ULCRA repeal to aid housing cos

MUMBAI, NOV 15: The imminent repeal of the Urban Land Ceiling Regulation Act (ULCRA), will revive the sagging sales of real estate companie...

MUMBAI, NOV 15: The imminent repeal of the Urban Land Ceiling Regulation Act (ULCRA), will revive the sagging sales of real estate companies, and help consumers get a better deal, at the same time.

With its repeal, as and when the Maharashtra government clears the Centre’s recommendation, housing industry analysts say prices of land in all the major metros, including Mumbai will go down by at least by another 20-25 per cent. "Release of surplus land will increase supply to the industry and finally prices of buildings will come down drastically," says Y P Gupta, CEO of LIC HF.

For more than 21 years, the ULCRA failed in its real objective to re-distribute land equally. Instead, the ULCRA, a product of Indira Gandhi’s infamous emergency, bred corruption and blocked the growth of the real estate industry. At least two states will have to send the proposal to scarp ULCRA to Centre which can subsequently take further steps, analysts say.

In the housing industry, land still constitutes a substantial 60 per cent of the cost. Increased supply at a lower rate will pull down the total cost of construction eventually, trigerring demand. "The margins of the real estate companies would go up as they develop more land and sell it at a lower price to the customers," Gupta adds. The volume of business for both housing companies as well as housing finance companies will also go up as lower prices will fuel sales and help the industry to revive, says a top official of HDFC. Companies like Godrej, which have a large tracts of land in Mumbai, will be able to develop and construct houses, which is presently lying unused.