Critical factors & challenges in Real Estate Development in Urban India

1. Adani University
REALESTATE-
BUSINESS DEVELOPMENT
Year: 2023
Course Code: Trimester V,
Batch – PGDM IM & Law
Visiting Faculty: Shamik Desai
(M) 9426302503

2. Session 3
Thursday, 12.10.2023
2
Critical Factors & Challenges in Real
Estate Development in Urban India

3. 1. Urban Sprawl
2. Overcrowding
3. Land scarcity, characteristics
4. Housing demand v/s supply
5. Unemployment ….disposable income
6. Slums and Squatter Settlements
7. Transport ….. all time challenge
8. Water supply
9. Sewerage Problems
10.Solid Waste Management
11.Crimes …. Law & order situation
12.Pollution
13.Educational facilities
14.Public health & re-creation facilities
15.Policies
• Land ceiling act
• Town planning
• Zoning / FSI
• Re-development bye-laws
Critical Challenges / Factors

4. Land as a limited resource
Land is crucial for the economic, social, and environmental
advancement of all countries.
Land is partitioned for administrative and economic purposes, and it is
used and transformed in a myriad ways.

5. Characteristics of land
• Relative fixity of supply
• No cost of creation
• Heterogeneity
• Absence of market for land
• Derived demand
• Law of diminishing returns
• Economic rent

6. Relative fixity of supply
• Land as a supply is fixed–if one type of use is increased in area it will be
at the expense of other.
• Capital changes its form and location with each turnover, while land
remains the same.
• But the intensity of use of land can be increased to serve the need.
• Can land be created???

7. No cost of creation
• Man has the power to create or increase their
capital, but not possible with land
• when land is developed, costs are incurred
and it becomes one of the factor of
production
• Modern technology -land reclamation:
Example: Bandra Reclamation, Palm
Jhumeria(Dubai)
• It is being practiced in coastal cities.
• Heterogeneity of land??

8. No cost of creation
• Man has the power to create or increase their
capital, but not land
• when land is developed, costs are incurred
and it becomes one of the factor of
production
• Modern technology - land reclamation:
Example: Bandra Reclamation, Palm
Jhumeria(Dubai)
• It is being practiced in coastal cities.
• Heterogeneity of land??

9. Heterogeneity
• Each land parcel is different in character; having different
advantages and disadvantages
• It might be good for one kind of use and bad for another
• Land can be classified into number of categories;
➢ Sub-marginal land: no remunerative use – not fit for farming
➢ Marginal land: break even + Profits
➢ Intra-marginal land: profit or surplus yielding

10. Heterogeneity
• Each land parcel is different in character; having different
advantages and disadvantages
• It might be good for one kind of use and bad for another
• Land can be classified into number of categories;
➢ Sub-marginal land: no remunerative use – not fit for farming
➢ Marginal land: break even – Profits = Costs
➢ Intra-marginal land: profit or surplus yielding

11. Demand for Land
• Urban land is fairly inelastic in supply- We don’t produce this stuff!!!!
• As per Ricardo: Rents were determined by the interaction of supply and demand.
• Higher urban rents are the consequences of competition between different users.
• If land is scarce in CBD and there is high demand for central sites, rents will be high.
• CBD may thus be subject to more intensive use of land and increase in spatial extent
by invading surrounding zone.
• Demand for land is a demand for space which can be varied by land use changes,
development control and regulation changes, structural changes and through the
process of property development/conversion.
CBD- Central Business District

12. Absence of market for land
• Land deals are transaction not in land itself but in interest or rights, possible returns
from the land.
• Rights in aggregate are known as “real property”
• Transaction in real estate market generally are conducted in private while transaction
in commodity market take place in public.
• Reliable information about land transaction in real estate is not available easily.

13. Land Use

14. SessionOutline
❑ Introduction To Real Estate Planning
Planning, Neighbourhood Planning, Planning models
❑ Sub-urbanisation Of Population And Employment
❑ Master Planning, Development Plan
Land as a resource, Land use control and zoning, Various levels of Planning
❑ Town Planning In India-past And Present
Planning Commission, NITI Ayog Etc.
❑ Urban challenges and Local Government
Present day dilemmas in different cities, Urban Issues, Governance and
Politics
❑ Housing and Real Estate Planning
Housing for all, Various schemes, Slum Rehabilitation, Real estate trends etc.
❑ Mass transit
❑ Recent trends in Urban Planning - Growth Control & Decline Management
• Planning for the future
• Smart Cities
14

15. Land use planning ?
• Its purpose is to select and put into practice those land uses that will
best meet the needs of the people while safeguarding resources for
the future –Sustainability
• Systematic assessment of land potential, alternatives for various uses
at a location wrt economic and social conditions
• Select and adopt the best land-use options.
• It must satisfy two broad objectives;
✓ Ensuring best possible use of land
✓ Separating incompatible land uses

16. Results in :
• Evaluate and record unique features.
• Preserve unique cultural or historical features.
• Conserve open space
• Plan for mixed uses in close proximity.
• Plan variety of transportation options.
• Set limits and managed growth patterns.
• Encourage development in areas of existing infrastructure.

17. Land Use Classification

18. Forest & water bodies: It includes the area under forest, sanctuary, rivers, lakes,
conservation etc.
Agricultural: It basically comprises of agricultural fields.
Residential Use: It principally comprises of dwelling (housing units), gardens,
community open spaces, convenience shopping facilities, primary schools, health
clinics, smaller service industries
Public and semi-public use: It comprise of institutional buildings which serves the
community as a whole. It includes city administration buildings, Town Hall, Museum,
Art Gallery, Library, police station, post office, fire stations, schools, charitable
institutions, hospitals, religious facilities etc.
Commercial use: It comprises offices, shopping centers, malls, retail stores, hotels,
restaurants, multiplexes and other such places housing income-generating activities.
Recreational (parks and open spaces):It includes parks, playgrounds, gardens,
amusement parks, community open spaces, toad-lot areas etc.
.

19. Industrial: It comprises of areas having industrial activites ranging from light industry
to heavy industry.
Roads and Transportation: It includes transport terminals like bus-stations, railways
stations, bus-stops, roads, footpaths, cycle tracts, parking arrangements, etc.
Vacant land: It includes land parcels lying vacant without any building.

23. GRAM
PANCHAYAT
MC
UDA
COLLECTOR
OFFICE
Agricultural Land
NA
conversion
Old tenure
7/12 7/12
Conversion to
old tenure
New Tenure Form 6A
Construction
permission
City Engineer
Gamtal Area
HNP
Area
Const.
permission
granted
Registration
& Stamp duty
Sewerage
connection
LAND
CONVERSION
PASSING
PHASE
Water
supply
UGVL
supply
BU
Application
BU
Granted
City Engineer
75%
ANTRI
RATE
2
YEARS
4.9%
JANTRI
RATE
10/-
Sq.ft
45
DAYS
3-4
MONTHS
12 – 15 DAYS
1
1. Under section 65 BLRC.
2. Under section DCR
2

24. Developer buys agricultural land parcel at negotiated prices from land owner
Makes Application to Collector office under section 65 of BLRC for NA conversion
Submitting a Layout proposal
Plotting scheme with access to all plots
Common plot -Reserve 10% as common area
FSI as per applicable municipal regulations (1.5 permitted in Gram Panchayat areas)
It usually takes atleast 90 days for approval
Once approved –applicant has to pay the conversion charges
Developers sells the individual plots or develops housing unit and then sales it off
Internal Infrastructure is usually provided by the developer

25. Levels of Planning

26. ❑ National Level
•Policy planning & reallocation of resources
❑ State Level
•Policy planning & reallocation of resources
❑ Regional Level
•Link between policy planning and spatial planning
•Policy planning & reallocation of resources
•Regional infrastructure projects
❑ City/Town level
•Spatial planning
•Land-use control
❑ Zonal Level
•Detailed Spatial planning
•Land/Area Development Schemes

27. Land Development Mechanism
(Zonal Level)

28. Various land development mechanisms are being used by different
states across India;
Town Planning Scheme (Guj and Mah)
DDA Model (Delhi)
HUDA Modal (Haryana)
Ghaziabad Modal (Uttar Pradesh)
Hyderabad Urban development Authority Modal
Chennai Metropolitan Development Authority

29. DDA Model
DDA identifies and acquires land for development within the urban limits.
Land is acquired under Land Acquisition Act,1894 and compensation is provided
to the land owners
DDA then develops the acquired landby providing the necessary infrastructureand
allocates certain portion for housing (all classes EWS, LIG, MIG and HIG).
DDA constructs flats for each class and invites application –allotment is done
through draw system.

30. Ghaziabad Model
Its is based on joint venture between the development authority and the private
developer.
The equity sharing between the development authority and the private developer
is in the ratio of 10:90.
Private developers earn revenue from the sale of 60% of plotsin the free market
Development Authority earns annual revenue of 1%from the private developer (tie
up cost index).
In this model, 20% of the plots are reserved for the EWS/LIGat predetermined rates.
The model is applicable in selective residential areas with a minimum size of 50
acres
It does not take into consideration the city/zonal level infrastructure facilities.

31. Haryana Model
Development Authority acts as facilitator
The authority partners with the developers having proven track record
It issues licences to such developers –permitting acquisition of land directly from the land
owners through negotiated market price
Time frame: The entire process of negotiating the land purchase and development is to be
completed within three years.
After assembling, the developers then develops the land and construct houses based on
stipulated norms, rules and regulations
This model is applicable in residential sectors only and the minimum viable size for the scheme is
40 hectares.

32. Haryana Model
Developers pay development fees at the rate of Rs.3.7lakhs/acre and handle all internal
infrastructure
Other stipulations are that 20% of the plots are to be sold to EWS and LIG at a certain fixed
price. Another 25% of the plots are to be sold on no profit no loss basis.

33. Chennai Metropolitan Development Authority
also called “Guided Urban Development Modal”
Land is bought by the private developers and developed
Development authority purchases reserved unit at subsidized rates
Developer has a free hand fixing prices for HIG and MIG units.
Developer is responsible for development of all internal infrastructure

34. Co-operative societies
Group of interested individuals come together –form Housing Co-operative Societies
It then identifies land for housing
Members fund initially to purchase land
Either from open market
From development authority through auctions
Prepare layouts and gets it approved from the authority
Society then approaches various authorities for laying of roads, electricity and water
connections.
Members constructs individual unit.
Development authority provides offsite infrastructure and technical assistance

35. Town Planning Scheme
• Town Planning Schemes - basic concept - pooling together all the land under
different ownerships and redistributing it in a properly reconstituted form after
deducting the land required for open spaces, social infrastructure, services, housing
for the economically weaker section, and road network.
• This process enables the local authority to develop land without fully acquiring it
and gives it a positive control over the design and the limiting of the urban growth.
• This method is extensively practiced in Gujarat and Maharashtra, selectively in
Kerala and occasionally in Andhra Pradesh and Tamil Nadu.
35

36. Town Planning Scheme
36

37. ➢The T.P. Schemes are prepared giving micro-level planning for smaller areas of
about 100 acres that are already under pressure of urban development.
➢T.P. Schemes are conceptualised as a joint venture between the local authorities
and the owners of the plots who agree to pool their land, redistribute and share
the development costs as per this scheme prepared by development/local
authority under the act.
➢An area of 1-2 sq. km is taken-up for a T.P. Scheme so that it can be manageable
for preparation and implementation.
➢The land parcels having common ownership are marked as one original plot on a
map and all such original plots are pooled together for planning purposes.
37

41. URBAN PLANNING

42. Necessity of Law and Legislation:
Impacts of these changes on
the city –
• Overcrowding,
• Congestion
• haphazard development of
cities.
• shortage of housing,
resulting in squatting on
public lands,
encroachment, un-
controlled settlements,
shortage of public utilities,
community facilities etc..
Growth in the cities –
Industries, and IT and other demand drivers
in the city
Migration
Urbanisation

43. Urban Land Ceiling Act, 1976

44. Introduction :
• Urban vacant lands have become highly speculative in nature
• Concentration of property in the hands of few people.
• The Govt of India passed the bill to be known as The Urban Land Ceiling Act, 1976.
• This law enacted in India with socialist objectives.
• Individual or firms can not hold vacant land beyond certain limit
• If they do then they have to declare and sell the excessive land to the Govt.
• Surplus land to be acquired by Govt. for public purpose.
• equitable distribution of the land
• uniform development of all sectors of Urban areas.
• To secure orderly Urbanization.
Transfer of Vacant Land:
•The act prohibits the transfer of vacant land by sale , mortgagee, gift, lease by a person holding excess
urban land and if it is done then such transfer is to be treated null and void.

45. Selection of Towns:
•was made applicable to 73 towns and cities.
•The main criteria for the inclusion of towns was its population rather than its size.
•out of 142 class I cities of 1971 census, only 73 cities (population exceeding 2 Lakhs) selected for
application.
Objects of the Act:
Ceiling Limits on Vacant land:
❑ 500 Sq.m – A grade Municipal Corporations
Delhi, Mumbai, Kolkata, Chennai
❑ 1000 Sq.m – B class area Urban agglomeration with population
exceeding 10 Lakhs.
❑ 1500 Sq.m – C class areas with population in between 3 – 10 Lakhs.
❑ 2000 Sq.m – D Class areas with Population in between 2 – 3 Lakhs.

46. Acquisition of excess Land:
Publication of intention in
official gazette
Preliminary survey
Making of Draft Plan by
authority and submitting it to
the govt.
Inviting and reviewing
objections and suggestions
Inviting objections and
suggestions
Modifications in draft plan
and submitting it to state
government for approval.
Final Plan
Within
60days
Within 2
yeras
Within
60days
Within 3
months
Within 1
year

47. Why government will acquire land?
For public purpose which includes:
• Provision/ Extension of Village sites.
• Land improvement / Development of existing village sites
• residential purposes to the poor or landless or person, slum
clearance
• Housing for project affected persons
• educational, health, housing, in other words public facilities.
• Parks , open spaces etc.
Land is not sufficient for
settlement.
Govt Can acquire
land for
development /
extension of
settlement.
Provisions in the Act:

48. Procedure of acquisition
•Preliminary Investigation and survey
•Declaration of the intention -issue a notification in the state Govt Gazette and publish in 2 daily
newspapers.
•Objections and suggestions within 30 days
•Owner is prevented from carrying out any works after the notice.
•Valuation of the property: The valuated value of the property in section 4 valid up to 1 year.
•Preparation of draft plan by authority and invitation for objections and suggestions.
•Modification in draft plan and Submission of report by collector to govt.
•Final permission of Govt. (Commissioner) – Can confirm the acquisition
Can cancel the acquisition
•Compensation to owner
•Detail documents/ proofs of the owner

49. Hearing of Objections
Objections to the acquisitions will be valid on one or more of the following grounds
1. The purpose is not a public purpose.
2. The land is not suitable for the said purpose.
3. The land is less suitable than the other piece of land
4. The area is excessive than required.
5. The acquisition will destroy historical or artistic monuments, religious buildings like temples,
graveyards, churches etc.
Provisions in the Act:
Apportionment – Distribution of compensation among all the persons known or believed to be
interested in the land

50. Period within which an award shall be made:
• 2yrs from the date of publication of declaration by collector
• If fails, entire proceedings gets lapsed and has to repeat whole procedure.
• Solatium – the extra value of land for the compulsory acquisition is known as ‘Solatium’.
• Collector has to grant 30 % solatium + 12% special value (i.e.. Interest ) per year.
Agricultural Field
well
Proposed Road
•Owner will also get –
1. Shifting charges
2. Loss of Business
3. Damage sustained by the persons interested
e.g. If there is any crop on the land at the time of possession,
its value should be accounted.
•Severances – When the land is divided in parts by the portion of
the land to be acquired by the Govt, the owners has to
compromise on its access or other things. This is Known as
Severance.
Provisions in the Act:

51. THANK YOU
Shamik Desai + 91 9426302503
desai.shamik@gmail.com