INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

GOVT LAND AGENCIES RAKING IN CRORES

   THE government agencies and authorities — with the mandate for urban development — are making money at a rate that would embarrass fast-growing business houses, thanks to the real estate boom. During the last one year, some of the agencies, such as DDA in Delhi and Noida authority, have contributed more than Rs 3,000 crore to the government's treasury. And this excludes retail transactions, which, if taken into account, would become more than three times over. The Mumbai Metropolitan Region Development Authority (MMRDA), for its part, has sold 48,000-1.1 lakh sq ft plots for Rs 2,500 crore last year.

The MMRDA sold five commercial and residential plots at Bandra Kurla complex (BKC) plus one plot meant for a convention centre along with a commercial complex last year.

What's more interesting is that the larger part of the action is yet to be seen. Sources say that the Haryana Urban Development Authority (Huda) has been on a land acquisition spree in various parts of the state. A source close to the state's chief minister said that later this year, the government may invite bids from organised developers for over 1,500 acre of land on the upcoming Global Business Corridor, near Manesar. “The target is to pitch the bid in such a way that it crosses the Noida landmark,” he said. The Noida Authority last month auctioned a 330-acre plot in the Expressway for a record price of Rs 1,583 crore.

Various revenue models are also being worked out, and in some of
these public-private partnership (PPP) cases, land could be the basis for revenue-sharing. “We have been high on land acquisition and have built a significant land bank, but our priority will be retail buyers.” a state government spokesperson. Recently, the authority had announced sale of 500 plots to retail buyers across more than 10 districts of the state, for which it had received 1.75 lakh applications.

DDA has raised over Rs 1,000 crore from land disposal in the past year, and is expected to garner double the amount in the current fiscal. A large chunk would come from the 30-odd hotel plots to be auctioned in Delhi before the Commonwealth Games. Also in the pipeline is the PPP-route for creating several multi-level car parks in the city, along with scope for retail exploitation. According to DDA vice-chairman Dinesh Rai, there are no plans for auctioning very large parcels of land on the lines of those done by Noida authority. “At best, we will bring 5 and 10 hectare plots to the market,” he added. The authority spent over Rs 900 crore on land acquisition in 2005-06, earmarking a similar amount for this year.

Even the real estate industry is in favour of urban development authorities acquiring land and then releasing it to the market through auction or PPP route.