Gurgaon master plan a gold mine for realtors

In a three-part series, Business Standard has explored how agricultural land has been commercially tapped and exploited over the years by developers, often with ample help from the government, and its impact on the stakeholders.

The series begins with the Gurgaon-Manesar region, next to Delhi. In the next two parts, we will look at Rajarhat on the fringes of Kolkata and the Mumbai-Pune and Mumbai-Nashik belt.

As the glitzy malls, skyscraper corporate offices and plush residential complexes lining Gurgaon on the National Highway-8 stretch draw to a close, the road to Pataudi, a 30-km drive off the Sohna Road, offers glimpses of agriculture fields, interspersed with a school, a college, a couple of private offices, residences and a 'palace' known more for its Bollywood connect.

Till one reaches Wazirpur and then Hayatpur on the Pataudi Road, where concrete is increasingly replacing agricultural land.

In places where builders haven't yet started construction, they have ensured their nameplates are firmly in place.

Tulip Infra, Rahejas, Siddhartha, Ramprastha, and Sare Homes are among those visible in the area.

The real game-changer here is the master plan of Gurgaon-Manesar, revised thrice in the past five years, say land dealers and brokers, doing brisk business in the region.

The forever modifying plan, that has seen residential land use increase from 14,930 to 16,010 hectares (ha) and commercial use from 1,404 to 1,616 ha in five years, has much to do with how builders have been able to knock down many boundaries to spread their reach beyond the outskirts of Gurgaon.

Wazirpur and Hayatpur, among many other such haunts, are part of the Gurgaon-Mansesar 2025 master plan notified in 2011, just four years after the 2021 master plan was out in 2007.

The draft Gurgaon-Manesar 2031 Master Plan, awaiting notification, is sure to unlock value for many more upcoming builders which took a chance on areas unknown and unsung so far.

On an average, a land-lot acquired for Rs 25 lakh (Rs 2.5 million) an acre in 2003 is now Rs 6-7 crore (Rs 60-70 million) an acre.

In some cases, the rates have crossed Rs 15 crore (Rs 150 million) an acre!

Once the 2031 plan gets notified, the Special Economic Zone allocated some five years earlier to businesses, including to Reliance Industries Ltd, will get struck off from the area, as the draft shows, making so much more room for builders to make houses, malls, hotels and offices.

Estimates suggest farm land has already been reduced to less than five per cent of the total urban area covered under the latest master plan of Gurgaon-Manesar. Soon, there will be none left, says a farmer-leader.

Costs & profits

Some say the hyper-growth and increasing demand in the Gurgaon region prompted such quick revisions in the master plan, unusual in any other region.

"In the last six years, residential units in Gurgaon have grown 400 per cent," said Samarjit Singh, managing director, IndiaHomes, a brokerage company.

But land dealers, on condition of anonymity, talk discreetly about how the master plan acts as a gold mine for the officials drafting it, the subject of strong lobbying by developers.

Typically, developers want their land in the area, acquired cheap over the years, to be notified in the plan, so that they can make a killing at the time of selling apartments.

But conversion from agricultural land for grant of a change in land use turns out to be a costly affair for a developer, said Sanjay Sharma, MD, Qubrex, a real estate consultancy.

The official conversion charges are pegged at Rs 158 a sq metre for group housing, and Rs 1,260 to Rs 1,470 a sq m in commercial projects, depending on the FAR (floor

to area ratio.BR>
The licence fee for a group housing project is Rs 670,000 an acre, and goes up to Rs 270 lakh for an FAR of 175 for a commercial one.

In addition, the government has to be paid external development charges and internal development charges of Rs 3 crore (Rs 30 million) an acre for residential projects, Rs 4.5 crore (Rs 45 million) an acre for commercial ventures and Rs 1.25 crore (Rs 12.5 million) for plots.

Besides the licence and conversion fees, there's often an 'informal payment', on which nobody is ready to give any evidence or on-record comment, to get the land use changed.

These informal rates vary from Rs 25 lakh to Rs 30 lakh (Rs 2.5-3 million) an acre for residential group housing projects to Rs 50 lakh (Rs 5 million) an acre for commercial ones.

While many farmers Business Standard spoke to were gung-ho about the direct land deals with builders in Gurgaon, unlike in Noida and Greater Noida where the government buys land from farmers, Supertech, a builder active in both regions, thought otherwise.

"In Noida, land is provided by the state government. In Gurgaon, we have to acquire contiguous land ourselves, a tedious task," said R K Arora, chairman, Supertech.

Ahead As less than five per cent of farm land remain here and just a couple of sectors remain to be tapped for development, is it the end of mega real estate projects in Gurgaon?

Experts say there's still much to be done.

Land can be tapped further beyond the outskirts, which can at a future date perhaps be part of yet another master plan.

Also, small builders which have land can tie up with bigger developers who are ambitious about setting up projects.

Gurgaon, which hit the world map once Maruti launched the first small car in the early 1980s, turned into a real estate haven much later, with the information technology and outsourcing boom.

Large-scale acquisitions by builders on the Delhi-Gurgaon NH8 began only around 2004.

Consider the growth. Between 2007 and now, a little more than 100 licences were given for residential and commercial projects on NH8 to the Sohna Road stretch across 14 sectors of Gurgaon, numbers 68 to 80, said people in the know.

But supporting infrastructure, including roads, are lacking, they add. The builders given these licences in the last five years include BPTP, DLF, Unitech, M3M, Emaar MGF, Godrej, Rahejas and Supertech.

A recent report in The Hindu cited Haryana government records to say that from 1981 to 2004, licences for an estimated 8,550 acres were granted across the state, including Gurgaon.

But, under the current Congress-ruled BS Hooda regime of seven and a half years till now, licences adding up to as much as 20,549.6 acres have been granted, a rise of around 150 per cent. Of this, 7,733.7 acres were in Gurgaon.

Stakes

While partnerships between farmers and developers are common in land deals, brokers are abuzz with talk of indirect partnerships between politicians and builders, too.

A prominent politician of Haryana owns around 1,800 acres of land in partnership with an upcoming builder of the region, they said.

Also, a scam-tainted MP is believed to have stakes in residential and commercial projects in the Gurgaon-Manesar area.

Agents and brokers work from anything between six months to two years to get a land deal done and the money charged is based on their respective negotiations.

A one per cent commission norm doesn't work in such cases.

For instance, a land dealer might buy a lot for Rs 2 crore (Rs 20 million) from a farmer after long months of negotiations and then sell it to the developer for Rs 3-4 crore, making a neat sum for himself.

This explains why real estate is such a high-stake game.