Unlocking urban land: need of the day

One of the ways in which several cities across the world have tided over the problem of limited land supply is to unlock the inherent potential of urban land. We can do this in our cities too.

Underutilised housing estates

Large parcels of urban land are available in the form of housing estates developed by the state and Central governments where the level of utilisation is extremely low. Buildings there have outlived their life span and are nearly crumbling. With a little modification in the local laws,by increasing densities,allowing higher floor area ratio more families can be housed and value of the land can be unlocked.

As a matter of fact,the Maharashtra housing authority,MHADA,has recently initiated such a scheme in Mumbai and a number of their old colonies are being redeveloped. Real estate developers are being roped in to do the entire project,provide larger and modern flats for existing residents at no cost basis,provide benefit to the government and also make a profit in the bargain. In the case of lands occupied by slum dwellers,a similar scheme of redevelopment has been under implementation where the land is unlocked and slum dwellers,the real estate developers and the government have benefited.

Similar models are being developed in Rajasthan,with many variations built in,where developers are permitted to bring in their lands for urban housing development and become eligible for higher floor space and are exempted from various charges,etc. if they provide housing for the weaker sections.

There are other types of lands where underutilisation is widely prevalent. For instance,most of the post offices occupy lands where the level of utilisation is very minimal. One can actually exploit such lands to at least ten times the present capacity and several uses can be accommodated there. Similarly,many such ‘passive real assets’ are available in cities with urban local bodies,some of which are lying vacant. These could be exploited and put to profitable use.

It is interesting to note that this wisdom has dawned on the Indian Railways and they have started a Rail Land Development Authority with a view to redevelop railway lands in a commercially viable manner. For the Delhi Metro Rail Corporation too,income from land development does constitute a good proportion of their revenue streams.

PAIRING viability with sustainability

A classic example is the Hong Kong Housing Development Authority (HDA),which has developed virtually all the housing estates in the Hong Kong SAR,mostly for the low and middle income groups. HDA actually owns most of the shopping malls in the city — which it has got commercially developed — that provides a continuous stream of income for maintaining and managing the city. The state authority acts like an entrepreneur and actively promotes commercially viable projects.

This is unlike most urban development authorities and state housing boards in India who are mostly starved of funds and have turned parasites,grossly dependent on governments,if not funding agencies,to dole out funds for development activities. Para-statal agencies have not been trained to think and work in a commercial environment where financial viability is the key.

In Delhi,the nation’s capital and the largest urban agglomeration,the Union urban development ministry has been championing the urgent need to unlock urban land and deliver built urban spaces. The argument to speedily increase supply to meet humungous demand is understandable.

For long,the popular argument amongst experts was to demolish the model adopted by Delhi for urban development,using a large bank of land deliberately acquired,as a resource,as it did not lead to satisfying the needs of the large lower and middle income groups. Interestingly,the same critics are now advocating the philosophy of using land as a resource for urban development,by partnering real estate developers. However,it needs to be noted that this alone would not solve the housing problems for this section. Other support mechanisms would be needed too.

Redevelopment is one solution. The other is land pooling. Agricultural land holdings can be pooled and after development,the benefits redistributed,depending on valuations. This model is again a tried and tested model in South East Asian countries,and has been adopted states such as Gujarat and Chhattisgarh. This is now under discussion in Delhi. In both these methods,the real estate developer is a key player who drives the project while the state does the steering.

The environment angle is equally important. If lands are overutilised,the sustainability of the settlement becomes a serious concern. The argument for compact cities,reduction in fossil fuel consumption and enhanced mass mobility,all demand higher living densities in our cities. While there are limits to low rise high density,high-rise high-density could actually offer more opportunities for intense land utilisation and keep city size to a minimum spread.

Need for Calibrated Intervention

While the potential of urban land can be released,the danger is that neither the state nor the common man may receive the benefits — all may be cornered by the real estate developer,that too by a factor of several hundred percent. With a difficult Land Acquisition Bill looming large,the chances of procuring cheap land on the periphery also seem to be bleak.

The solution does not really lie with mere unlocking of the urban land potential,but the a) institutional mechanisms,b) the formula for sharing the spoils of the unleashed potential and c) the manner of distribution of benefits between the stakeholders. An unholy nexus is believed to have come into play. Political economy makes it expedient for lobby groups to be appeased in democratic politics,particularly before the elections and urban land incentives become an easy route to appeasement.

Therefore,there appear to be few alternatives today and the best bet still is using the private entrepreneur for either redevelopment of existing lands in the city or for pooling lands on the periphery. Thence,the only way to ensure that the low and middle income also benefit is by facilitating a carefully calibrated involvement of stakeholders.

— The author is an urban expert,and currently is professor at SPA,New Delhi