What Land Acquisition Bill means for you as a home buyer
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Prospective home buyers, brace yourself. At a time when high interest rates are eating into the dreams of many urban Indians to buy a house, the proposed Land Acquisition Bill could make that quest even more expensive; though it will provide safeguards and benefits to the farmer.
With increasing urbanisation, demand for adequate housing has reached record proportions. Estimates by the housing ministry suggest that there is a shortage of 2.65 crore houses during the Eleventh Plan (2007-12). A study by McKinsey has estimated the total urban population to reach around 59 crore by 2030.
This increase in urbanisation has fuelled demand for housing at the fringes of existing cities. Gurgaon, Noida and Ghaziabad at the fringes of Delhi; Vasai-Virar, Thane, Panvel around Mumbai; Sholinganallur, Porur and the area along the Grand Southern Trunk Road in Chennai are such examples. This phenomenon is not confined to the principal metros, but several tier-II and tier-III cities too are witnessing rapid expansion.
How is this demand for housing being fulfilled? Developers enter the space in two ways. One, they purchase parcels of land at the fringes directly from farmers and aggregate it. For instance, that's what DLF did when it developed Gurgaon into the city that it is today. The other route is for state authorities to acquire lands and then sell parcels of land that has been earmarked for housing to developers. Most developers are taking this route currently, to build townships, which have become attractive given the huge demand-supply mismatch.
When land is developed, its value will always rise and so will the price of undeveloped land in the vicinity that would be up for grabs. Most land developed this way is usually agricultural land that would have been acquired many years ago, for a fraction of the value it commands currently.