Land Bill: Real estate project cost may shoot up
Big projects face slowdown owing to mandatory clauses in Bill
Sep 02, 2013
Source : The Hindu


DELHI: The Land Bill, passed in the Lok Sabha on Thursday, may ensure transparency and fair compensation for farmers, but the slowdown-hit real estate sector feels it will add to project costs and lead to execution delays. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2012 replaces a 120-year-old law.

The highlights of the Bill include a transparent land acquisition strategy, compensation and rehabilitation as a matter of right.

The industry notes that the cost of infrastructure projects is likely to go up by almost 3 per cent and companies will tend to avoid bigger infrastructure projects because of clauses such as ‘time-bound’ execution.

Niranjan Hiranandani, Chairman, Housing and Real Estate Committee of the Federation of Indian Chambers of Commerce and Industry, and the Housing Committee of the Indian Merchants Association, said a new law was definitely needed to replace the existing archaic law. But the provisions of the proposed law will hike up land costs multi fold and make most infrastructure projects and affordable housing projects unviable.

In affordable housing projects land costs can be about 30-40 per cent of the project cost. But if this is to go up four times or even double, affordable housing will simply not be possible.

Also, the social provisions like compensating people who have worked on the land, how are the beneficiaries to be identified? How will the governments implement this provision especially if the law is the take effect retrospectively, he asked.

Sanjay Dutt, Executive MD, South Asia, Cushman & Wakefield, said: “The cost of land acquisition will surely go up for all projects, irrespective of them being Government or private or public-private-partnerships (PPP). Further, the clause of mandatory consent of 80 per cent of owners for private projects and consent of 70 per cent for PPP projects will delay the process of acquisition and the projects.”


Mayank Saksena, Managing Director - Land Services, Jones Lang LaSalle India, said the Bill was beneficial for land-owners. “The Government’s role in land acquisition has been curtailed as far as private enterprises are concerned. These enterprises can now enter into their own negotiations and arrive at the price for acquisition,” he added.

The Bill also requires a Social Impact Assessment, which will outline how the acquiring parties intend to use the land, and how the original inhabitants or owners will be rehabilitated.

Ajay Aggarwal, MD, Microtek Infrastructure, said: “The Bill may convey the impression of welfare of farmers or land-owners on the surface, but it will harm their prospects in future, as industry and the real-estate sector will avoid investing in areas that have a history of land disputes.”


With the law being enacted, the real estate sector has no option but to face the repercussions. Project costs will spiral upwards and implementation will be delayed. J. Rao, Chairman, Value and Budget Housing Corporation Pvt Ltd, says the law will have an overall negative impact on housing for the mass market segments, including the middle-income group and the poor.

If the purchase price of land has to be over two- to four-times the prevailing market price, depending on the location, just one transaction will drive up land costs and make projects unviable.

Anuj Nangpal, Managing Director, Investment Services, DTZ India, said: “The Bill walks a tightrope. While an enhanced compensation package ensures that land-owners get their due, the same would make a project financially unviable.”

Since developers will want to preserve their profits, there could be more joint development projects happening, wherein the profits as well as the resources and risks will be shared.

Latest Realty News

Cost-push Land Bill will push back growth: CREDAI chief
Sep 02, 2013
MUMBAI: Apprehending that the home and project prices will skyrocket with the implementation of the Land Acquisition Bill, developers’ apex body CREDAI national Chairman Lalit Kumar Jain said it could at best be a “feel good “rather than a development booster.
Should you invest in office space instead of a house?
Sep 02, 2013
BANGALORE: Prakash Nahata is happy with the decision he took in 1992. Instead of investing in a house, this owner of a property advisory firm bought a plot at Jai Nagar, Bangalore, where he later developed an office complex. "Office space gives you a rental return of 7-8%. If you factor in the 30% standard deduction, your return is even higher. The rental income increases by 5-6.5% annually, and the property's value also appreciates over the years," he says.
Slowdown in real estate forces builders to cut prices and dole out freebies
Sep 02, 2013
DELHI: There are no takers for close to 6 lakh homes in the country, forcing builders to cut prices and dole out freebies, which many hope will herald the much-awaited correction in the home market ahead of the festival season.
Land Bill, a retrograde step: Industry
Sep 01, 2013
DELHI: India Inc today termed the Land Acquisition Bill passed in Lok Sabha as a "retrograde" step, saying it could have "adverse consequences" on the country's industrial and infrastructural development.
Industry's fear on land bill exaggerated, overblown: Jairam Ramesh
Sep 01, 2013
DELHI: With the passage of the land bill, cost of acquiring land will go up, Rural Development Minister Jairam Ramesh on Friday said but dismissed as "exaggerated and overblown" the industry's fear about the measure.
With no takers for N Point building, AI plans to sell city flats
Sep 01, 2013
MUMBAI: Having failed in its plans to rent out the iconic 23-storey building in the megapolis which till recently was its headquarters, state-run Air India has now put some of its residential properties under the hammer.
Impact of land acquisition bill on the real estate scenario in India
Sep 01, 2013
DELHI: The LARR Bill is expected to majorly affect the development of large infrastructure development projects, industrial projects, integrated township projects and if they are brought under the ambit of this law.
Land Acquisition Bill may push up property prices by 30%
Sep 01, 2013
DELHI: Real estate developers say the passage of the Land Acquisition Bill could push up property prices by as much as 30% in projects where land is yet to be acquired.
Land Bill to hit project timelines, hike cost estimates: Crisil
Aug 31, 2013
DELHI: Rating agency CrisilBSE -0.60 % on Friday said Land Acquisition Bill, which was passed by Lok Sabha yesterday, will lead to an increase in the gestation time of projects and overall costs.
Impact of land acquisition bill on the real estate scenario in India
Aug 31, 2013
DELHI: The LARR Bill is expected to majorly affect the development of large infrastructure development projects, industrial projects, integrated township projects and if they are brought under the ambit of this law.

Latest Realty News Of State

Realty Talk's