stand and effort inves­ted over the past few years.

“We wait, to involve, and develop, aspir­a­tions of Delhi-ites”.

The author, Ruchika Bhard­waj, is an asso­ci­ate of Certes Realty Lim­ited, a realty invest­ment advis­ory organ­iz­a­tion focussed on the Delhi & Gur­gaon mas­ter plans 2021. She can be con­tac­ted on ruchika@certesrealty.com.

How­ever, the views expressed are of the author, and no claims what­so­ever are being made through the observations.