After a long wait and a lot of promises the Ulcra has finally been repealed in Maharashtrs winter assembly at Nagpur.
What will it mean ?
The scrapping of the Act by March 2008 means funding under the Jawaharlal Nehru National Urban Renewal Mission. It is expected to free up around 36,000 hectares in the state for development, including some 5,200 hectares in Mumbai.
Increase of rent in chawls and flats which payed abysmally low rents, where rents were capped at 1970s rates.
Increase of stock of land for builders and developers, especially people like Godrej and Wadias who have a huge land bank in Mumbai and indirectly translate in more funds for politicians from the builder lobby.
The Nationalist Congress Party (NCP) will be biggest gainer of the repeal of the Urban Land Ceiling Act. Of the 36,000 hectares of the land that will be freed in the state after the repeal, about 22,000 hectares is going to be released in Pune district alone, which is a stronghold of Sharad Pawar-led NCP.
“The builders’ lobby in this district is controlled by NCP and considering the emergence of Pune as the IT capital of Maharashtra, the real estate market in Pune is hotting up every day. About 9,500 hectares Pune-land falls in Development Zone and over 10,000 hectares fall in No Development Zone.
Lastly it also means early general elections
There are chances that midterm general elections will be held and the party requires funds for polls. Repeal of the ULCA in Maharashtra is an indication that the elections are likely,” said a senior bureaucrat.
So what about the aam admi who is faced with a so called housing price boom due low interest rate housing loan resulting in a quantum jump in valuation in suburbs sometimes exceeding 50 to 100 % escalation a yr, very much similar to what us experienced (10% yrly growth rate ) since 2001 ?
Well he wont still get his house at an affordable rate anytime soon, as builders who buy land will develop land in parts and release flats at a much lower rate so as to control prices.
Though Mumbai is saturated and prices will change little, I expect prices to fall in the next 6 mths in tier 2 cities like pune and nasik and suburbs like thane where the psf rate has escalated from a mere Rs 2000 to 6000 in some cases in lst 3 yr, if things are not stage managed by the politicians – builders nexus.