Saturday, December 01, 2007

Windfall in Mumbai real state.

The repealing of Ulcra is likely to open up around 17,000 acres of land for development in the Mumbai alone. As many as 330 private firms, including large corporate houses such as Godrej, Wadia, Birla and Wadhawan, stand to benefit from the release of large tracts of prime real estate in the country’s financial hub.

Industry sources estimate that various corporates and trusts — including Godrej group firms such as Godrej Industries and Godrej Consumers, Wadia group’s Bombay Dyeing and various Wadia trusts, Birla-owned Century Textile and Wadhawan-owned Housing Development and Infrastructure (HDIL) — hold around 6,000 acres of developable land in Mumbai.

“It will free up a lot of land for development. We believe that the move could free up 15,000 acres to 17,000 acres. Some 338 private land owners, including many corporate houses, are sitting on large tracts of developable land,” said Pranay Vakil, chairman of real estate consultancy Knight Frank India.

Though some of these lands are facing slum encroachment problems and other legal issues, in the next three to five years, around 4,000 acres to 5,000 acres of land will be available for development in Mumbai, he said.

As the news trickeled in, stock prices of real estate firms soared on BSE, with HDIL gaining more than 8%. Among others companies that witnessed a jump in their share price include Godrej Industries, Akruti City, Century Textiles and Bombay Dyeing.

“Apart from the fresh land that will be made available for development, developers will be able to get on with their construction work, without losing any time. Normally, a no-objection certificate (NoC) from the government under Ulcra is required for any kind of development in the city.

NoC takes up to three months. With the removal of the Act now, we can save a lot of time,” said HDIL managing director Sarang Wadhawan. He, however, refused to divulge the size of the land bank that his company is sitting on. Industry sources pegged the size of land held by HDIL under Ulcra at around 500 acres.

Godrej group chairman Adi Godrej sounded optimistic too. “It is an extremely good move for Maharashtra and will help develop and use a lot of properties. Most of the states had already abolished the Act and it is time Maharashtra did too. The move will help free a lot of land in Mumbai and Pune for development purposes,” he said.

Analysts believe that the move would primarily help companies that own land but could not sell because of the restrictions. Apart from Mumbai, thousands of hectares of land will be released for development in other crowded cities such as Pune and Nagpur.

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