ULCRA annulment can hold property prices by 40% by 2011-12

New Delhi, May 12 (UNI) Annulment of the 1976 Urban Land Ceiling and Regulation Act (ULCRA), by all the states, could lead to a 14 per cent growth in the real estate business, besides curtailing the sky-rocketing property prices by 40 per cent by 2011-12, an ASSOCHAM study said today.

With this move, the real estate sector alone can create an additional four million job opportunities and substantially increase its contribution to the national GDP from the current level of 1 per cent, a paper on 'Real Estate Issues and Solutions', brought out by the Associated Chambers of Commerce and Industry (ASSOCHAM) said.

The other issues which currently restrict and hinder the growth of the domestic real estate industry, include high stamp duty, obsolete rental and foreclosure laws and building code standards, it added.

It suggested that the aforesaid issues, if addressed properly with new laws in place, could make housing affordable for the weaker sections of the society.

The Government should allow Foreign Direct Investments (FDIs) in the real estate industry on liberal conditions, so that finance was easily available at reasonable interest rates for the developers. There should be certain conditions to safeguard against the outflow of capital from this sector, ASSOCHAM President Anil K Agarwal said.

''FDIs will also enable new technologies to be introduced in the housing industry, which will make the business far more efficient and cost effective.'' He, however, added that ''recently FDIs had been allowed in real estate projects, albeit with certain restrictive financial, time and area constraints.'' Innovative financing schemes such as Real Estate Investment Trust (REIT), real estate mutual funds and mortgaged backed securitisation will provide access to low cost and long-term funds, he said.

Referring to ULCRA, the ASSOCHAM Chief said that in 1999-2000, the Central Government had repealed it and some states like Punjab, Uttar Pradesh, Madhya Pradesh, Rajasthan, Gujarat and Haryana had followed suit.

However, states like Maharashtra, Karnataka, Kerala and Orissa and many other have yet to act on it, and as long as the forward looking states do not repeal the Act, property prices are unlikely to be contained, according to the Chamber.

As regards to infrastructure like electricity, roads, sewage, drainage, water supply, the Chamber is of the view that this is one problem area which also needs to be tackled on a war footing.

UNI PV RA KN1543