Illegal constructions on agricultural land to be regularized.

The Maharashtra government has finally decided to regularize the illegal constructions on agricultural land on the fringes and the outskirts of the city within the corporation limits. This is perhaps a step in regularizing the land acquisition and the land laws of the country which has to be following the order of the day. Places like Karjat, Kasara and Kalyan among others are dotted with land bought by the denizens of Mumbai for building farmhouses and holiday homes. There are many such cases which are estimated to be about 2.5 lakhs in which constructions have come up on the land plots but the status of the land is still agricultural. 

The state government has decided to dilute the regulations which is the Maharashtra Gunthewari Development Act which had till now restricted the splitting of the land and the owner couldn’t sell such property which was considered illegal as per the legislation. The amendments in the act will enable the common consumers to purchase land at outskirt of the city and the fringes of the corporation limits and built a house on it. 

This decision will impact the Pimpri-Chinchwad regions where lakhs of residential constructions were being done on land even before the formation of the well planned Pimpri-Chinchwad Pradhikaran in the year 1978. The Land Revenue Minister Mr. Eknath Khadse remarked that as the matter of Pimpri-Chinchwad is not yet decided and is sub judice the decision will ultimately be taken by the court. The government had been since then collecting revenue from the illegal constructions and thus it is now required to regularize them. Such proposals from the land owners have come to the government in lakhs which will be scrutinized and studied by the state urban development department and efforts would be made to regularize them on an official basis.
Know more about khata of your property before buying any residential land, it will help you protect from falling in any trap of buying agricultural land,

Eased FDI norms may hike realty prices instead says experts

Last week the central government in a directive eased the norms of the Foreign Direct Investment in the real estate sector. The directive removed the restrictions regarding the size and the volume of investment. The realtors say that earlier the foreign direct investment used to come to the real estate sector in the way of debt capital or at the entity level. So many experts have pointed out that earlier the FDI was utilized in very large projects and as from now on the restrictions on the size of investment has been removed there will be investment on the affordable sector too which will boost the segment. But another section of the experts very ably argue that it is not the case at all. They opine that FDI in the affordable sector will further fuel the prices instead. According to them the cost of the FDI capital is not cheap. It comes tagged with an interest rate of 20 to 25 percent. It is quite natural that if the builders and the developers buy land and property at this rate of interest, they have to raise the price of the apartments in order to recover the amount.  This seems as explains the experts that the market is driven by the investors.

This section of the realtors and the experts argue that there can be an imbalance in the urban economy because of the FDI pouring in and creating a vicious cycle from which it will be difficult to get out. Rather than that they argue that the government should urge the banks to lend capital to the developers at a cheaper rate of interest.  There should be a condition that they start the construction of the houses immediately and should not be allowed to sit on the land plot for an unlimited period.
This creates the accumulation of unproductive assets and also shortage of houses.

Other experts like the top officials of the renowned realty consultant Knight Frank India Pvt. Ltd. said that from the last three consecutive festive seasons the realty sector is going through a bad time. It is not able to generate or raise funds and thus the fund raising is of highest priority for them. In these circumstances Foreign Direct Investment (FDI) seems to be the only option of infusing capital in the business.  Thus the relaxation of the size of the project in terms of FDI will not have an impact on the short run.  But a section of the experts still feels that in this phase of lull where the sector is gasping for capital and urge for a renewed interest from the buyers, extra liquidity will surely help the sector in a big way.

Different other veterans and the experts from various associations of the realty sector like the experts from the Builder’s Association of India said the flow of FDI will have a positive impact on the residential real estate.  Easy flow of money at a cheaper interest rate will help projects in places like Mumbai where the land prices are about 70 percent of the total outlay.  He opined that property prices are bound to reduce if the developers are able to buy land with easy money available.  But he also reiterated that one year of time on the ground is required to see the outcome. Let’s wait and watch.

Karnataka government to allot land plots under special categories

BENGALURU: The allotment of land by the government under the special categories which landed the Yedurappa Government in trouble is back again. The Chief Minister Mr. Siddaramaiah initially hinted that the government would refrain from allotting the G category land and plots in Bengaluru. The allotees will be chosen according to the discretion of the Chief Minister.

The Bangalore Development Authority (Allotment of sites) Amendments Rules 2015 which was notified on the 20^th of May 2015 confers the powers to BDA to start the allocation of sites for the special category people. It is this allotment of land to the special category people that landed the Yedurappa government in trouble.

The commissioner of the Bangalore Development Authority Mr. Sham Bhatt said that a cabinet sub-committee was set up that looked in to the B Padmaraj panel report on the land that fell under the G Category sites. This committee was set up by the direction of the high court after a lawyer Mr. Vasudev Murthy filed a writ petition on the issue of the distribution of land in 2010. After that the court according to Mr. Bhatt has given directives to the government to continue with the distribution of the G category lands by asking the civic agencies along with the government to formulate rules for the allotment of land plots.

In this regard the Comptroller and the Auditor General (CAG) in its report said that the BDA needs to amend certain anomalies including the listing of the stray land plots before deciding to allot the sites. 

In this context the commissioner replied that they are on the process of rectifying their anomalies including listing that of the stray sites before the BDA starts allotting the sites. Mr. Bhatt said they are still preparing the list of stray sites and plots of land and in few days’ time they will come to know the exact extent of the stray sites available. In his statement he also reiterated that the lands that are in litigation are also or will be considered in the list of stray sites. This will eventually make more sites and land plot available for distribution under various categories.

This is also true that the BDA will have to reserve 30 percent of the stray sites under special category for the people in public life. But these will be selected under the discretion of the Chief Minister. In this regard the government has reduced the reservation of the people in sports and who are recognized in the national and international level to 10 percent from 15 percent. But at the same time the reservation for the people who got recognition in the field of art, literature, painting, sculpture, music, dance, drama and others have been increased. This category also includes people and judges occupying the higher levels of the judiciary, either sitting or the former judges. 

Recent escalation in land prices pushes the guidance values up

Land among all real estate property prices increases at a faster rate than even apartments as well is the opinion of the expert realtors and market watchers. The reasons are many. One of the main reasons for this is that the floor space ratio of land compared to apartments is very high.  This makes the demand of land higher but on the contrary the supply is limited. Thus the land value escalations in most of the cities are higher than the value increments of the built up apartments opines the expert realtors. But what is the range of the escalation of values in the last year? We have a city wise analysis below.  

In Delhi and the NCR region the price escalation from all the four corners of the city was in the mean range of 13.5 percent.  

In Mumbai the mean price increment as noted in the table in the four directions of the city was in the range of 26.875 percent which is quite high. 

In Bengaluru, the IT capital of India, the price escalations in the North, East, South and West of the city has a mean increment of 19 percent which is also quite high.

If we look at the situation of Pune the table below shows the price increment of land in different areas of the city

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According to the table above the price increment of land values in Pune also shows an increment of an average of 30 percent in the last year which is quite high. 

Notwithstanding all the data shown above the expert realtors and trend watchers note that there are cycles of real estate and the economy which also has an impact on the increment of land prices. But considering all these factors one concludes that the increment in prices of land is of the order of at least 12 to 14 percent annually with the price doubling in five years.

Increase in Guidance Value owing to increase of Prices in Bengaluru 

There is a guidance value of land and property in every region that is determined by the local authority which determines the stamp duty that has to be paid to the state. No matter what the value of the property the seller attributes, the guidance value is the minimum that the stamp duty and other charges are to be paid on during registration. 

During the last year Bengaluru has noted a huge and a sudden jump in the guidance value of properties in different places of Bengaluru where the myth goes that the return is always above 20 percent on real estate year on year.  Let’s look at the table below which points out that the guidance value is very high in Sadashivnagar. It touches the mark of Rs. 20, 000 per sq. ft. Cunningham Road is also one of the areas where the guidance value is of that range of prices. 

UB City is one of the most posh areas of Bengaluru where the revised rate is Rs. 21, 350. Commercial street,Kanakapura Road,MG Road and Brigade Road are few of the areas where the guidance value has also been increased considerably. We see that this increment in guidance value of land has been increased after 15 months owing to increase the amount in the exchequer as there has been a slump in the revenue of the government by 10 to 15 percent this year.

Outlook

The realtors say that this is perhaps the best time to invest in land especially in cities like Bengaluru, Hyderabad, Pune and Tier II cities also like Ahmedabad as the infrastructure development is at an all-time thigh. There are many suburbs that are being developed in the cities like Bengaluru and Pune with the possibilities of higher rate of return on investment. If you think of the economic cycles also the market watchers and economists opine that this is the ideal time to invest as the market will go to a peak again in the late or middle of 2020’s. Thus the investor will get a quite few years of time to reap the benefit of the period when the prices would be at its peak.