Mumbai frees up huge land surplus

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More than 17,000 acres of land is to be freed up in India's financial capital, Mumbai (Bombay), after the scrapping of a law on land ownership.

The 1976 law prohibited anybody from owning more than 500 sq m (less than an acre) of land in the crowded city.

But experts feel that making more land available will not result in a drop in real estate prices in the seventh most expensive city in the world.

An estimated 60% of Mumbai's 12 million people live in slums and shantytowns.

Much of this surplus land in Mumbai is stuck in legal disputes Pranay Vakil, Knight Frank

The land ownership law was repealed after pressure from federal authorities, who want to pump money into developing major infrastructure in the city.

The law allowed surplus land to be acquired by government for low-cost housing, but was rarely used for the purpose.

Disputed

"The law did not work. As a natural response, people cheated," said senior official Sanjay Ubale.

But the freeing up of this land is not expected to translate into affordable property prices in a city which boasts some of the priciest real estate in the world.

"Much of this surplus land in Mumbai is stuck in legal disputes, and has been encroached upon. Most of it cannot be developed on," Pranay Vakil, chairman of real estate consultants Knight Frank, said.

The government is also planning to tax land owners who keep their plots vacant for a long time.

About 60% of Mumbai's people live in slums

Media reports say politicians and builders have violated the land law for years, and sold surplus land illegally to developers.

Many experts feel that most of the freed land will be used for upmarket developments rather than to provide affordable housing for Mumbai's middle class and poor.

"This law has been scrapped in other states, but prices of real estate have not come down anywhere. The law was not implemented properly," said Simpreet Singh, who works on housing for the poor.

The scrapping of the land law means that nearly 50,000 acres will be freed up for development in the western state of Maharashtra - of which Mumbai is the capital.

This is also likely to bring a flurry of construction to smaller towns in the state like Pune, Sangli and Nasik.