By: Santhosh Kumar, CEO – Operations, Jones Lang LaSalle India
The Centre has responded positively to the Delhi Government’s appeal to regularise more than 1600 of the city’s unauthorised colonies. However, the truth is that even after this notification, the ground reality in that these colonies are unlikely to change for now.
There are several hurdles on the road ahead:
Individual Rights: The residents there will still have to await the declaration culminating in ownership rights that will grant them the legal right to buy, sell and register their properties, besides carrying out construction work at these sites. Only colonies have been given a legal tag and not the individual houses. Every house owner residing in one of the unauthorized colonies will have to apply to the respective corporation for getting the property registered. People will have to get their building plans approved from the civic agency.
Multi-Ownership: Considering that most of the houses in these colonies are builder flats built on a single plot, there is multi-ownership issue attached to these properties. Presently, there is no policy under which such owners can apply for having their houses regularised. A new policy will have to be framed by the civic agencies and DDA.
Layout Plans: The Corporations will have to prepare the layout plans wherein the basic facilities and infrastructure that needs to be created will be earmarked.
Infrastructure: A number of colonies that were regularized in 1977 are still in shambles, with basic infrastructure such as sewage, parks, dispensaries and street lights missing. The Government will have to ensure creation of infrastructure to make the move meaningful.
Meanwhile, because of this move, it is expected that many of the existing structures will go for redevelopment. Local builders are likely to lead this trend. Getting fresh land will prove to be a challenge, and this may prevent the entry of new players.
Builders are expected to assemble and redevelop structures in vertical fashions. Also, construction activities are expected to pick up pace. This holds the potential for increasing supply in the affordable housing segment. All building activity in these colonies will remain a domain of small-timer builders, at least in foreseeable future. Housing options available in all such colonies are in the highly affordable segment and will be attractive to the large migrant population with limited budgets. Only smaller players will have the motivation to capitalize on the renewed interest by this category.
Currently, there is negligible infrastructure development and no availability of basic amenities, resulting in demand levels that are less than spectacular. That said, these colonies have the most affordable housing options of all available housing stock, and offer an opportunity to a large migrant population in Delhi to fulfil their dream of owning a house in Delhi. With the regularization move, that dream has been given further impetus and will prompt many builders to assemble and redevelop the structures to further lure this population segment.
Though a lot of rental stock is already available in these colonies, there is likely to be an overdrive in construction as builders will try and lure buyers with the regularization tag. Illegal constructions are learnt to have taken off in many colonies ever since the news of regularization were announced, as well. This will result in more units being available for rent. Considering the current lack of infrastructural development and civic amenities, demand is not likely to gain any significant momentum. With supply outpacing demand, moderation in rentals can be expected.
With regards to the effect on adjacent authorized colonies, it needs to be seen how seriously Government actions the needed infrastructure for the regularised colonies. As such, the surrounding colonies will be not immediately impacted by this move. However, in the long run, prices in all such colonies may rise, depending upon how the infrastructure development paces up. With significant infrastructural developments and other amenities making inroads in all such colonies, all the adjacent authorized colonies will also witness price appreciation and increased rentals.
