Developers on a buying spree to buy farming land fearing cost hikes
Real estate developers were hoping a lot from the new government in the center to relax the proposed norms, however are now worried about one thing that the new law may raise the cost of land acquisition significantly. Hence they are in a buying spree and have been buying more land from farmers over the past year than usual.
The land acquisition bill was passed last year; however is yet to come into force has some provisions which the states want to be changed. It proposes to double the compensation for acquisition of land in urban areas while land acquired in rural areas will entail four times compensation.
The developers are wary that the clause mandating consent of 80 % of the landowners for a private project will delay the process of acquiring land and further increase project costs for the developers.
Amit Goenka is the chief executive officer of the private equity fund Nisus Finance, which is currently working with the developers in Mumbai, Pune and Bangalore to fund large land purchases. Goenka feels that the land acquisition bill will make the lands more expensive and tedious to buy in the future and hence his firm is advising the companies to buy lands in their catchment areas.
If we look at the data of some of the developers, then we will see that this trend is true. Noida-based builder Supertech has acquired three different land parcels around Gurgaon totalling about 350 acres over the past year. Real estate developer Chintels, which has large landholdings in and around Gurgaon, has acquired about 150 acres of land in the last one year. There are many other developers which have taken the same path and everyone is waiting with a bated breath to see what the new government does to the land acquisition bill.
Source- The Economic Times
