Plan it Right - Nov 4, 2006. Times Property (Times of India)

As the issue of the Urban Land Ceiling Act comes into focus again, Chetan Narain says it is time to plan development

Do you feel the soaring property prices are artificially created by a cartel of players within the market?
Brokers/consultants like me are often accused of price rigging, although it is a sheer cause and effect of the 'developer's' pricing strategy or the seller's. In most cases a broker 'buys and sells' information and not the property. I often say this: "The buyer buys and seller sells." The broker can only represent either or both (Read: seller and buyer). I say all this because when the market has had a long run, like it has now with prices soaring and having peaked, it has left a lot of folks sour who were unable to enter or buy. These folks usually look to blame someone for this crazy run and it is usually the broker and then the developer who are blamed. My role as a consultant is to analyse and not add or subtract fuel into the pricing arena. The funny part is each time it is the buyer who creates a new high by buying and not the seller.

The big question is, will property prices fall in Mumbai, if the Urban Land Ceiling (ULC) act is abolished in our state?
Such a question cannot be answered without location specifics. For example: Locations like Malabar, Cumballa Hill, Nepean sea/Warden road, Bandra, Khar, Santacruz, Parle (Juhu) upto Versova/Lokhandwala in the west have no land to talk about. Locations beyond that in the west (read: sea front) have Coastal Regulation Zoning (CRZ) and the rest of the area beyond Lokhandwala upto Malad and Borivali on the same stretch are under Non-Development Zone (NDZ) and with the recent High Court judgment on land with mangroves under strict NDZ norms, there seems to be no real supply coming into these locations, to be able to drag the prices down.
But Mumbai is much more than just these locations; it is spread far and wide if you take Navi Mumbai and Thane into account. Locations from Goregaon east upto Thane and Ghatkopar upto Navi Mumbai have a huge potential to benefit from abolition of ULC. Except the land prices may not see a drastic change due to a great demand from Local/National and International (FDI/JV) groups who are coming in hordes. My brother Sanjeet Narain was in USA for a real estate seminar/conference and the biggest buzz there and almost everywhere is "India".
In the next two months there are several international conference companies who are organising seminars on real estate for Foreign developers/ funds to network with local developers/land owners, potential investors, and partners. They are creating platforms to allow them to mingle with various service providers too. Local funds and banks too are reaching out to established and upcoming developers with finance options. Given the
potential, these folks will easily absorb any amount of land that comes in, leaving room for more to absorbed. The utilities may vary; you will see a fleet of hotels, IT parks, Hospitals, Malls etc.

Why do you think the Government would have waited for so long? And why now?
It is almost impossible to figure out why it was not done so far. But it is not that difficult analyse, why now? Two of the main reasons could be:
"Pure Pressure". With millions of eyeballs staring at India and awaiting entry into the buoyant real estate market of Mumbai, there seems to be no source of land for these International/Local developers and funds. Most of the funds are getting diverted to other states and the Government of Maharashtra realises that.
The Special Economic Zones (SEZ) land acquisition process has run into issues and road blocks with farmers etc. The only safe land would be the one which is stuck under ULC, yet to be released. Larger tracts of such land released maybe offered with SEZ benefits.

Will this help stabilising prices or getting affordable housing?
I doubt it. I think is an opportunity for the chief minister to handle one of his key portfolios "Urban Development" in the best possible manner. Releasing the ULC and adding supply of
property will burden the already burdened infrastructure. This is an opportunity to have a proper planned development - open areas/parks, hospitals and schools with ample parking spaces, vegetable/fruit markets etc.
Also, stamp duty or any government charges pertaining to such deals should be dedicated towards infrastructure development into upgradation of stations, walking pavements, bus stops/depots and other transport means. Most important of all, a minimum of 20 per cent of development should be allocated for affordable housing to deserving people through a panel of NGOs and not government departments or organisations.