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

REALTY SPECULATORS SET FOR DEMOLITION

THE urban development ministry is planning to make it must for those in possession of ‘urbanisable' land to start construction within six months of procuring the property. Otherwise, the land would be acquired by government at floor rate, which is usually lower than market rate. The main aim of the proposed policy is to keep cash-rich speculators at bay.

According to ministry sources, a mandatory reduction in licensing time is one of the most prominent strategies that government is likely to introduce. The regulation is likely to be included in forthcoming real estate legislation. Later, it will be incorporated in Delhi master plan, which is the model for all metro cities.

“Right now, the concept is in initial stages and being discussed by top officials and policy-makers. A formal regulation might come into effect later this year. The move is apparently aimed at countering the problem of land hoarding, which can best be attributed to the lack of any comprehensive policy or guidelines,” said DDA member Virender Kasan.

In fact, a strong lobby within the ministry and associate authorities such as DDA feels that the present situation has led to artificial land scarcity, particularly in larger cities. Addressing this issue is one of the prime concerns now.

Analysts feel the worst-hit would be cash-rich investors and financiers, who had all along made a killing. The biggest beneficiary would be the great Indian middle class, for whom owning the dream house may once again become a realistic proposition.

Delhi chief minister Sheila Dikshit told: “I will not like to comment on this policy matter, but I repose complete faith in Delhi master plan, which is currently being prepared by the Centre.” On the other hand, analysts and developers feel t the government should move with the plans at a steady pace. Says real estate consultancy Realty Verticals director Rajan Ahuja, “It will indeed be a welcome move as far as countering land hoarding is concerned. But the government needs to be practical about the whole issue. As a matter of fact, no credible developer indulges in hoarding.”