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Delhi Development Authority’s new land pooling policy is expected to open the floodgates to private players for a crucial role in meeting the demand-supply housing gap besides impacting the realty scene in multi-faceted ways in a manner like never before.

17There is cheer in the air in Delhi after the Delhi Development Authority (DDA) recently cleared the land pooling policy, giving  much-needed impetus to the housing sector in the city.

The policy has now paved the way for private players to participate in creating housing pockets in the city, and is aimed at freeing land and ensuring infrastructure is in place before the construction of homes begin in new areas of the city that are earmarked as residential zones under the city’s master plan.

According to the master plan, nearly 24 lakh residential units are required for an estimated 23 million people by 2021. Delhi has over 1.67 crore residents and by 2021, the population is expected to rise to nearly 2.3 crore which will require an additional 241akh houses.

Landowners can pool their land for development by the city’s land-owning agency. But instead of being compensated when the government takes over the land, the owners will get 48-60 per cent of it back  after the authority has set up the infrastructure.

As per the land pooling policy draft, land valuations rose phenomenally under an increased demand regime, as well as the higher spend and investment appetite. The government continued to rest on the provisions of the land acquisition Bill 1894, which was seemingly unfair to the land owners, for compensation as well as rehabilitation.

Sudhir KrishnaThe land pooling policy is expected to bring in a winwin situation for the land losers and the developers, besides creating built spaces on a large scale. The DDA is the agency to implement it and we hope that it would be put into operation in the next few months
Sudhir Krishna, Secretary, Urban Development Ministry

This policy assures fundamental changes in the way of acquisition and development of land in Delhi. The policy was approved by the urban development ministry on September 5, 2013.

Under this policy, land owners can surrender their landholding into the central pool and be a stakeholder to the development proposed on their land. Once the land is pooled, the landowner would get back 40-60 per cent of the total land surrendered, as developable land, for once, the disputes on undervaluation of land for acquisition would be removed, and the process would seem fair to every land owner, irrespective of the size of their land holding.

The 40-60 per cent land the DDA would retain with them would be utilised for creation of infrastructure as well as monetise it against specific purposes by DDA.

FAR FUNDA
ONLY A CERTAIN PERCENTAGE OF FLOOR AREA RATIO (FAR) MAY BE PERMITTED TO BE TRADED: GOVT SOURCES
• The zones where such development can be taken up in the city are ‘J (South Delhi), ‘K-I’, (Dwarka), I’ (West Delhi), ‘M’ (Rohini), ‘N’ (Northwest Delhi) and ‘P-I’ and ‘P-II’ (Narela sub-city and North Delhi).
• The National Capital Territory of Delhi has been divided into 15 planning zones under Master Plan-2021. Out of these, eight zones (‘A’ to ‘It) are in urban areas and six zones (t to ‘P’, except ‘0’) are in urban extensions or rural areas. Zone ‘0’ is designated for Yamuna front.
• Planning zone ‘1 in South Delhi is bounded by the Mehrauli-Badarpur road in the north, National Highway-8 in the west and Delhi’s boundary in the south and east.
• The UD ministry issued the notification in this regard on September 5. As per the notification, the immediate urban extensions could be in zones ‘J’ to ’12, ‘N’, ‘P-I’ and ‘P-II. In order to accommodate the additional population, the land required for urban extension will have to be assembled for planned development.

Past Practice

The first Master Plan of Delhi was formulated in the year 1961. The policy then of DDA was to acquire large chunks of land directly from the land owners, at a price determined by DDA. DDA would then undertake the master planning and then sell or develop the land, piece by piece. When the land valuations were nominal, this process was acceptable.

How Did Both Private and Govt ACT On Land Acquisition Process

The land valuations rose phenomenally under this increased demand, as well as the higher spend and investment appetite. The government continued to rest on the provisions of the land acquisition Bill 1894, which was seemingly unfair to the land owners, for compensation as well as rehabilitation. With the many instances which happened in West Bengal, Andhra Pradesh, Haryana, Noida etc, it became increasingly clear to the government that forceful acquisition cannot be a tenable and legal method. Also, the private sector sought a more free market methodology, as the government acquisition could potentially be a delaying factor for project.

24How Many People Will Be Accommodated and How Many Housing Units Be Created Under this Policy?

The Delhi Master Plan 2021 is touted to be the largest ever real estate opportunity in the country for the demographic demand, and the administrative commitment provides the triggers for growth. “Delhi’s master plan is designed to accommodate an additional population on 10 million people, as well as facilitate the creation of almost 1.6 million dwelling units, and the land pooling policy being the first of the many innovative methods towards the vision to reality”, the draft says.

Why Did The Govt Take Initiative On It?

In the 1960s, the private sector wasn’t strong enough in the economy to shoulder the responsibility of urbanisation and housing. Hence, the government took on the responsibility, and land acquisition became the norm. From the 1980s, the private sector through their incremental ability rightfully started seeking a larger role. In the past couple of decades, the demand surge from the consumers actually made the supply from the government stable inadequate, and hence, the majority of supply was created by the private sector.

anujpuriDelhi and NCR areas comprise about 50% of the country’s realty sector and the large-scale residential development will keep the land prices under control
Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India

rahulgaurIf someone has the surplus land at disposal and one is willing to trade it for a win-win situation then it is a fair market practice. The only apprehension is its implementation in a way where it does not become a bone of contention between the landowner and the developer. Land pooling is one of the measures and must be encouraged across the markets
Rahul Gaur, CMD, Brys Group

Pramod agarwalThe modified land pooling policy seems fine on paper but it lacks clarity on many operational points, that’s why it hasn’t generated the kind of enthusiasm it should have. The trading of FAR has been allowed to accommodate the concerns raised by the developer community. But it is not clear on many points. Till the time it happens, it won’t help either the developer or buyer
Pramod Agarwal, ED, Microtek Infrastructure

sanjayThe new policy will also give ample opportunities to the developers and will be able to bring in infrastructural development on the outskirts of Delhi. Any supply will add to more inventories and will keep realty prices under check.
Sanjay Dutt, ED (South Asia), C&W

How Many Types Of Land Pooling Policy Are There?

There are two basic types of land pooling which have been announced so far. The first one: 20 hectares and above where 60 per cent of land would be returned to the land owner and the second: Between 2 and 20 hectares, where about 48 per cent of land pooled would be returned to the land owner.

20“With the many instances in West Bengal, Andhra Pradesh, Haryana, Noida in Uttar Pradesh, etc, it became increasingly clear to the  government thatforceful acquisition cannot be a tenable and legal  method,” said the draft.

The policy will now also allow private developers to plug in the holes in infrastructure in an ever expanding city. Since the  development is mainly expected to take place in urban extension areas, a large chunk of agricultural land will also enter the urban pool. Experts estimate around 20,000 to 25,000 acres of agricultural land to be urbanised, benefiting farmers willing to pool their land.

It is also expected that the new land pooling policy will, for the first time, see private players acquiring land directly from farmers, a move that will see at least 5-6 lakh new residential units being built in the next seven years or so.

A DDA source said: “The Authority has acquired and developed 75,609.84 hectares of land as of now. According to the Master Plan of  Delhi (MPD) 2021, the city still has 27,628.9 hectares of land. This means that at least five sub cities will come up.” The Union government also agrees with the Authority’s proposition. “The land pooling policy is expected to bring in a win-win situation for the  land losers and the developers, besides creating built spaces on a large scale The DDA is the agency to implement it and we hope that it would be put into operation in the next few months,” said Sudhir Krishna,secretary, Union ministry of urban development.

 Experts feel that the new land pooling policy will also stabilise the rising realty prices, mostly in the national capital region (NCR) especially in residential segments.

“The new policy will give ample opportunities to developers and will be able to bring in infrastructural development on the outskirts of Delhi. Any supply will add to more inventories and will keep realty prices under check,” said Sanjay Dutt, executive managing director for South Asia, Cushman and Wakefield (C&W), a global real estate consultant.

According to a property consultancy firm, DTZ, the new policy will arrest the sharp rise in property prices in NCR areas such as Gurgaon, Noida, Ghaziabad and other adjoining areas. Prices of residential property on the Dwarka Expressway in Gurgaon, for instance, have seen about 150 per cent increase in the last five years.

Echoing a similar voice, Anuj Puri, Jones Lang LaSalle chairman and country head, said: “Delhi and NCR areas comprise about 50 per cent of the country’s realty sector and the large-scale residential development will keep the land prices under control.”

The policy comes at a time when land acquisition by government bodies is becoming increasingly difficult and is unable to keep pace with the pace of urbanisation. Delhi being a focal point for the policy, the Master Plan-2021 projects that the population will swell to nearly 2.3 crore with an estimate of an additional 24 lakh houses in demand by 2021.

Keeping the projection in view, developers are agog with their future business prospects and have already welcomed the policy.

This policy assures fundamental changes in the way of acquisition and development of land in Delhi. The policy was approved by the urban development ministry on September 5, 2013.

Under this policy, land owners can surrender their landholding into the central pool and be a stakeholder to the development proposed on their land. Once the land is pooled, the landowner would get back 40-60 per cent of the total land surrendered, as developable land, for once, the disputes on undervaluation of land for acquisition would be removed, and the process would seem fair to every land owner, irrespective of the size oftheir land holding.

The 40-60 per cent land the DDA would retain with them would be utilised for creation of infrastructure as well as monetise it against specific purposes by DDA.

“If someone has surplus land at disposal and one is willing to trade it for a win-win situation then it is a fair market practice. The only apprehension is its implementation in a way where it does not become a bone of contention between the landowner and the developer,” said Rahul Gaur, chairman and managing director, Brys Group.

In fact, satellite cities have already mushroomed around Delhi in the last two decades largely because of the restrictive nature of development in the city. DDA mostly developed small patches of land and auctioned homes, creating a substantial demand-supply mismatch. While Gurgaon and Noida may have initially flourished because of sparse availability in Delhi, the NCR cities now have a life of their own and are economic centers themselves.

Not everyone is convinced the move will lead to prices easing. “The opening up of new areas isn’t likely to have too much of an impact,” said Mohit Gujral, chairman, DLF Universal, adding that it is too late to reverse the policy but surely opening of new areas in Delhi might slow the pace of growth in prices.

The new policy also allows partial sale of a portion of one’s floor area ratio (FAR) to another developer or landowner under “the modified land pooling policy in Master Plan-2021,” passed by the Urban Development ministry.

The aim of the policy is to involve private parties in the development of real estate for residential and commercial purposes in the capital, something only the DDA was doing till now.

The profit from such development will go to landowners pooling their land for the projects. In case of residential use, ‘tradable’ FAR can only be transferred to another development entity or DE (a landowner or a group of landowners) in planning zones with approval or licence for projects more than 20 hectares.

“This essentially means that a DE can sell his FAR to another developer. This can be done especially in case of height restrictions in a specific area,” AKJain, former planning commissioner (DDA), recently told a national daily. The concept, he said, was prevalent in Mumbai.

There are the usual doubting Thomases too. Gurgaon based developer Pramod Agarwal, executive director,

Microtek Infrastructure, said: “The modified land pooling policy in the Master Plan-2021 seems fine on paper but it lacks clarity on many operational points, that’s why it hasn’t generated the kind of enthusiasm it should have.

The trading of FAR has been allowed to accommodate the concerns raised by the developer community. But it is not clear on many points. Till the time it happens, it won’t help either the developer or buyer.”

While the involvement of private players in planning and development of land pockets with residential and commercial components, instead of leaving acquisition to the government, the DDA is expending an effort to bridge the ever-increasing gap between supply and demand in housing. But the pertinent question remains whether DDA’s land pooling policy is a step in right direction. It certainly offers some food for thought.