The Financial Express - November, 2007

Demand for crushed sand sees 20% hike

The Promoters & Builders Association of Pune (PBAP) has welcomed the scrapping of the Urban Land Ceiling Act. (ULCA). The move has in one smooth stroke released huge tracts of land in Maharastra.
      
“This restoration of a normal supply of land will in turn lead to a reduction of land prices as a result of the potential abundance of supply,” Lalit Kumar Jain, president, PBAP said.
        
The ULCA that was enacted in 1976 has been responsible for creating an artificial shortage of land since its inception. This throttling of land supply had led to an artificial increase in the cost of land, which has seen sales at exorbitant prices.
         
“The impact to the rates of  housing stock in the form of apartments, however, will not be seen immediately. The lower rates of land will be seen in the immediate term. However, this land after being purchased, a process that takes three to four months, needs to go through planning and approval process of eight to 12 months. This impact of the lower land prices as a result to this action will therefore only be seen on homes that will be offered in the market to the customers 12 months to 18 months from now,” he said.
             
There are many other factors that one needs to consider in arriving at future prices including inflation, interest rates and government legislation that can impact the price of homes.
              
“The land stock that is currently being developed for housing has been purchased prior to the repeal of the Act and as such, the selling prices factor the purchase price of the land at the erstwhile levels. We will, therefore, not see any reduction in rates of apartments in the immediate future,” he said.
                
The PBAP has urged the state government to treat the scrapping of the act as the first step in facilitating affordable housing for the masses.

                                   According to Kumar Gera, chairman, CREDAI and CMD, Gera Developments Pvt Ltd scrapping of ULCA would mean significant amount of land would come into the market. “There will be opportunities now to develop large sized schemes. There was an artificial shortage that had been created through this law which will no longer exist. I would definitely expect softening of land prices in Mumbai, Thane, Pune, Nasik, Nagpur & Kolhapur,” he said. “The softening will vary from place to place and is dependent on a number of factors,” he added.