Maharashtra to create land bank

Maharashtra to create land bank
The Financial Express, November 24, 2009, Page 11

Sanjay Jog, Mumbai

The recession-hit realty sector now has reason for cheer. The Maharashtra government, seeking to hasten the availability of housing stock under its flaghship programme of providing 10 lakh houses in five years, plans to create a land bank of 1,000 to 2,000 hectare across the state. A part of the land under the Maharashtra Industrial Development Corporation, along with land under the Urban Land Ceiling Act, will be earmarked for housing. The state government has already earmarked about 350 hectare of land near Nagpur for housing.

The government, which aims to make these houses, of 500 sq ft or below, available to the low and middle classes in particular through the Maharashtra Housing & Area Development Authority (Mhada), will also promote the involvement of realty players from the private sector. Besides, the government also proposes to jointly develop the land owned by farmers by giving them 10 or 20% of the developed land, in a manner similar to that followed during the implementation of SEZs in the state.

The state government plans to provide 2.5 floor space index (FSI) across the state for the Mhada schemes and wants Mhada to participate in the bidding for lands, including that of textile mills The minister of state for housing, Sachin Ahir, told FE that a land bank will give a much needed boost to construction activity. “I want to make it clear that the government is not competing with the private sector but wants the public private participation model to be implemented, in order to add more housing stock. In rural and semi-urban areas, farmers will be involved if they agree to provide land for housing. Nearly 10-20% of the developed land will be given to such farmers.”

Niranjan Hiranandani, chairman, Hiranandani Developers, welcomed the government’s move. “The current government has taken a holistic view to achieve growth. Creation of a land bank is one of the components to boost housing. However, the government is simultaneously paying due attention to urban infrastructure, which includes water, metro and security. Similarly, the development in smaller towns and rural areas is also being pursued.”

Mohan Deshmukh, former president of Maharashtra Chamber of Housing Industry, made a strong pitch for the removal of restrictions on FSI on the lines of Andhra Pradesh. He also suggested that the government should follow the PPP model to create more housing stock more aggressively.

Ranjit Niknavare, executive committee member, Confederation of Real Estate Developers Association of India, however, said, “It is a challenging assignment since it is not easy to create a land bank across the state. While it is very desirable to create units with areas less than 500 sft across the state, the land, if located unfavourably in terms of its distance from city centres, might not get the kind of response that the government is anticipating. Likewise, it may be better to offer the same facility of additional FSI to private developers who have land banks and who are willing to allow their full utilisation for this segment of sub-500 sft flats. This way, the customers have a choice of developers between MHADA and private developers and this may bring the prices of flats further down and afford better apartments to customers. While this initiative seems to be to give MHADA an opportunity to provide homes to economically weaker sections and the middle income group, this effort can be further augmented by support from the private sector.