Mysore: Mysore city authorities have a proposal for farmers who own land in and around the city: Part with your plot for nothing and get 18% of it back after it is developed and potentially more valuable.
The Mysore Urban Development Authority (Muda) thinks it’s offering a good deal to farmers as it competes with private developers for land to build public housing in a city where property prices have doubled in 18 months. Whether the offer will find takers is in some doubt.
Making deals: Mysore Urban Development Authority office on JLB Road.
“The objective is to give back farmers 18% of their own land, after it is developed, so that they get to retain the asset...,” said A. Rudrappa, joint director (planning) at Muda. “It will also prevent them from being cheated by builders who often don’t pay them the entire amount.”
Muda has 150,000 applications pending for public housing in Mysore, the largest city in Karnataka after Bangalore, the state capital and India’s Information Technology hub. The agency’s inability to pay market price for farmland has driven landowners to private developers and sent property valuations soaring.
The 18% land-back offer is based on the average cost estimation of developed and undeveloped land that showed farmers would benefit even if they get back less than one-fifth of their original holding, according to officials at the urban development department in Bangalore.
Developed land would include access to amenities such as electricity, water and sewerage, enhancing its potential for commercial development.
But reaping an immediate profit out of their land holding is too tempting to resist for farmers, says Sudarshan Rao, a Mysore property consultant who has brokered land deals.
“For many farmers, land is a liability and they want to sell it off quickly to repay debt or start some new business. They wouldn’t wait for a period of two-three years till the land gets developed and he gets partial ownership of it.” Rao said.
Sudhakar Shankar, for example, sold his 25-acre farmland in the Hunsur Road area near Mysore in January last year for Rs65 crore, paid off whatever debt he had and salted the rest away. The value of that land he sold to a Bangalore-based developer has since risen to Rs100 crore and a rueful Shankar, 36, says he wished he had kept at least a part of it, because of the sense of security that owning land gave him.
But, adds the farmer: “There is a huge demand for land now and we should make the most of it. I am not sure what kind of development will happen if I give my land to the government and of the value that it would earn if I were to sell it,” he said.
Developers have bought up large parcels of agricultural land in areas such as Nanjungud Road, T Narsipur Road, Hunsur Road and HD Kote Road in and around the city, in the belief that Mysore was the next real estate market.
In the last one year, top developers such as Unitech Ltd, Emaar MGF Land Ltd, Sobha Developers Ltd, Nitesh Estates and Total Environment System have acquired land in and around Mysore. But while developers rushed in and property prices soared, little development has taken place. Most projects are yet to break ground in the city that is still waiting for its first shopping mall. “Mysore was tipped to be the next hot real estate destination,” explained Naresh Dandapat, regional director (south) at real estate consultancy Knight Frank India. “But with infrastructure projects such as the Bangalore-Mysore corridor and the doubling of rail track yet to happen, the city has a long way to go to be bracketed in the same league as Bangalore.”
Developers say they are waiting for an opportune time to launch their projects. “Though many developers have bought land, no one is jumping into development right away,” said Nitesh Mani, chief executive officer of Nitesh Estates, which plans to develop an IT park in Mysore. “It is important to choose the right kind of project in Mysore.”
Puravankara Projects, a Bangalore developer, has one luxury residential project coming up in the city. “We have other land parcels but we aren’t planning to develop them now. Also, approvals and land conversions take time here,” said a senior sales official from the company, who did’nt want to be named as he is not authorized to speak to the media.
Meanwhile, urban development officials are preparing to brief farmers and landowners about the potential benefits of selling their land to the city authorities. Real estate experts say they are unlikely to convince their audience.
“Selling the land to private developers at market value would be a better option for landowners because they don’t know what is the kind of development and infrastructure that would come up on that land once they get it back,” says Praveen Kumar, associate director at property consultancy Jones Land LaSalle Meghraj.
“Appreciation of developed land would only depend on the kind of infrastructure or commercial development that goes into the venture,” Kumar adds.