ibnlive » India

Sep 07, 2011 at 12:44pm IST

Realty developers unhappy with new Land Acquisition Bill draft

New Delhi: Industry experts say that if the new Land Acquisition Bill is implemented, the cost of land will go up by 60 to 80 per cent, which will lead to escalation of housing prices in the near future. Real estate developers say that townships will be financially non-viable leading to a supply crunch and price hike.

CREDAI President Pankaj Bajaj said, "In certain markets there is a limit of purchasing power and in fact vast majority of demand of houses is in the lower middle class. Those people won't be able to absorb these cost escalations. So the end result will be that developers in such markets will not undertake these projects. Why will they undertake a loss making project that will in turn decrease the supply, hence increasing the prices? It is a dismal scenario for housing."

The new land draft proposes compensation to farmers that is four times the market rate. An allowance of Rs 3,000 per month for a year and an annuity of Rs 2,000 per month will have to be paid for 20 years. Developers will also have to provide employment to each family. Developers say that the additional cost of all this will be passed on to the customers.

Raheja Developers Senior Vice President Manoj Goyal said, "If this bill is implemented, the expectations of the farmers will keep increasing. If a developer pays Rs 6 crore for the land, then this Rs 6 crore becomes a benchmark for the next deal. Farmers will increase it to Rs 12 crore next time as Rs 6 crore was the benchmark price."

The new Land Acquisition Bill has not really got any good news for the customers. Experts say that the farmers' interests have been protected, but the housing requirement of the middle class has been completely ignored.