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Law repeal may free up 25,000 acres in Mumbai

Raghavendra Kamath  |  Mumbai 

Maharashtra set to be the 10th state to rescind the Urban Land Ceiling & Regulation Act.

With Maharashtra set to become the 10th state in the country to repeal the Urban Land Ceiling & Regulation Act (ULCRA), the megapolis of Mumbai alongwith Thane and could see around 25,000 acres of land being freed up for development.
Nearly 10 entities including corporations and trusts will be direct beneficiaries of the move.

Entity Location of land
Beyramjee Jeejeebhoy Oshiwara, Bandivali,
Mogra, Goregaon Pahadi
A H Wadia Trust Mohili, Chembur, Kolekalyan, Sahar, Mole Maroshi
Veekaylal Company Dahisar
Godrej & Boyce Vikhroli, Ghatkopar, Hariyalli
A S Inamdar Valnai
Ardershair Hormasji Bhiwandiwala Juhu, Khar, Uran, Alibaug
Chandrakanth Bhonsle Malad
F A Dinshaw Charity Trust Malad
Pratapsingh Surji Vallabhdas Hariyalli, Ghatkopar Vile Parle
Savitabai Kedia Marol, Malad, Bhayendar
On February 6, 2006, these entities faced a serious setback with the urban land ceiling department of Maharashtra issuing a circular to the registrar of properties not to register any of their documents which fell under the ULCRA. Once the Act is repealed, these entities will be free to trade in their land.
The Maharashtra government moved a resolution to repeal ULCRA on the last day of the Assembly session on Monday. This means the matter will be taken up for debate in the coming monsoon session of the state legislature.
Real estate industry analysts expect a 25 to 30 per cent price correction when this kind of land supply hits the market. "If this happens, there will be a slowdown in property prices. Since there is acute shortage of land, developers will benefit," says Rajesh Mehta, chairman, Raha Realtors.
Developers also feel they can save significantly on the money spent on getting permission under ULCRA for land development. "Most developers spend Rs 100 per sq ft on getting permission from the ULC dept. Now we can save on that cost and pass it on to the consumer," a Mumbai-based developer said.
Property consultancy Chairman said: "In the absence of ULCRA, developers will be in a position to develop huge tracts of land. This supply will have a sobering effect on prices. Moreover, it will be a win-win situation for the state, developers and house buyers."
Analysts say states will become eligible for funding under the Jawaharlal Nehru National Urban Renewal Mission as soon as they repeal their land ceiling acts, as stipulated by the Union government. The Union government has earmarked Rs 23,000 crore under the scheme for Maharashtra.
Rating agencies think repealing the archaic law would help attain greater transparency and efficiency and reduce problems in accessing funds overseas.
"Earlier, nobody knew what was going on in many of the real estate firms, with the holding company creating many subsidiaries to buy huge tracts of land for projects like townships. This was due to the ceiling on land acquisition and ownership," said Vikas Agarwal, GM, ICRA, a credit rating firm.
"Now, the main company can buy land and overseas investors can also be assured of how it has been bought and developed," he added.

First Published: Thu, April 19 2007. 00:00 IST