Revised Land Acquisition Bill to Push Up Real Estate Prices and Affect Budget Homes..

The Revised land acquisition bill passed by Lok Sabha on recently is expected to push up property prices & will have adverse impact on affordable housing projects, real estate developers / promoters &  consultants told.

The Revised land acquisition bill states that affected families will get four (4) times the market value of land acquired in rural areas & two (2) time in urban areas and land losers will get compensation.

Mr. Sunil Rohokale, Managing Director, ASK Group, an asset management company, “If you pay two or / four times the market value of a property depending on where you buy, land costs will go up which will increase price of the end product”

Mr. Niranjan Hiranandani, Managing Director, Hiranandani Constructions said, "" When cost of acquisition goes up, project costs go up which lead to higher prices.”

Several are of the belief that the bill is likely to have an adverse impact on affordable homes projects in India.

“Land costs in power projects are 3% to 4% of overall costs, but in housing, it is substantial. When land costs are high, affordable homes is not possible” Mr. Niranjan Hiranandani also said.

Mr. Sanjay Dutt, Managing Director, Cushman & Wakefield, a global property consultant said: “Government does not give land to developer but expects them to do affordable homes. Does not give them approvals. But,  them expects them to pay premium on development. The  central government should have given additional development rights to developers / promoters  for paying higher land prices to farmers. If you give 4 FSI *, developers think that they are paying more for additional developable space. A lot of future affordable supply will get impacted now”

Real Estate industry has mixed views about the consent from 80 % of affected parties.

Mr. Lalit Kumar Jain, President, Confederation of Real Estate Developers Associations of India (CREDAI) , feels this clause will lead to many sorts of issues, ASK’s Rohokale said getting consent from the large majority leads to certainity in launch of projects.

Realty Industry veterans feel  the Revised land acquisition bill does not impact individual land buyers as it talks about "land acquistions" of 50 acres in cities and 100 in rural areas.

* FSI - Floor Space Index

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