Land prices on the outskirts of Delhi have risen significantly and in many cases have as much as doubled over a period of 18 months following the announcement of land pooling policy by Delhi Development Authority (DDA). The prices may rise further, once the finer details of the policy are out. The final policy is expected within a month.
Estimates suggest that the price of 1 acre of plot around Najafgarh increased to Rs 4-4.5 crore per acre from Rs 1-1.5 crore in just a year. However, the rates are now hovering around Rs 3.5 crore. The prices rationalized a bit after there was no movement on the policy side, according to an expert tracking the sector.
“The land prices mainly on the outskirts of Delhi went up by 2-3 times after the buzz of the land pooling policy as well as one acre farmhouse policy by DDA. And the prices might go up again after the clarity on the policy front comes and there is a stamp of approval from the government,” says Sanjay Sharma, managing director, Qubrex, a Gurgaon based real estate consultancy firm.
Delhi address has a premium attached to it and once the supply starts coming into the market, there might a repercussion in the neighbouring areas such as Gurgaon and Noida. “Prices are expected to fall in neighbouring regions once there is more supply in the Delhi market. But, I think the supply will take at least 2-3 years,” Sharma adds.
However, Harinder Singh of Realistic Realtors has another point of view.
“Gurgaon is independent of Delhi now. And due to its proximity to airport and a corporate/IT hub, Gurgaon may not feel the impact of the new projects in Delhi,” said Singh. But a real impact can only be assessed after the actual supply comes into the market.
As for price escalation of Delhi land prices on the back of land pooling policy, Singh pointed at a rise of about 15-20%.
Anshuman Magazine, managing director CBRE South Asia, says the land pooling policy will be very good in the long term and there would be rationalisation of prices in Gurgaon and Noida with supply coming into the Delhi market.
“But prices may not fall in Gurgaon and Noida due to inflationary and other factors. All this though would take at least 3-4 years. And anything which would improve supply is positive for the realty market,” Magazine adds. In Delhi, price appreciation has happened only on the periphery of cities .
DDA is expected to soon invite interested land owners/parties for pooling their land under its new land pooling policy, which will see development of about 100 residential projects with estimated 14-16 lakh units across outer Delhi, according to a senior DDA official. DDA has been unable to acquire any land over the last 10 years, which mandated the need for such a hybrid pooling policy, under the Delhi Master Plan 2021.
The first project is expected to be ready as early as 2016 and the final contours of the policy are being processed and will be out by the end of this month, before the General Elections due in May this year. About 20,000-25,000 acres of land will be unlocked through 95 villages and it will take about 10 years to fully develop the land. DDA has also set up a cell for implementing and monitoring of land pooling policy.
Currently, the population of Delhi is around 17 million and is expected to reach 23million by 2021. The Master Plan 2021 seeks to build housing units for all Delhiites.
The housing units, mainly affordable, will be priced at Rs 2000 per sq ft and the area would be around 500-1000 sq ft. DDA will also promote EWS (economic weaker section) housing units by giving 15% extra FAR (floor area ratio) on a project.
Under the land pooling policy, landowners can pool their land for development by DDA. But instead of compensation, the owners will get 48-60% of the land back after the authority has set up the infrastructure. The owners will then be allowed to build on the land themselves or give it to private developers.