Stifling Growth

DESARAJU SURYA
Hyderabad: The Comprehensive Master Plan (CMP) and Special Development Regulations for the development of the Hyderabad Outer Ring Road GrowthCorridor (ORRGC) have come as a rude shock to real estate developers as there are many clauses that will only stifle growth rather than encourage it. Layout developers are crying foul, in particular, over the rule that mandates them to "gift" five per cent of total developed area free of cost to Hyderabad Urban Development Authority through a gift deed. Developers are also required to reserve five per cent of total area for Economically-Weaker Sections (EWS) housing programme. Besides, a minimum of 10 per cent of total area has to be reserved for parks, playgrounds and open spaces of which five per cent has to be for 'local' open spaces. Developers are equally aghast at the provision for levying a "Development Deferment Charge" (DDC) which, authorities say, is aimed at discouraging owners from land hoarding. "There is nothing encouraging in the CMP that spurs growth but rather it will only discourage prospective investors from coming to the state," real estate developers say, adding that the CMP and the SDRs were totally "unviable and impractical." When the Municipal Administration and Urban Development Department came out with the draft master plan for the ORRGC last year, it did not contain provisions for "gifting" of land or levying the development deferment charge. "These issues were never discussed with the stakeholders at any level. The provisions in the CMP have indeed come as a shock for us," president of the Builders' Forum Sekhar Reddy remarked. Developers contend that there was no logic in trying to impose the development deferment charge as the Outer Ring Road itself has not taken shape. "Where can you expect development when there is practically no infrastructure to speak about? It will take a few more years for things to take shape," one major real estate player pointed out. In case, the government goes its way, developers will be required to shell out Rs 80,000 per acre in the first year as DDC and Rs 2 lakh per acre in the second year. This rule alone will deter investors from looking at Hyderabad as a popular destination, particularly in the real estate sector. The move to impose DDC boomeranged in the case of Cyberabad Development Authority, forcing the government to withdraw it. "The same scenario may repeat even in respect of ORRGC," developers feel. Besides, the "abnormal" impact fee and other development charges that the developers are required to bear amount to at least Rs 1.5 crore per acre -- a burden which will ultimately be passed on to individual buyers. Though the government spoke of providing incentives for large projects, developers see it as an "eyewash" as the levies outweigh the discounts. The MAUD Department authorities, however, say there was nothing unusual about the provisions in the CMP. "These are essential to regulate development. Moreover, the land we take from developers will be used only for development of common facilities and not used for commercial purposes," a senior MAUD official pointed out. Referring to the DDC, he said it was meant only to ensure there was no land hoarding. He said the ORR would be ready in two years but development along the ORRGC could be taken up simultaneously.