The repeal of the Urban Land (Ceiling and Regulation) Act (ULCRA) by the Maharashtra legislature on November 29 was like serving a feast for ravenous hordes. The possibility of 17,000 acres (1 acre = 0.4 hectare) of land suddenly becoming available for development in Mumbai alone sent the stocks of some real estate companies soaring to as much as between 2 and 10 per cent.
When the 17,000 acres do go on the market it remains to be seen whether or not property development will be allowed on all this land or whether new development control rules, the Coastal Regulation Zone Act and other laws forbid it. Irrespective of the uncertainty, developers are expected to go all out to purchase the land by outbidding one another. To recover the costs, they are likely to build premium housing or commercial complexes on the land, thereby killing the argument that the repeal of ULCRA will open up land to house the poor and the middle classes.
The argument that oversupply will bring down prices is dismissed as a pipe dream. While this may be so in the immediate future, the sheer force of market demand will ensure a rise in land prices. Take the case of the mill lands in central Mumbai. The “oversupply” argument was used there to justify the release of the land for use for the middle classes. However, far from being an area where lower middle class workers lived, it now boasts luxury apartments.
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Related Story: At last, Maharashtra Legislative Assembly repeals the Urban Land Ceiling and Regulaton Act of 1976
Wednesday, December 19, 2007
The repeal of the Urban Land Ceiling Act in Maharashtra will benefit the real estate lobby and do nothing for affordable housing
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