How Delhi Land-Pooling Policy Will Affect Realty Prices

In May this year, the Union Ministry of Urban Development approved the regulations for a land-pooling policy in Delhi. The land that will be acquired as a part of the policy are near southwest Delhi, Dwarka, Rohini and Narela. Under the plan, as many as 89 villages are to be declared as urbanised development areas.

Also Read: Should You Consider DDA L-Zone For Investment?

What is Land Pooling Policy?

In a unique move, farmers and the owners of the land under the plan will be able to participate in the development. Instead of merely selling and exiting the land, they will pay some charges and get a part of the developed land in return. The Delhi Development Authority (DDA) will be responsible for the development of land of around 20,000 hectares, along with some private players. DDA is expected to finish the development of the virgin land into assembled land parcels. The infrastructure that will be built will be on the lines of a smart city.

Impact of LPP on Gurgaon and Noida

The development process of this hub is expected to be finished in six to eight years, as the new policy de-incentivises delays in the process with penalties. Even if the shortest period of development is counted in, it is unlikely to have any short-term impact on prices.

In the long-term, too, an impact on other growing and thriving hubs of Noida and Gurgaon might not be major. According to the policy, after the development, the pooled land is expected to be priced between Rs 5,000 and Rs 10,000 per sqft, which is in line with average prices of property in Gurgaon and Noida.By the time these new pieces of land come in, a lot of under-construction properties in Noida and Gurgaon will be under possession, hence not posing any direct competition to them.

This land, however, might arrest the expected rapid growth further from Gurgaon towards the Yamuna Expressway. The direction of growth now points inwards, towards Delhi.

Will there be Reverse migration?

The new land to be developed is also touted to cause some reverse migration from Gurgaon and Noida hubs to Delhi. This is highly unlikely, as these hubs have already become cities in with their own commercial and residential hubs. A number of companies are headquartered in these areas now, making them self-sustainable. The new infrastructure and comfort offered in these areas are now attracting migrant entrepreneurs and professionals more than the capital.

Affordable homes versus upper middle-class homes

The pooled land is not earmarked for the economically weaker sections only. However, it will have a certain number of dedicated units of affordable residential property, as determined by the policy. This is yet another differentiator from Gurgaon and Noida.

While some builder in under the 'affordable' tag are looking at Greater Noida, Gurgaon and Noida will predominantly remain upper middle-class and posh areas, with most of the demand and supply restricted to comfortable 2BHKs, with good amenities to ultra-luxury 3BHKs.

The pooled land will be a mix of all kinds of residential properties that caters to the residential needs of many people in Delhi with all pocket sizes.

(Katya Naidu has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)