ULCRA repeal may cut cost of housing

MUMBAI, Aug 15: In the event of the state government deciding to repeal the Urban Ceiling & Regulation Act (ULCRA), 1976, it is expec...

MUMBAI, Aug 15: In the event of the state government deciding to repeal the Urban Ceiling & Regulation Act (ULCRA), 1976, it is expected that the cost of housing will further come down as the cost of land that constitutes 60-70 per cent of the cost of housing would reduce drastically, according to a report prepared by the Lloyds Brooke Hillier Parker.

The report quotes the ministry of urban development as stating that out of the 2,20,674 hectares of vacant land identified to be in excess of the ceiling, the land actually taken into possession by the state government is only 19,020 hectares. This works out to barely nine per cent of the total vacant land identified to be in excess of the ceiling.

The effect on property prices in the short term will mostly be behavioural, the report said. Since all the players in the market expect that the repeal of the ULCRA will lead to the release of saleable land, thus increasing the supply and reducing the prices, these expectations may actually translate into pricedips even without substantial land release taking place.

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But in the long term, the report said, the real impact of the repeal will depend on how much land is released, how soon it is released and the areas where it will be released. In south Mumbai, it is unlikely that any land would be released, and even in the suburbs the amount of land that would be released is not large enough to affect the demand-supply situation in a significant manner.

The release of mill land in central Mumbai alone will contribute to about 1,69,099 sq mts to the market. Although it is industrial land, not restrained by Ulcra, but repeal of the Act will allow the release of this land easier. In suburbs like Andheri, Powai, Bhandup and Mulund, repeal of the Ulcra will allow for a smoother release of industrial land into the market for commercial purposes.

The price movement due to the release will depend on the time frame of release (the developers might relese the supply gradually so as not to depress the prices), the reportsaid.

And the prices will depend on whether the development is planned by the government so that the development is not haphazard and infrastructure supporting facilities are adequately provided. A well-planned area may emerge as an alternative destination thus impacting the prices in other areas of Mumbai and on the land use.